The Inflation Reduction Act is a game-changer on methane. Here’s why.

By Edwin LaMair and Grace Smith

The US Congress recently passed the Inflation Reduction Act of 2022, which takes bold action to address the climate crisis. Multiple independent analyses show the bill could reduce U.S. greenhouse gas emissions 40% below 2005 levels by 2030, providing important support for President Biden’s goal of halving emissions by 2030.

Last week, the EPA requested public input on a key provision of the IRA — the Methane Emissions Reduction Program, MERP, — which works hand-in-hand with forthcoming EPA rules to cut methane from oil and gas operations through a fee on wasteful emissions.

As enforceable pollution rules from EPA ensure broad, equitable protections for all communities, MERP’s waste charge will help discourage excessive emissions from a large proportion of polluting facilities across the supply chain.

The program was also allocated $1.55 billion by Congress to support methane pollution monitoring and innovation, improve the accuracy of emissions reporting and drive down the costs of reducing pollution, in addition to providing support for cutting other harmful air pollutants from oil and gas operations that endanger frontline communities. EDF and a coalition of groups recently submitted comments, available here and here,  with recommendations for how EPA should use MERP’s funds and implement the waste charge.

Here are just some of the ways the program bolsters EPA’s ability to swiftly tackle methane pollution.

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Putting a price on methane waste

A primary pillar of MERP is its charge on methane emissions from US oil and gas facilities across much of the supply chain. The charge starts in 2024 at $900/ton of methane, increasing over time to $1500 by 2026. The charge is only assessed on emissions exceeding thresholds aligned with industry-set targets, and it applies to a large proportion of polluting facilities. Companies can reduce emissions to avoid the charge and there is also an exemption for compliance with strong EPA methane regulations.

The charge acts as a strong incentive — many operators will choose to reduce their emissions by minimizing leaks and replacing equipment rather than pay for excessive emissions.

It also contains an exemption for: “an applicable facility that is subject to and in compliance with methane emissions requirements pursuant to subsections (b) and (d) of section 111 upon a determination by [EPA] that (i) methane emissions standards and plans pursuant to subsections (b) and (d) of section 111 have been approved and are in effect in all States with respect to the applicable facilities; and (ii) compliance with the requirements described in clause (i) will result in equivalent or greater emissions reductions as would be achieved by the [November 2021 proposed rule] . . . , if such rule had been finalized and implemented.”

This exemption will facilitate swift finalization, implementation and adoption of EPA standards.

Updating emissions tracking to reflect real-world pollution

MERP also directs EPA to update the Greenhouse Gas Reporting Program, GHGRP, to ensure reported emissions and the waste charge are based on real-world empirical data and accurately reflect total methane emissions from oil and gas facilities. It further provides EPA the funds to carry out the measurements necessary to implement this requirement.

Updated reporting standards are critical to better understand methane emissions and inform policy decisions, as well as accurately assess the waste charge. Numerous field studies coordinated by EDF in collaboration with various research teams have found that observed emissions are significantly higher than current EPA estimates. This discrepancy results from EPA’s use of bottom-up estimation methods that fail to account for abnormal emission events, which account for a significant proportion of emissions. Updating the GHGRP using empirical data and verifying the accuracy of that data through real-world observations will improve our understanding of emissions and better inform efforts to reduce pollution. EDF also submitted recommendations for these updates using site-level and top-down measurement data.

Protecting health in vulnerable communities

EPA can use MERP funds to mitigate the health effects of methane and associated pollution in low-income and disadvantaged communities.

Methane from oil and gas equipment is emitted alongside hazardous air pollution, including human carcinogens and volatile organic compounds that contribute to smog which can lead to asthma, heart attacks and early death, to varying degrees. These effects are felt most severely by populations like children, the elderly, low-income people and communities of color who are often more vulnerable or face greater exposure to pollution.

MERP funds should be used to address the disproportionate impacts harming disadvantaged communities and support community and fence line monitoring.

Expanding methane monitoring and supporting innovation

Under MERP, EPA is permitted to give local governments, organizations and individuals grants to monitor methane emissions. Monitoring is critical to understanding methane emissions and developing solutions. These grants could be used to deploy advanced monitoring technologies that can quickly scan broad areas for the largest pollution sources, support compliance monitoring to ensure oil and gas operators are meeting their obligations or create community monitoring grant programs that gathers data from communities directly impacted by oil and gas operations nearby.

MERP will also encourage the early adoption of zero-emitting technologies, like pneumatic controllers. EPA has proposed a zero-emitting pneumatic controller requirement which, if finalized, could decrease methane by about 20 million tons by 2035, the climate equivalent of taking over 300 million cars off of the road for a year. MERP’s structure incentivizes early adoption of this requirement and standards for other technologies that could reduce pollution from high-emitting sources.

Providing solutions for marginal wells and orphan wells

MERP allocates $700 million specifically for “marginal conventional wells,” provides additional funding for plugging wells that complements and reinforces EPA’s ongoing regulatory efforts to reduce emissions from these wells and ensure proper closure.

Around three quarters of wells across the country are marginal, generating about 5% of usable product, but are large and disproportionate emitters of methane. These wells cumulatively account for roughly half of oil and gas production emissions in the US.

Marginal wells often turn into “orphaned” wells, i.e. wells that no longer have an clear owner, but many still emit and leak methane into the atmosphere and nearby communities.  Around the U.S. there are thousands of orphan wells. Properly plugging wells at the end of their productive life can prevent ongoing emissions. The incentives to plug wells and funds for marginal well methane mitigation create a huge incentive for addressing both pollution culprits.

Taken together, these provisions will play a critical role in driving down methane pollution alongside EPA regulations, while improving our understanding of the emissions problem and empowering communities to address it.

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