EPA Proposes Methane Fee for Oil, Gas Facilities to Cut Emissions
The U.S. Environmental Protection Agency (EPA) has proposed a new rule, the Waste Emissions Charge (WEC) for petroleum and natural gas systems, under the Clean Air Act section 136. Announced on January 12, 2024, this rule aims to reduce methane emissions and is set to begin with 2024 emission data.
The WEC applies to facilities emitting more than 25,000 metric tons of CO2 equivalent per year, with methane emissions exceeding specified thresholds. It does not cover natural gas distribution facilities. The EPA anticipates that the fee will be $900 per metric ton of methane above applicable thresholds for emissions in 2024.
Owners and operators must designate one party as the 'WEC Obligated Party', responsible for paying the methane fee, by March 31, 2025. This obligation is similar to the agreement required for reporting emissions under proposed Subpart W. Parties should review their contractual arrangements to determine if the methane fee is already covered or if it falls under provisions allocating industry surcharges. For facilities with multiple owners or operators, contractual issues regarding responsibility should be considered.
The EPA encourages parties to monitor developments surrounding the Proposed Rule and Subpart W, as they will function together when finalized. Parties should also consider the benefits and burdens of becoming the WEC Obligated Party in the context of their broader portfolio of applicable facilities.
The EPA's Proposed Rule, required by the Inflation Reduction Act (IRA), is a significant step towards reducing methane emissions in the petroleum and natural gas sector. With the first fees expected to be imposed based on 2024 emission data, parties involved should prepare for the new requirements and consider their roles and responsibilities.
