In a groundbreaking initiative, the Biden administration has introduced the first federal fee targeting excessive methane emissions from oil and natural gas companies. The rule, which was announced by the EPA on November 12, 2024, requires that businesses that release methane above certain limits pay fees that will increase from $900 per ton in 2024 to $1,500 per ton in 2026.
Methane, a potent greenhouse gas, significantly contributes to climate change, with the oil and natural gas sector being the largest industrial source of methane emissions in the United States. The EPA’s new regulation aims to incentivize the industry to adopt best practices for reducing these emissions, thereby mitigating their environmental impact.
EPA Administrator Michael Regan emphasized that the fee, officially termed the Waste Emissions Charge, is designed to encourage early deployment of available technologies to reduce methane emissions and other harmful air pollutants. He stated that this initiative is part of a broader strategy under President Biden’s methane plan to improve efficiency in the oil and gas sector, support American jobs, protect clean air, and reinforce U.S. leadership on the global stage.
The EPA estimates that this rule will result in a reduction of over 36 million tons of methane emissions through 2035, equivalent to removing nearly 8 million gas-powered cars from the road for a year. The anticipated climate benefits could total as much as $2 billion, according to EPA calculations.
However, the rule has faced opposition from industry groups. The American Petroleum Institute (API), representing the oil and natural gas sector, argues that the fee hampers the industry’s ability to meet growing energy demands while maintaining profitability. API has expressed concerns about the financial impact of the rule and signaled its intention to work with Congress to revisit the regulations.
Environmental advocates, on the other hand, have praised the methane fee, asserting that oil and gas companies must take responsibility for their environmental impact. They argue that companies have often found it cheaper to waste methane through flaring or leaks rather than investing in upgrades to prevent emissions. Maggie Coulter, a lawyer with an environmental group, stated, “This fee is a step in the right direction to hold polluters accountable. Even if future administrations attempt to roll back these measures, it’s vital to establish the principle that methane pollution has a cost.”
This development comes as the Biden administration works to cement its environmental legacy amid an anticipated transition of power. With President-elect Donald Trump expected to assume office in January, there is speculation about potential rollbacks of environmental regulations, including the newly introduced methane fee. The administration’s swift action reflects a commitment to addressing climate change and reducing greenhouse gas emissions, even in the face of potential policy reversals.
As the political landscape shifts, the future of such environmental regulations remains uncertain. Nevertheless, the introduction of the methane fee marks a significant step in the United States’ efforts to combat climate change and holds the oil and gas industry accountable for its environmental impact.
