The Inflation Reduction Act, the biggest climate bill in US history, marks a turning point in the battle against methane. It imposes a fee of $900 per metric ton of methane emissions starting in 2024, rising to $1,500 by 2026. It’s the first time the US has imposed a fee or tax on any form of greenhouse gas emissions.
The only problem is: The fee won’t apply to most of the country’s methane emissions.
Methane is the sneaky, dangerous cousin of carbon dioxide. Although accounting for only 11% of US greenhouse gas emissions by volume, methane is 25 times more potent than carbon dioxide at warming the planet, and responsible for up to 30% of the observed increase in global temperatures since the pre-industrial era. Methane emissions are not regulated in the US, and are only sporadically measured and reported by the companies that produce them—predominantly those in the fossil fuel and livestock industries.
But the new law covers only the oil and gas sectors, which account for about one-third of emissions. Farting and burping cows, landfills, and other sources can still let loose freely.
How effective is the new methane fee?
The methane fee also applies only to sources that emit more than the equivalent of 25,000 metric tons of CO2 per year. According to an analysis by the Congressional Research Service (CRS), that threshold applies to 2,172 facilities—including wells, pipelines, and storage facilities—that together account for just 43% of the oil and gas sector’s total methane emissions.
Even that number is an over-estimate, because the law allows facilities to get away with a certain percentage of emissions for free, depending on the type of facility it is. For the biggest sources, that discount could shave a third off the total covered emissions, according to CRS.
Moreover, rather than directly measuring emissions, companies are allowed to self-report based on a federally approved estimation method that relies on assumptions about average emissions from certain types of equipment. Depending on how that method is applied, companies can dramatically underreport their emissions. Even in a generous interpretation, the federal method undercounts real methane emissions by up to 60%, according to the Environmental Defense Fund.
But methane remains in the new law’s sights in other ways. The government will make available provides $1.5 billion for research and development into methods to monitor methane emissions and plug leaky infrastructure. Federal regulators are also finalizing a broader set of rules to require oil and gas companies to monitor and reduce their methane emissions (although such regulations are notoriously vulnerable to legal challenges and could be thrown out by a future presidential administration).
Perhaps companies’ strongest incentive is the market itself: With natural gas prices reaching record heights, any methane (the main chemical component of natural gas) lost to the atmosphere through leaks or intentional flaring is money flying away.