US Targets Oil and Gas Industry With Proposed Methane Fee

A new methane fee that would impose a surcharge on excess emissions has passed its first hurdle. The fee was included in a huge environmental and social policy bill passed by House Democrats on Friday.

Proponents say that the fee will help reduce greenhouse gas emissions, improve human health and bring in revenue that can be put towards climate projects. Critics say that it will raise unduly raise energy prices for consumers and businesses.

Methane is a major contributor to global warming. Although it counts for a small percentage of overall global emissions it is thought to cause one third of the warming from greenhouse gases; it traps about 30 times as much heat as carbon dioxide, according to America’s Environmental Protection Agency (EPA).

The oil and gas industry is the largest industrial source of methane emissions in the United States and contributes about 24% of the total methane emissions globally.

"America is back and leading by example in confronting the climate crisis with bold ambition,” said EPA Administrator Michael S. Regan in a press release about the bill. “With this historic action, EPA is addressing existing sources from the oil and natural gas industry nationwide, in addition to updating rules for new sources, to ensure robust and lasting cuts in pollution across the country.”

The move follows President Biden’s pledge at the recent U.N. climate summit in Glasgow, Scotland, to work with dozens of other nations to reduce global methane emissions by 30% by 2030.

But not everyone is happy about the proposal, which would see a fee of up to $1500 per ton of excess emissions applied to oil and gas facilities. Methane is emitted during normal oil and gas operations, maintenance procedures and system disruptions, according to the Global Methane Initiative.

“This is a tax on American natural gas that makes us less competitive,″ said Frank Macchiarola, senior vice president of the American Petroleum Institute, quoted in the Associated Press. “At a time of rising energy costs, it’s a flawed policy to raise costs on energy producers.″

The proposed fee is included in the House-passed Build Back Better bill and is expected to pass through the Senate in early December.

Interested in learning more? 

If you’re tasked with reducing methane emissions in your operations, join us at the National Summit on Methane Mitigation, taking place at the Norris Conference Centre, Houston on December 6-8, 2022.

Join over 200 of your industry peers to get insight into best practices to identify, measure, monitor and eliminate methane emissions, factor emissions reduction into operational planning and build a culture focused on methane mitigation.

Find out more here.