The Biden administration’s Environmental Protection Agency (EPA) has announced the first-ever federal methane fee, targeting oil and gas companies that emit methane above specific thresholds. The regulation, unveiled at COP29 in Azerbaijan, aligns with the 2022 climate law's directive to curb methane emissions.
In-coming President Donald Trump has announced plans to unwind as many regulations as possible to unleash oil and natural gas production in America.
In 2024, excess methane emissions could incur a fee of $900 per ton, escalating to $1,200 in 2025 and $1,500 in 2026. The EPA projects that the rule will result in penalties of $2 billion. EPA Administrator Michael Regan emphasized that the role of this methane rule is to mitigate the oil and gas industry’s contribution to global warming.
Industry groups are expected to challenge the regulation, particularly regarding retroactive fees. The rule will not be finalized until it is published in the Federal Register early next year.
The rule, proposed a year ago and mandated by the Inflation Reduction Act, will be more difficult for the second Trump administration to dismantle.
The announcement comes amidst a political transition in the U.S., as President-elect Donald Trump selected former Congressman Lee Zeldin to lead the EPA. Zeldin is anticipated to curb several environmental regulations enacted during Biden’s term, including the methane fee, as Trump seeks to enhance U.S. energy independence.
As Governor Newsom vows to fight against every policy effort coming out of the Trump White House, perhaps this time around, California’s independent producers can find some relief in a more aggressive federal government.