Overturning the Waste Emissions Charge Lifts a Monkey Off Producers’ Backs
An all-too-common theme of the Biden administration’s energy policy was punishing energy producers for emissions that poorly thought-out regulations were responsible for causing. This trend certainly applied to Biden’s methane rules, the most recent of which implemented a Waste Emissions Charge (WEC) that taxes oil and gas producers for their reported methane emissions by an increasing amount each year — a policy based on Inflation Reduction Act requirements.
The EPA’s methane fee is an unnecessary burden on energy production. Energy producers already have a strong financial incentive to reduce methane leaks, as natural gas is a valuable resource. However, the Biden administration made flaring more common by delaying approvals of pipelines and processing facilities, especially near key production hubs. Imposing an additional EPA tax only increases compliance costs. In the end, it’s consumers who bear the brunt, as these higher costs are passed down in the form of increased energy bills. The real aim of this regulation appears to be raising the cost of reliable energy to promote alternative energy sources aligned with specific ideologies. These costs were set to get worse over time: the WEC is slated to begin taxing producers at $900 per metric ton of reported methane emissions in 2024, with that number increasing to $1,200 in 2025 and $1,500 for 2026 and later.
The previous administration’s methane tax was yet another effort to undermine an industry they opposed, while promoting an ideology that the American people have rejected. The Biden administration finalized this tax in November, once the political risks of imposing such an expensive policy on Americans had subsided. Luckily, last week’s joint resolutions from the House and Senate on the WEC used the Congressional Review Act to overturn the ruling from Biden’s Environmental Protection Agency (EPA). It is encouraging to see that Republican leaders are listening to the American people and have prioritized repealing this tax in the new Congress.
Natural gas flaring happens when it is uneconomical for producers to transport natural gas away from drill sites, forcing them to burn the gas so that it does not get in the way of oil extraction. Therefore, an administration that wants to reduce methane emissions from flaring without harming energy production should make it easier to transport natural gas via pipelines. The Biden administration actively undermined these goals by implementing regulatory hurdles to pipeline construction and pausing liquified natural gas exports, making it harder for producers to get value for the natural gas they drilled.
While the U.S. has led the way in reducing methane emissions, this success has come from industry, not government. The EPA’s rule neglects the fact that total methane emissions in the U.S. have been decreasing for over 30 years, resulting from improvements in leakage detection technologies and reductions in natural gas flaring. According to a study from Texans for Natural Gas, the methane intensity — the amount of methane emitted for every barrel of oil equivalent of oil and gas produced — in the Permian basin fell more than 76% while production increased over 345% from 2011-2021. At the same time, flaring across the U.S. was lower in 2021 than 2012 and, from 2019-2021, flared volumes decreased from 17,294 million meters cubed to 8,764, which coincided with the U.S.’s sharpest decrease in methane emissions.
U.S. Methane Emissions, 1990-2022
By voting to repeal the WEC, the House took an important step to remove a barrier placed on energy production by the Biden administration.
