EPA Advances Important IRA Program to Establish Oil and Gas Methane Waste Charge

(Washington, D.C.) Today the U.S. Environmental Protection Agency took another critical step to implement the Methane Emissions Reduction Program, which was passed by Congress last year in the Inflation Reduction Act, with a proposed structure for MERP’s methane waste charge on large sources of oil and gas methane pollution.

“EPA’s proposal for a fee on oil and gas methane pollution implements the clean air protections for Americans that were part of the Inflation Reduction Act,” said Environmental Defense Fund President Fred Krupp. “It’s common sense to hold oil and gas companies accountable for this pollution. Proven solutions to cut oil and gas methane and to avoid the fee are being used by leading companies in states across the country.”

Methane is a potent greenhouse gas that is responsible for about 30% of current global warming. The oil and gas sector is the largest industrial emitter of methane in the U.S. 

“The Methane Emissions Reduction Program’s waste charge creates important incentives for operators to take near-term actions to reduce their methane pollution,” said Environmental Defense Fund attorney Grace Smith. “Today the EPA delivered a fair, practical and effective proposal to implement that program in accordance with Congress’ directives and in complement with EPA’s recently-finalized methane standards.” 

MERP’s waste charge applies to large polluting facilities in the oil and gas sector with excessive methane pollution. By reducing their emissions in line with industry’s own targets, companies can avoid paying the charge. Those that choose to continue to pollute excessively will have to pay a fee for each ton of methane they release. 

MERP also includes funding for states, tribes, local communities, operators and other stakeholders to reduce methane pollution from the oil and gas industry. Last month, EPA announced an initial commitment of $350 million to 14 states to mitigate and monitor emissions from end-of-life wells. 

In December, EPA finalized new protections that will significantly reduce methane emissions from the oil and gas sector. MERP was designed by Congress to complement and bolster those standards by reinforcing EPA’s authority, providing financial and technical assistance, and incentivizing timely implementation and compliance. The proposal announced today provides details for how EPA will calculate the charge and determine when certain exemptions apply.