On November 12, 2024, the Environmental Protection Agency (EPA) finalized the rule for calculating the Waste Emission Charge (WEC) fee in Section 136 of the Clean Air Act. This is the long-awaited finalization of the first methane fee imposed on the oil and gas industry that was introduced on August 7, 2022, when the U.S. Senate approved the Inflation Reduction Act (IRA).

Which oil and gas industry segments does the WEC apply to?

The WEC is a fee on methane emissions from oil and gas facilities that exceed a certain threshold. The WEC applies to nine oil and gas industry segments that report greenhouse gas emissions to the EPA under the GHGRP that have a methane intensity over the identified threshold:

• Offshore petroleum and natural gas production

• Onshore natural gas gathering and boosting

• Onshore petroleum and natural gas production

• Onshore natural gas processing

• Onshore natural gas transmission compression

• Onshore natural gas transmission pipeline

• Underground natural gas storage

• Liquefied natural gas (LNG) storage

• LNG import and export equipment

How much is the Waste Emission Charge (WEC) fee?

The first payment is due on March 31, 2025, and applies to emissions from 2024. These companies must pay a $900 per metric ton methane fee for methane emissions in excess of the intensity identified in CAA section 136(f)(1) through (3) and a facility’s natural gas throughput (or oil throughput in certain circumstances). Starting in 2025, the fee will increase to $1,200 per metric ton, and for 2026 and beyond, the fee will increase to $1500 per metric ton.

What are the primary sources of methane emissions?

Methane is a greenhouse gas that is emitted from naturally occurring sources such as wetlands as well as anthropogenic (human-caused) sources including landfills, enteric fermentation from agriculture, petroleum, and natural gas and coal industries. According to the Inventory of U.S. Greenhouse Gas Emissions and Sinks 2022 report, when combined, petroleum and natural gas systems are the largest source of methane emissions in the U.S. Because methane is estimated to have an impact on global warming that is 84 times more potent than carbon dioxide in a 20-year timeframe, it is often a target of reduction strategies.

What is the Global Methane Pledge?

At the 2021 United Nations Climate Change Conference (COP26), the Global Methane Pledge (GMP) was launched, which called for further action globally to achieve a worldwide reduction of 30% of methane emissions from all sources by 2030. As of the writing of this article, 158 countries, as well as the European Union, are now participating in the Global Methane Pledge. According to the Intergovernmental Panel on Climate Change (IPCC) climate change assessment report published in April 2022, a 50% reduction in greenhouse gas emissions can be achieved by 2030, largely in part by reducing methane emissions in the oil and gas industry by about 30%.

How have oil and gas methane-specific regulations evolved?

The increased focus on methane emissions from the oil and gas industry started gaining traction almost a decade ago. In 2015, the Obama administration announced its plan to cut methane emissions from the oil and gas sector by 40-45 percent from 2012 levels by 2025. Although methane-specific regulations that followed were scaled back to some degree in the first Trump administration, many petroleum and natural gas companies continued to voluntarily build on the momentum of the Obama administration’s call to reduce methane emissions through participation in programs such as ONE Future, the EPA Methane Challenge Program, and the Natural Gas Sustainability Initiative (NGSI) to name a few.  In the last four years, the Biden administration has introduced and finalized several interrelated regulations to target methane reductions in the oil and gas industry, which include the WEC fee through the IRA, updates to EPA 40 CFR Subpart W to more accurately calculate methane emissions, and updates to monitoring and reduction requirements through NSPS OOOOb and OOOOc.

KERAMIDA closely follows the regulatory updates affecting the oil and gas industry, ensuring our clients stay informed on the latest requirements. For compliance assistance or more information on how we can assist your facility, contact us or call (800) 508-8034 to speak with one of our oil and gas experts today.

Author

Kindal Keen
Senior Sustainability Analyst
Certified Lead GHG Verifier for Oil & Gas
KERAMIDA Inc.

Contact Kindal at kkeen@keramida.com

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