EPA Finalizes Waste Emissions Charge for Oil and Gas Sectors
TL/DR –
The US Environmental Protection Agency (EPA) has announced a final rule under the Inflation Reduction Act to reduce methane emissions in the oil and gas sectors. The rule includes a Waste Emissions Charge for facilities emitting more than 25,000 metric tons of carbon dioxide equivalent a year, starting at $900 per metric ton and rising to $1,500 by 2026. The EPA expects the rule to cut methane emissions by 1.2 million metric tons by 2035 and create climate benefits worth up to $2bn.
EPA Announces New Rule to Reduce Methane Emissions
The Environmental Protection Agency (EPA) declared its final rule to lower methane emissions from oil and gas industries on November 12. This action complies with the Inflation Reduction Act’s requirements and comes in response to the growing demand to address climate change.
Introduction of the Waste Emissions Charge
Central to the EPA’s methane reduction efforts is the newly established Waste Emissions Charge. Enforced by Congress, high-emitting oil and gas facilities must pay this charge when emissions surpass 25,000 metric tons of carbon dioxide equivalent per year. The measure is a complement to the final Clean Air Act standards issued earlier this year.
Waste Emissions Charge Structure and Impact on Oil and Gas Industries
From this year, the Waste Emissions Charge has been set at $900 per metric ton of wasteful emissions. It will escalate to $1,200 in 2025, and $1,500 in 2026. The charge is only applicable to emissions that exceed the legally defined methane performance levels. Facilities that maintain these standards will be exempt from the charge, provided they meet corresponding criteria. The EPA bases the emission charge on data reported under subpart W of the Greenhouse Gas Reporting Program. For more details on the revised subpart W, see the ELM’s methane rule finalization coverage.
Anticipated Reduction in Methane Emissions
The EPA expects the number of facilities paying the Waste Emissions Charge to decrease as methane emissions are reduced. The agency forecasts that this final rule will lower methane emissions by 1.2 million metric tons through 2035, resulting in potential climate benefits of up to $2 billion.
Response to Public Comments and Future of the Rule
The final rule was shaped in response to public comments, offering owners and operators of natural gas facilities more flexibility to reduce methane emissions. It also strengthens incentives for states to submit compliant state plans. The rule will be finalized early next year, following its publication in the Federal Register. Its impact under the next administration remains uncertain.
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