In attempts to control air pollution from the Oil and Natural Gas Operations, the Environmental Protection Agency (EPA) recently revised the November 2021 proposal on reducing emissions of methane and other harmful air pollution from both new and existing oil and gas operations. The most important thing to drive home is that the tax will be based on emissions for this year. How the methane fee works is bulleted below.

Effective Date – a CH4 fee will be imposed and collected for emissions reported per EPA’s Greenhouse Gas Reporting Program (GHGRP) for calendar 2024 methane emissions.

Applicability – the fee will apply to operators who reported ≥ 25,000 mtCO2e in 2024.

Cost – For calendar year 2024, a fee of $900 per mtCH4 will be assessed. The fee increases to $1,200 in 2025 and increases again to $1,500 in 2026.

Fee Scope – The fee will be assessed for each mtCH4 that exceeds 0.2% of the natural gas the operator sent to sales.

Exemption – the IRA has a fee exemption for operators in compliance with New Source Performance Standard (NSPS) OOOOb and Emission Guidelines (EG) OOOOc.

** Exemption Caveat – The exemption will only be available if final EPA regulations addressing methane emissions:

  •  are in effect in all states with applicable facilities; and
  • would result in equivalent or greater emissions reductions than EPA’s November 2021 NSPS OOOOb and EG OOOOc proposals.

Click here to find the EPA’s Oil and Natural Gas Final Rule Table of Covered Sources.