On Nov. 12 EPA announced a final rule to reduce methane emissions from the oil and gas sector. Methane emissions are responsible for approximately one-third of global warming, said EPA.
The rule enables EPA to collect a Waste Emissions Charge. This charge applies to methane from certain oil and gas facilities that report emissions of more than 25,000 metric tons of carbon dioxide equivalent per year to the Greenhouse Gas Reporting Program, beginning with methane emissions reported in calendar year 2024.
As directed by Congress, the Waste Emissions Charge is calculated with the input of data reported to EPA under subpart W of the Greenhouse Gas Reporting Program. In May 2024 EPA published a final rule revising subpart W to increase the accuracy of reported methane emissions from the oil and natural gas industry.
The Waste Emissions Charge starts at $900 per metric ton of wasteful emissions in CY 2024, increasing to $1,200 for CY 2025, and $1,500 for CY 2026 and beyond, and only applies to emissions that exceed statutorily specified methane intensity levels.
“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, in a statement. "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.”
EPA estimates that this rule alone will result in cumulative emissions reductions of 1.2 million metric tons of methane (34 million metric tons CO2-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.
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 expects that over time, fewer facilities will face the charge as they reduce their emissions and become eligible for this regulatory compliance exemption.
EPA made changes in response to public comments that will provide owners and operators of oil and natural gas facilities with greater flexibility to achieve emission reductions and thereby avoid the charge. States now have a stronger incentive to submit satisfactory plans for limiting methane from existing oil and gas operations in a timely manner.
Additionally, the Waste Emissions Charge will apply until oil and gas operators achieve full compliance with state plans, helping to incentivize better performance. The final rule also provides additional clarity on exemptions and other provisions of the rule.
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, 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.
For more information visit the Methane Emissions Reduction Program website.