When Joe Biden was elected president in 2020, he made it clear that he intended to become the first president in American history to successfully take on climate change — a goal that necessarily included targeting methane emissions. In 2022, he signed the Inflation Reduction Act, or IRA — legislation that offered hundreds of billions of dollars in incentives, loans, and grants to households, utilities, and industries to cut their greenhouse gas emissions.
The IRA also amended the Clean Air Act to include a provision that directed the Environmental Protection Agency to establish a methane fee for major producers of oil and gas — essentially, taxing fossil fuel companies for every ton of the greenhouse gas they emitted above a certain threshold. The legislation included subsidies to help producers who emitted methane over the legal limit to install gas-trapping technology to reduce their emissions.
The rule the EPA finalized in November last year, technically called the Waste Emissions Charge, would have applied to facilities that produce volumes of methane that exceed the equivalent of 25,000 tons of carbon dioxide. The fee started at $900 per ton of methane in 2024 and would have risen to $1,200 per ton in 2025 and $1,600 in 2026 and every year beyond that. Most big oil and gas companies already meet the standards laid out in Biden’s fee, which means they wouldn’t have had to pay anything. The EPA was supposed to start tallying up fees this year based on 2024 emissions data, but Republicans repealed it before the agency could start collecting penalties.
The fee, had it taken effect, would have been the first-ever federal tax directly imposed on a greenhouse gas. It would have applied to roughly a third of the methane emissions that come from oil and gas infrastructure in the U.S. and diverted 1.2 metric tons of methane through 2035 — the equivalent of taking nearly 8 million gas-powered cars offline for a year.
Shell, BP, and other oil majors supported the initiative. But other parts of the oil and gas industry, and Republicans in Congress, opposed it.
“No one wants to do business when the federal government creates regulations that will put them out of business, which is what this natural gas tax is doing,” said Republican August Pfluger of San Angelo, Texas, the Congressman who wrote the measure that Trump signed on Friday. Pfluger’s district overlaps with the Permian Basin, the highest producing oil field in the U.S. “In reality this rule has only stifled American energy production, discouraged investment, and increased energy prices across America,” he said.
Pfluger’s pessimistic view of the health of America’s oil and gas industry is at odds with what official reports say. America’s fossil fuel producers are on a winning streak by every measure. The U.S. is the largest exporter of natural gas in the world, and crude oil and natural gas production hit record highs in December. The Texas oil and gas industry broke new production records on Monday.
“It’s hard to imagine how a country that’s breaking records for production is being somehow constrained,” said Jon Goldstein, associate vice president of the Environmental Defense Fund’s energy transition program. “I don’t think that argument really holds water.”
However, the tax tackled only a sliver of U.S. methane emissions. The American agricultural and waste sectors produced almost twice as much methane as fossil fuel production between 2010 and 2019. But clamping down on emissions from those sectors is challenging. Methane emissions from agriculture come from myriad decentralized sources, like cows and manure storage facilities, making them difficult to regulate. And the amount of methane agriculture produces depends in large part on consumer eating habits, which are hard for the government to control.
Despite its limited impact, the methane fee was a step in the right direction, experts said. “There’s an order of operations in which we need to implement climate solutions,” said Daniel Jasper, the policy director for the climate solutions nonprofit Project Drawdown. “Methane is something we call an emergency brake, because we’ve got to do it now.”
The fee is one of seven climate and environment policies Republicans in Congress are targeting using the Congressional Review Act — a law that gives lawmakers the authority to reverse recently-passed regulations with a simple majority vote. But Republicans only repealed the EPA rule establishing the methane fee — not the IRA provision permitting the application of such a fee in the first place. If that remains intact, a future presidential administration could pick up where Biden left off. However, Republicans in Congress have signaled that they intend to repeal as much of the IRA as possible in the coming months, including the portions that empower the EPA to crack down on greenhouse gas emissions.
