The US Environmental Protection Agency (EPA) has proposed a new rule to levy a fee on methane emissions from big oil and gas producers, as reported by Reuters on January 12. This rule, known as the Methane Emissions Reduction Program, will apply to larger-emitting sources that report releases of more than 25,000 ton of carbon dioxide (CO2) equivalent annually. The fee starts at USD900 per ton of methane emissions in 2024, rising to USD1,200 in 2025 and USD1,500 in 2026 and beyond. Notably, it only applies to emissions that exceed the statutorily specified levels.

The proposed rule marks one of the most striking measures the US has taken to curb methane emissions. Previously, the Biden administration’s Inflation Reduction Act (IRA) has provided substantial incentives for businesses that reduce their emission, without punishment for companies that fail to do so. The new rule aims to accelerate the development and adoption of emission-reduction technologies within the oil industry. According to the EPA, fewer facilities will be subject to the charge as they reduce emissions and become eligible for compliance exemptions. The regulator anticipates the new rule to avoid the release of 960,000 tons of methane through 2035, asserting little impact on energy production and prices. Last month, the EPA also introduced a regulation to ban routine flaring of natural gas produced from newly drilled oil wells, together with a Super Emitter Program that will use third-party remote sensing to detect large methane releases or leaks.

Sources:

https://www.reuters.com/sustainability/climate-energy/us-proposes-fee-methane-big-oil-gas-producers-2024-01-12/

https://www.epa.gov/newsreleases/biden-harris-administration-announces-proposed-rule-reduce-wasteful-methane-emissions#:~:text=As%20directed%20by%20Congress%2C%20the,exceed%20the%20statutorily%20specified%20levels

https://www.bloomberg.com/news/articles/2024-01-12/biden-methane-fee-set-to-fight-climate-pollution-boost-prices?srnd=green

https://www.washingtonpost.com/climate-environment/2024/01/12/methane-fee-epa-climate/