03.09.21

Whitehouse, Booker, Schatz Unveil Methane Fee to Clamp Down on Potent Driver of Climate Change

Methane emissions are responsible for about 25 percent of global warming

Washington, D.C. – U.S. Senators Sheldon Whitehouse (D-RI), Cory Booker (D-NJ), and Brian Schatz (D-HI) today introduced new legislation to curb the potent methane emissions—especially from the oil and gas sector—that are responsible for about 25 percent of global warming. The Methane Emissions Reduction Act directs the Department of Treasury to assess a fee on methane emissions beginning in 2023. The Senators contend that an accurately assessed fee on the greenhouse gas would virtually end methane emissions from the fossil fuel industry, slowing climate change and dramatically improving air quality in communities located near oil and gas facilities.

“For too long, oil and gas facilities have been allowed to release huge amounts of methane, heating up the planet and polluting the air of nearby communities,” said Senator Whitehouse. “Putting a price on methane pollution that discourages oil and gas companies from continuing their practice of virtually unfettered methane pollution is one of the most effective immediate steps we can take to keep global temperatures from rising more than 1.5 degrees Celsius. We believe our new bill would put a stop to virtually all methane emissions from the industry.”

“Reducing methane emissions must be part of our broader strategy to quickly and comprehensively reduce greenhouse gas emissions and address the existential threat of climate change,” said Senator Booker. “This bill will hold oil and gas companies financially responsible for their methane pollution and make methane emissions from fossil fuel production cost prohibitive, steps that will go a long way in the fight against climate change and to protect air quality in local communities.”

“Methane emissions from the oil and gas industry are accelerating climate change and polluting communities. We need to make polluters pay a price for their contributions to the climate crisis,” said Senator Schatz. “Our bill will ultimately zero out methane emissions from the fossil fuel industry, helping curb a potent source of warming and improving public health.”

Methane is 84 times more potent than carbon dioxide in the first two decades after its release. The oil and gas industry accounts for at least a third of man-made methane emissions. Recent research suggests that methane emissions from oil and natural gas operations are 60 percent higher than previously estimated.

The Methane Emissions Reduction Act directs the Treasury Department, working with the Environmental Protection Agency and National Oceanic and Atmospheric Administration (NOAA), to develop a program to measure methane emissions annually in each oil- and gas-producing basin. The measurements will be based on empirically determined, peer-reviewed data, including a combination of aerial, terrestrial, and satellite measurements for each basin.

The bill would direct Treasury to assess a fee on methane emissions starting in 2023. The fee will be assessed on a basin by basin basis. The fee will cover all companies that produce, gather, process, or transmit oil or natural gas in a given basin. For companies producing oil or natural gas in a basin, the fee will be equal to a company’s natural gas production in the basin, multiplied by the difference between basin’s methane emissions rate (as measured under the program and expressed in percent of natural gas production in the basin) and 0.2 percent, multiplied by the price for the given year. For companies gathering, processing, or transmitting oil or natural gas in a given basin, the fee will be equal to the total quantity of natural gas gathered, processed, or transmitted by a company in the basin, multiplied by the difference between basin’s methane emissions rate (as measured under the program and expressed in percent of natural gas production in the basin) and 0.1 percent, multiplied by the price for the given year.

The price assessed on methane pollution is based on the Obama administration’s Interagency Working Group’s social cost of carbon, and equals $1800 per ton in 2023. It would increase at two percent above inflation in subsequent years. Funds raised from the fee would be directed to the National Coastal Resilience Fund, a program administered by the National Fish and Wildlife Foundation and NOAA to prepare communities for climate change.

Recognizing that some companies have done more to control methane emissions and wanting to incentivize such behavior, the bill provides an “opt out” alternative fee calculation method for companies wishing to demonstrate that their emissions intensity is less than the average for basins in which they operate. Under the alternative fee calculation, the company may substitute its basin emissions rates for the average rates in the above formulas. In order to opt out, a company must: develop a protocol to empirically measure its methane emissions that must be peer-reviewed by independent scientists and validated by the Treasury; regularly collect emissions data and make them available to the public; install state of the art methane leak detection and control technologies on all facilities; and eliminate venting and flaring.

The legislation is backed by the Environmental Defense Fund, the Union of Concerned Scientists, the National Wildlife Federation, and the Clean Air Task Force.

“We applaud Senator Whitehouse’s proposal to assess a fee on methane emissions from oil and gas operations,” said Elizabeth Gore, Senior Vice President, Political Affairs at the Environmental Defense Fund. “This bill shows leadership and adds to growing calls for significant reductions in this potent greenhouse gas from oil and gas industry operations, a top source of this pollution. Cutting methane is critical to putting the United States on the path to meeting our economy-wide climate goals and creating a safer future for our families.”

“Methane is one of the most potent drivers of the climate crisis, and Senator Whitehouse’s bill will help reduce oil and gas methane emissions through rigorous tracking, public disclosure, and pollution fees,” said Shannon Heyck-Williams, Director of Climate and Energy Policy at the National Wildlife Federation. “These common-sense reforms will buy us some time to reduce all greenhouse gas emissions throughout the economy.

This proposal deserves close consideration in Congress.” Text of the Methane Emissions Reduction Act is available here.