The US Environmental Protection Agency has announced a final rule aimed at reducing methane emissions from the oil and gas sector. The rule facilitates implementation of Congress’s directive in the Inflation Reduction Act to collect a waste emissions charge.
Congress established the charge on large emitters of methane if their emissions exceed specific performance levels and directed the EPA to collect the charge and implement other features of the program, including providing appropriate exemptions for actions that reduce methane releases. The EPA says the rule is designed as an incentive for companies to take near-term action to ensure natural gas reached the market instead of being released into the atmosphere.
“EPA has been engaging with industry, states, and communities to reduce methane emissions so that natural gas ultimately makes it to consumers as usable fuel — instead of as a harmful greenhouse gas,” said EPA Administrator Michael S. Regan. “Along with EPA’s complementary set of technology standards and historic financial and technical resources under the Inflation Reduction Act, today’s action ensures that America continues to lead in deploying technologies and innovations that lower our emissions.”
The EPA estimates that this rule alone will result in cumulative emissions reductions of 1.2 million metric tons of methane (34 million metric tons carbon dioxide equivalent) through 2035 — the equivalent of taking nearly 8 million gas-powered cars off the road for a year — and will have cumulative climate benefits of up to $2 billion.
As directed by Congress, the waste emissions charge applies only to waste emissions from high-emitting oil and gas facilities. The Inflation Reduction Act provides that the waste emissions charge applies to methane from certain oil and gas facilities that report emissions of more than 25,000 mtpa of carbon dioxide equivalent to the Greenhouse Gas Reporting Program, beginning with methane emissions reported in calendar year 2024. Also, as directed by Congress, the waste emissions charge starts at $900 per metric ton of wasteful emissions in 2024, increasing to $1,200 for 2025, and $1,500 for 2026 and beyond, and only applies to emissions that exceed statutorily specified methane intensity levels.
EPA’s final rule details how the charge will be implemented, including the calculation of the charge and how exemptions from the charge will be applied. Facilities in compliance with the recently finalized Clean Air Act standards for oil and gas operations would be exempt from the charge after certain criteria set by Congress are met. The agency said it expects that, over time, fewer facilities will face the charge as they reduce their emissions and become eligible for this regulatory compliance exemption.
In keeping with the provisions of the Inflation Reduction Act, the waste emissions charge will work in concert with Clean Air Act standards issued in March 2024 to limit methane from new and existing oil and gas operations and with over $1 billion in financial and technical assistance that the EPA has partnered with the US Department of Energy to provide under the Inflation Reduction Act to support monitoring and mitigation of methane emissions from the oil and gas sector.
As directed by Congress in the IRA, the waste emissions charge is calculated with the input of data reported to the EPA under subpart W of the Greenhouse Gas Reporting Program. In May 2024, the EPA published a final rule revising subpart W to increase the accuracy of reported methane emissions from the oil and natural gas industry.
In addition to creating the waste emissions charge, the Inflation Reduction Act provides more than $1 billion to help monitor, measure, quantify, and reduce methane emissions from the oil and gas sector. Through the Methane Emissions Reduction Program, the EPA is partnering with DOE to provide financial and technical assistance to promote the adoption of available and innovative technologies — including funds to mitigate emissions at low-producing conventional wells and other oil and gas infrastructure, to support methane monitoring and measurement nationwide, and to provide transparent emissions data to impacted communities.