Biden's EPA Unveils Historic Methane Fee to Combat Climate Change

For the first time, oil and natural gas companies will face a federal fee for excessive methane emissions under a new EPA rule from the Biden administration. Following a mandate in the 2022 climate law, this initiative encourages companies to adopt cleaner practices, reducing methane—a powerful greenhouse gas—emitted into the atmosphere.

This rule, set to be finalized early next year, will impose a $900 per ton fee for excess methane in 2024, escalating to $1,500 by 2026. The policy, labeled the Waste Emissions Charge, aligns with an EPA methane rule introduced earlier this year, aimed at cutting the U.S. oil and gas industry's significant contribution to global warming.

While some companies already meet methane-reduction standards, the new rule could still face legal challenges, with industry groups likely to oppose it as a “punitive tax increase.” However, environmental advocates support the fee, asserting that it holds polluting companies accountable and incentivizes innovation. EPA estimates the rule could cut methane emissions by 1.2 million metric tons through 2035, equivalent to removing almost 8 million cars from the road for a year.