By Grace Smith
This past Friday the Environmental Protection Agency (EPA) and Department of Energy (DOE) announced in a Notice of Intent (NOI) that $1 billion in funding from Congress’s Methane Emissions Reduction Program (MERP) will soon become available.
Passed as part of the 2022 Inflation Reduction Act, MERP aims to significantly reduce methane and associated air pollution from the oil and gas sector in two key ways: first by providing $1.55 billion for projects led by agencies, tribes, states, communities, and industry to monitor and reduce methane emissions and second by imposing a fee on excessive methane emissions. EPA issued a proposed rule for implementing the methane fee earlier this month.
The announcement last week comes after the release of $350 million in funding in an earlier round for states to reduce emissions at marginal conventional wells, which are low-producing but responsible for half of wellsite emissions nationwide. Eighteen states including Texas, Louisiana, Colorado, and New Mexico, took part in that program and received funding based on their proportion of marginal conventional wells.
In line with the Biden administration’s Justice40 Initiative, the agencies intend for 40 percent of the funding’s benefits to accrue to disadvantaged communities through initiatives like tracking and reporting of air pollution impacts, public and community engagement, consent-based siting, high-quality job creation, and workforce development. Project applicants are encouraged to consider proactive community and labor engagement.
The upcoming funding will be divided into three areas:
Reducing emissions at existing wells and infrastructure
The first area will focus on directly reducing emissions at older, existing wells, which are a much larger source of methane emissions than newly drilled wells. Funds will be targeted to further three objectives: (1) reducing methane emissions at marginal conventional wells by identifying emitting wells and installing retrofits; (2) reducing methane emissions at other oil and gas facilities in the upstream and midstream segments that are owned or operated by small operators; and (3) reducing methane emissions from oil and gas wells and associated infrastructure on Tribal lands. For each objective, EPA and DOE plan to provide funds to a single lead entity to disperse to relevant oil and gas operators. Eligible lead entities include non-governmental research institutions, universities, and Tribal organizations.
Accelerating deployment of methane mitigation technologies
Under the second area, funds will be provided to support entities to test, demonstrate, and commercialize solutions that reduce emissions from methane emitting equipment and processes associated with oil and gas systems, including gas-fueled compressors and engines and flare stacks. Since the methane mitigation industry is generally well-established and thriving, one focus of the program will be on reducing emissions from difficult-to-mitigate emissions sources and supporting technologies in the earlier stages of development, including technologies to reduce pollution from non-routine flaring. Recipients of these funds will include teams of businesses that intend to commercialize technologies and industry partners who would adopt these technologies.
Advancing the collection of empirical data through methane monitoring
The final area would support the collection of empirical data to accurately characterize and quantify the total methane emissions from oil and natural gas operations in each of five U.S. regions. EPA and DOE envision granting funds to a collaborative partnership for each region comprised of universities, environmental justice organizations, industry, technology developers, tribes, state regulatory agencies, and NGOs. These partnerships would provide consistent, accurate, granular, and transparent multi-scale methane measurement approaches (including on-the-ground measurement, aerial flyovers and satellites) to inform and improve EPA’s greenhouse gas emissions inventories and reporting programs, and to help states and tribes mitigate methane emissions.
EPA and DOE have indicated in the NOI that a Funding Opportunity Announcement (FOA) will be issued in February or March, which will open the application process for stakeholders seeking funds under any one of these areas. The funding opportunities are part of a broader, complimentary effort by the Biden administration and Congress to drive deep reductions of oil and gas methane pollution. EPA finalized updated national methane standards for oil and gas operators in December and recently proposed updates to oil and gas facility reporting requirements and an implementing structure for MERP’s methane fee. The funding announced today will help smaller operators comply with the methane standards, further improve mitigation technologies, help states and tribes speed up compliance with their methane standard implementation plans, and ensure EPA is assessing the methane fee on accurate annual emissions.