Natural Gas Operators Face Fee for Methane Emissions

Oil and gas producers may have to pay a fee for excess emissions from their operations under a proposed rule the U.S. Environmental Protection Agency recently announced.

The charge is part of the Biden administration’s comprehensive effort to sharply reduce emissions of methane, a so-called “super pollutant” that is many times more potent than carbon dioxide in trapping heat in the atmosphere. Methane is the chief component in natural gas and the oil and gas sector is the largest industrial source of methane emissions in the U.S.

The announcement of the Waste Emissions Charge comes just a month after the EPA announced a final rule setting new, more stringent standards for methane emissions from oil and gas operations. The fee was required as part of the Inflation Reduction Act, which provided billions to support clean energy transition and reduction of greenhouse gas emissions. Included was funding to dramatically increase the plugging of orphan and abandoned oil and gas wells, which leak methane into the atmosphere and groundwater, and money to scale up clean technologies, including hydrogen.

The excess emissions fee will encourage operators to meet or exceed the performance levels set through the new methane rules, the EPA release said. Operators that report emissions of more than 25,000 metric tons of carbon dioxide equivalent per year to the Greenhouse Gas Reporting Program will pay $900 per additional metric ton in 2024, increasing to $1,200 in 2025 and $1,500 the following year.

“We are laser-focused on working collectively with companies, states, and communities to ensure that America leads in deploying technologies and innovations that aid in the development of a clean energy economy,” EPA Administrator Michael Regan said in a statement.

Natural gas producers operating in the Marcellus shale of Appalachia have been focused on reducing methane emissions for several years, both to help meet climate goals and because it reduces waste of resources. EQT has been particularly focused on eliminating emissions, and many natural gas companies have announced that they are undertaking real-time monitoring at their well sites and certification of high environmental standards in their operations.

The American Petroleum Institute, which represents oil and gas interests, called for the proposal’s repeal, saying it was a “misguided new tax on American energy.” But environmental groups are in support. “It’s common sense to hold oil and as companies accountable for this pollution,” said Fred Krupp, president of the Environmental Defense Fund.