Methane fee is our best chance to reduce a climate super-pollutant

As part of the Build Back Better Act, Democrats are considering a modest fee on methane pollution from the oil and gas industry. This is an important tool for addressing rapidly rising levels of atmospheric methane and a way to make the industry help fund vital climate investments in the Build Back Better Act.

• Methane – the primary component of gas – is responsible for nearly 30% of the impacts of climate change we are experiencing today. The latest Intergovernmental Panel on Climate Change Report emphasizes that swift action to reduce methane emissions is necessary to avoid the worst consequences of a warming planet. With COP26, a pivotal global climate summit, less than a week away, putting a price on methane pollution would show that the United States is serious about acting on climate.

• Methane leaks or is purposefully released at every stage of the process in the oil and gas industry - when it is extracted at wellheads, transported through pipelines and compressor stations, and burned at end use in homes, power plants and petrochemical facilities. This fee would give the oil and gas industry a financial incentive to capture methane rather than dumping it straight into the atmosphere, where it acts as a powerful greenhouse gas - more than 80 times as potent as carbon dioxide over a 20 year period.

• While specific estimates vary, the available research indicates that methane leaks constitute at least 3.0% of total U.S. gas production, which is over twice EPA’s current estimates. This is enough to entirely offset any greenhouse gas reduction benefits that might have resulted from replacing coal with gas as a source of energy.

• It’s not just atmospheric pollution - leaking and vented gas contains other pollutants that harm the health of nearby communities by contributing to unsafe levels of smog and other toxins. Research shows that these impacts fall disproportionately on communities of color.

• The methane fee - $1,500 per ton of methane - is expected to raise up to $20 billion that would help improve methane monitoring, fund environmental restoration, and help communities reduce the health effects of pollution and improve their climate resilience.

• This fee would be charged to the oil and gas industry, which could easily pay it out of the billions of dollars of profit they make annually. If the industry did choose to pass the costs on to customers, the financial impact would be minimal - analysis from Rhodium Group suggests a 2-3% increase in consumer prices, while a Resources For the Future study suggests the end impact to residential customers would be closer to 1%. These cost impacts are miniscule compared to the normal volatility of gas prices, which the Energy Information Agency warns could be 30% higher this winter due to increased exports, climate-driven extreme weather and the financial bust of the shale industry.

• Stopping methane leaks is a win for the industry, since it’s the product that they sell. Up to 65% of the methane leakage problem could be solved with current technology at low cost. The Energy Information Agency even found that the oil and gas industry could eliminate 40% of their methane leaks at no cost. And the industry is getting $35 million in Department of Energy grants to help with technology to monitor the methane problem.