The U.S. Environmental Protection Agency (EPA) on Tuesday announced a final rule to reduce 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 to better ensure valuable natural gas reaches the market rather than polluting the air.
Congress established the charge on large emitters of methane if their emissions exceed specific performance levels and directed EPA to collect the charge and implement other features of the program, including providing appropriate exemptions for actions that reduce methane releases.
Today's final rule delivers on this directive and incentivizes companies to take near-term action to conserve valuable energy resources for American consumers and reduce methane emissions – a potent greenhouse gas that is responsible for approximately one-third of the global warming we are experiencing today.
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.
In keeping with the provisions of the Inflation Reduction Act, the Waste Emissions Charge works in concert both with Clean Air Act standards issued in March 2024 to limit methane from new and existing oil and gas operations, and with more than $1 billion in financial and technical assistance that EPA has partnered with The U.S. Department of Energy to provide under the Inflation Reduction Act to support monitoring and mitigation of methane emissions from the oil and gas sector.
Combined, these actions will help position the United States as the most efficient producer of oil and natural gas in the world and ensure that the industry remains competitive in overseas markets that require a minimum level of emissions performance.
In the final rule, 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.