In a landmark move to combat climate change, the Biden administration is finalizing an Environmental Protection Agency (EPA) rule that will impose a first-ever federal fee on oil and gas companies for methane emissions exceeding certain thresholds. The new regulation, a key part of President Biden’s ambitious climate agenda, aims to accelerate reductions of methane – a potent greenhouse gas responsible for about one-third of global warming.
Methane: The Climate “Super Pollutant”
While less abundant than carbon dioxide, methane packs a much stronger climate punch, trapping over 80 times more heat in the atmosphere over a 20-year period. The oil and gas sector is the largest industrial emitter of methane in the U.S., making it a critical target for emission cuts. As a White House official explained:
Reducing methane emissions is one of the fastest, most cost-effective ways to slow the rate of global warming. This rule will hold energy companies financially accountable for wasted methane pollution and incentivize them to invest in leak detection and repair.
How the Methane Fee Works
Under the new EPA rule, oil and gas facilities will be charged an escalating fee for each excess ton of methane released starting in 2024. The fee structure is as follows:
- 2024: $900 per excess ton
- 2025: $1,200 per excess ton
- 2026 onwards: $1,500 per excess ton
The goal is to encourage companies to swiftly upgrade equipment and adopt best practices to avoid the fees altogether. Most large operators already meet the EPA’s methane standards, so they likely won’t face penalties. However, smaller firms with older infrastructure may struggle to comply.
Building on Previous Methane Regulations
The methane fee rule builds upon earlier EPA regulations that set strict leak detection and repair requirements for new and existing oil and gas facilities. Those standards, finalized in 2021, reinstated and strengthened Obama-era methane policies rolled back under President Trump.
The fee was mandated by Congress in the Inflation Reduction Act – the most significant climate law in U.S. history. It’s a crucial enforcement mechanism to hold energy firms accountable and ensure timely methane reductions as the industry had long resisted voluntary cuts.
Projected Impacts and Industry Pushback
The EPA projects that the methane fee, combined with the 2021 rules, will slash methane emissions by 1.2 million tons through 2035. That’s equivalent to taking 8 million gasoline cars off the road for a year. Total climate benefits could reach $2 billion.
However, oil and gas trade groups like the American Petroleum Institute have blasted the fee as a “punitive tax” on U.S. energy production. They argue it will raise costs, undermine economic growth, and face certain legal challenges. An API executive warned:
This misguided policy adds insult to injury as our industry struggles with price volatility and supply chain bottlenecks. We’ll work vigorously to overturn this rule and protect American energy leadership.
The EPA is bracing for industry lawsuits seeking to block or delay the rule’s implementation. But officials express confidence that the regulation rests on solid legal authority and is critical to meeting America’s climate commitments.
An Uncertain Road Ahead
As the methane fee rule is finalized, its future hangs in the balance. President-elect Donald Trump has named Lee Zeldin as his pick for EPA administrator. If confirmed, Zeldin is expected to advance Trump’s “energy dominance” agenda and target the methane fee for repeal.
Environmental advocates worry that losing the fee would severely undermine methane reduction progress and make it nearly impossible to meet the U.S. pledge to cut emissions 50% below 2005 levels by 2030. One climate policy expert cautioned:
Without a strong financial incentive, many smaller oil and gas operators will simply keep leaking methane because it’s cheaper than fixing the problem. Voluntary reductions have proven inadequate – we need this fee as an insurance policy.
Supporters are girding for prolonged court battles and an all-out messaging war to preserve a policy they deem essential for the climate fight. The methane fee’s survival could emerge as an early test of how far President Trump can go in unraveling his predecessor’s environmental legacy.
Only time will tell if this landmark regulation endures long enough to fulfill its potential as a potent tool to slow the climate crisis. For now, it stands as a signature achievement of President Biden’s “whole of government” push to confront global warming before the window for action slams shut.
