Overview

• The Biden administration has proposed a new regulation that would impose fines on oil and gas companies for methane emissions, starting this year.
• The policy would require companies to pay a penalty of $900 per every ton of methane emitted beyond limits established by the government, with the cost for each ton above the government’s thresholds increasing to $1,200 in 2025 and jumping to $1,500 in 2026 and beyond.
• The proposal would become the first direct federal tax on emissions in the U.S. if it is finalized and implemented as planned.
• Congress approved the policy in the Inflation Reduction Act, President Joe Biden’s signature climate bill, which also contains $1 billion in grants and subsidies intended to improve methane leak detection.
• Energy producers have criticized the proposal for adding complexity to the regulatory environment and potentially driving up energy costs for consumers.