The Biden administration recently unveiled its proposal for determining fines on oil and natural gas companies for their methane emissions. This initiative is part of the administration’s ongoing efforts to reduce the release of potent greenhouse gases.
Setting the Fees
The proposed rule aims to impose charges on companies that exceed specified levels of emissions. These fines are intended to incentivize companies to repair leaky equipment and take necessary steps to reduce emissions ahead of new environmental regulations that will be enforced in the coming years.
Fueling Innovation and Prompt Action
EPA Administrator Michael Regan stated in a news release that the proposed rule and accompanying fines will stimulate industry innovation and prompt immediate action. The administration is committed to working collectively with companies, states, and communities to ensure that America leads the way in deploying clean energy technologies and fostering a sustainable future.
Targeting the Source
Oil and natural gas operations are the largest industrial sources of methane in the U.S., making them a primary focus of the administration’s efforts to curb methane leaks. To achieve this, the White House has already issued a final rule banning routine flaring of natural gas from new oil wells, implemented monitoring measures for methane leaks at well sites and compressor stations, and established standards for reducing emissions from high-emitting equipment.
Detecting “Super Emitters”
Additionally, the administration is introducing a program that utilizes third-party remote sensing technology to detect large methane leaks known as “super emitters.” These leaks are responsible for nearly half of all methane emissions from the oil and natural gas sector.
Exemption for Compliant Facilities
Facilities that comply with the aforementioned rules will be exempt from methane fines, subject to meeting certain criteria set by Congress, as stated by the EPA.
This comprehensive approach by the Biden administration underscores its commitment to tackling methane emissions in the oil and gas industry and promoting the development of a cleaner and more sustainable energy economy.
EPA Expects Reduction in Fines for Non-Compliant Industry Facilities
The Environmental Protection Agency (EPA) has announced that it expects a decrease in the number of industry facilities facing fines as more companies adhere to EPA regulations. The agency also stated that the new rule will have minimal impact on oil and gas production.
In June, the administration pledged $1 billion towards the reduction of methane emissions from the sector, with a major portion of the funding allocated for slashing well emissions. This initiative has received positive feedback from environmental groups. Fred Krupp, President of the Environmental Defense Fund, emphasized the importance of holding oil and gas companies accountable for their pollution. He stated that leading companies across various states are already implementing proven solutions to reduce methane emissions and avoid fines.
However, the American Petroleum Institute (API), a trade group representing the oil industry, voiced opposition to the new rule. API argues that the regulatory regime created by the rule is confusing and hampers innovation, impairing the ability to meet growing energy demands. The trade group has called on Congress to repeal the methane fee.
Dustin Meyer, API’s Senior Vice President of Policy, Economics, and Regulatory Affairs, criticized the tax increase, asserting that it undermines America’s energy advantage at a time when stability is crucial in an increasingly volatile world. API highlighted that oil and gas companies are already making efforts to decrease emissions, resulting in a notable 66% decline in average methane emissions intensity from 2011 to 2021.
Reporting by Steve Cronin; Editing by Jeff Barber