Biden admin issues new natural gas tax in latest fossil fuel crackdown

The Biden administration unveiled a new regulatory proposal Friday that would introduce a new tax on the fossil fuel industry, punishing producers that exceed a certain level of methane emissions.

The Environmental Protection Agency (EPA), which spearheaded the proposal, said it will help “tackle wasteful methane emissions” from the oil and gas sector, encouraging facilities with the highest emissions levels to meet or exceed higher levels of performance. The proposed rules would create the so-called Waste Emissions Charge, which begins at $900 per metric ton of wasteful emissions in 2024, and increases to $1,200 for 2025 and $1,500 for 2026 and beyond.

“Under President Biden’s leadership, EPA is delivering on a comprehensive strategy to reduce wasteful methane emissions that endanger communities and fuel the climate crisis,” EPA Administrator Michael Regan said in a statement. “Today’s proposal, when finalized, will support a complementary set of technology standards and historic resources from the Inflation Reduction Act, to incentivize industry innovation and prompt action.”

“We are laser-focused on working collectively with companies, states and communities to ensure that America leads in deploying technologies and innovations that aid in the development of a clean energy economy,” he continued.

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The announcement was immediately applauded by green groups and Democratic congressional leaders, including Senate Environment and Public Works Committee Chairman Tom Carper, D-Del., who said the proposal would “slow climate change and protect our one and only planet.”

Fred Krupp, the president of the Environmental Defense Fund, added that implementing a methane fee was a “common sense” move to cut emissions across the economy.

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For years, environmentalists and Democrats have called for stricter regulations targeting methane, which activists refer to as a “super pollutant” and which is far more potent than carbon dioxide. In its announcement Friday, the EPA added that reducing methane emissions was among the most important actions the U.S. could take to “slow the rate of rapidly rising global temperatures.”

However, EPA’s proposal was met with disapproval from the fossil fuel industry, which characterized it as a “punitive tax increase.”

“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,” American Petroleum Institute senior vice president of policy, economics and regulatory affairs Dustin Meyer said Friday.

“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,” Meyer added. “We look forward to working with Congress to repeal the IRA’s misguided new tax on American energy.”

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EPA’s actions come a month after it unveiled separate environmental regulations targeting methane emissions during the recent United Nations climate summit in Dubai.

Those regulations include rigorous new standards that force the energy industry to slash methane emissions, mainly by incorporating advanced technology like pollution-control equipment and aerial screening, sensor networks and satellites. It further phases in a requirement to eliminate routine flaring of natural gas, the release of gas produced during oil drilling operations that lack capture technology.

EPA said its methane fee unveiled Friday was designed to work in tandem with the regulations finalized last month.

“The Waste Emissions Charge will help encourage the oil and gas industry to stay on target to lower emissions,” EPA said in its announcement. “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,” it continued.