Industry group decries EPA methane proposal

The American Petroleum Institute (API) is urging Congress to repeal a “misguided” fee on methane emissions.

Earlier this month, the Environmental Protection Agency (EPA) issued rules addressing how it will enforce methane emissions in the oil and gas industry. The Inflation Reduction Act (IRA) established a Waste Emissions Charge for 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. 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 the statutorily specified levels.

The Waste Emissions Charge (WEC) for methane applies to petroleum and natural gas facilities that emit more than 25,000 metric tons of CO2 equivalent per year as reported under Subpart W of the Greenhouse Gas Reporting Program, that exceed statutorily specified waste emissions thresholds set by Congress, and that are not otherwise exempt from the charge. The WEC starts at $900 per metric ton for 2024 reported methane emissions, increasing to $1,200 per metric ton for 2025 emissions, and $1,500 per metric ton for emissions years 2026 and later. (Image: EPA)

Dustin Meyer, API Senior Vice President of Policy, Economics and Regulatory Affairs, called the proposed rules a “misstep.”

“As the world looks to U.S. energy producers to provide stability in an increasingly unstable world, this punitive tax increase is a serious misstep that undermines America’s energy advantage,” Meyer said in a news release. “While we support smart federal methane regulation, this proposal creates an incoherent, confusing regulatory regime that will only stifle innovation and undermine our ability to meet rising energy demand. We look forward to working with Congress to repeal the IRA’s misguided new tax on American energy.”

API said it has worked with the administration to craft policies that maximize emissions reduction at the lowest cost to society. The organization said it was concerned that a lack of coordination between policymakers shaping various methane regulations, including the Methane Rule that sets the standards for emissions reductions, the Reporting Rule that will determine what companies may pay under the Methane Fee, and the Methane Fee Rule, could result in regulatory incoherence. For these complex rules to work cohesively, meaningful coordination both within EPA and between federal regulators and the industry throughout the rulemaking process will be critical.

EPA’s proposed rule addresses details regarding 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.

In the meantime, the Waste Emissions Charge will help encourage the oil and gas industry to stay on target to lower emissions. Oil and natural gas operations with methane emissions in excess of the emissions intensity levels established in the Inflation Reduction Act can reduce or eliminate any charge by deploying readily available technologies to reduce harmful and wasteful emissions. This program will help to level the playing field for industry leaders already employing best practices and drive near-term opportunities for more widespread methane reductions while EPA and states work toward full implementation of the Clean Air Act standards.

The U.S. natural gas and oil industry is taking action to reduce methane emissions while continuing to produce affordable, reliable energy, according to the API. Average methane emissions intensity declined by nearly 66% across all seven major producing regions from 2011 to 2021.

Industry-led initiatives like The Environmental Partnership, whose members make up nearly 70% of the U.S. onshore natural gas and oil industry, are helping to accelerate progress on methane emissions reductions by driving collaboration and sharing best practices across the industry.

API’s approximately 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.