The Environmental Protection Agency announced on Nov. 12 its final rule to further reduce methane emissions from oil and gas industries as required under the Inflation Reduction Act.
In particular, Congress established a Waste Emissions Charge for high-emitting oil and gas facilities once emissions exceed 25,000 metric tons of carbon dioxide equivalent per year to the Greenhouse Gas Reporting Program. Coupled with the final Clean Air Act standards issued in March, the Waste Emission Charge is a central component of EPA’s efforts to reduce methane emissions.
Beginning this year, the Waste Emissions Charge is $900 per metric ton of wasteful emissions. It will increase to $1,200 for the 2025 calendar year and $1,500 for 2026. The Waste Emissions Charge only applies to emissions that exceed the statutorily specified methane performance levels. Therefore, facilities that comply with these standards will be exempt from the charge once certain criteria are met. The Waste Emissions Charge is calculated using data reported to the EPA under subpart W of the Greenhouse Gas Reporting Program. Notably, in May, the EPA revised subpart W to increase the accuracy of methane emissions reported by the oil and gas industry (see ELM’s methane rule finalization coverage here).
The EPA anticipates the number of facilities that pay the Waste Emissions Charge will decrease over time as more facilities reduce their methane emissions. It also estimates that this final rule will result in a reduction of 1.2 million metric tons of methane through 2035 and have cumulative climate benefits of up to $2 billion.
In response to public comments, the final rule includes measures to ensure that owners and operators of natural gas facilities have greater flexibility to reduce their methane emissions. It also provides stronger incentives for states to submit compliant state plans. However, the rule will not become final until early next year, after it is published in the Federal Register. Therefore, it remains to be seen if and/or how this rule will be impacted by the next administration.
