The Inflation Reduction Act is the most significant investment the U.S. government has made in fighting climate change, putting more than $369 billion toward projects that will reduce planet-warming emissions.
While much of the bill, signed into law by President Joe Biden on Tuesday, will pay for incentives like tax breaks for renewable energy construction and electric vehicle purchases, it also quietly introduced the country’s first ever fee on a greenhouse gas. Methane emissions, which can contribute more to warming over a much shorter period than carbon dioxide, could be subject to a fee starting in 2024.
Cutting the amount of methane released into the atmosphere is one of the easiest and most effective ways to fight climate change, according to a U.N. report released last year.
While environmentalists say the fee is a step in the right direction, the fight to control release of the gas is just getting started. Crucially, the Environmental Protection Agency is set to release new regulations early next year that will define the threshold at which an oil or gas facility is subject to the emissions fee on methane.
“I think this is huge and transformational progress,” says Dan Grossman, a methane expert at the Environmental Defense Fund. “But we can always do more. It's a pernicious problem.”
Cutting methane is a climate solution
In the United States, carbon dioxide makes up 79 percent of greenhouse gas emissions and methane just 11 percent. But over a 20-year period, methane is 80 times more powerful at warming the Earth than carbon dioxide, since its chemical structure makes it a very effective trapper of heat. Some methane is naturally produced, wafting up from swamps and seeping from volcanoes, but as much as 65 percent of the methane in the atmosphere comes from human activities, according to the EPA.
For the past two years, the National Oceanic and Atmospheric Administration (NOAA) has observed record methane emissions entering the atmosphere. As of 2021, atmospheric methane was 150 percent higher than it was before the Industrial Revolution.
In the U.S., methane is produced by a variety of industries, but the biggest polluters are the oil and gas industry, agriculture—primarily from cows—and landfills, which each emit 32, 27, and 17 percent respectively. But historically, determining exactly how much each source produces has been tricky. Under current EPA regulations, oil and gas companies are required to self report.
“We’ve been using estimates based on engineering specifications and production to guess, as opposed to using direct measurements,” says Grossman.
One study published in 2020 found that the U.S. was underestimating by as much as 40 percent how much methane was released by burning fossil fuels.
But as detection has improved from continuous on-the-ground monitoring, aerial surveillance, and satellite observations, addressing methane emissions has emerged as a tangible solution, and Grossman and others hope new federal regulations will revamp how the U.S. calculates them.
“Just over the past year and a half there’s been all this increased interest in methane, which wasn’t on the radar. We’ve gone from it being neglected to it having an actual fee. I was just amazed,” says Drew Shindell, a climate scientist at Duke University and chair of the UN’s Global Methane Assessment released last year.
Carbon dioxide can linger in the atmosphere anywhere from 300 to 1,000 years, but methane dissipates after about a decade. So while efforts to reduce CO2 emissions will pay off in the long run, reining in methane is a fast fix.
At a global climate conference last November, 100 countries, including the U.S., agreed to cut methane emissions 30 percent by 2030 in a bid to limit warming to 1.5 degrees Celsius. But if the world could cut emissions by 45 percent in that same time frame, 0.3°C of warming could be avoided. Already the Earth has warmed 1.2°C, so even a fraction of a degree makes a difference.
“If we do something about methane,” says Robert Kleinberg, an expert on energy policy at Columbia University, “temperature will increase more slowly than it otherwise would.”
What the new bill does
Environmentalists have long advocated for placing a fee on greenhouse gas emissions, and addressing methane ultimately could save oil and gas companies money, says Shindell. When CO2 is released, it’s a byproduct of burning fossil fuels and no longer valuable to companies. Methane, however, is still in a viable form when it leaks out of oil and gas facilities; if it could be captured it could be used for energy. That means preventing leaks would save companies money.
To address domestic methane emissions, the IRA will impose a $900 fee per metric ton of methane starting in 2024. By 2026, that fee per metric ton increases to $1,500. Notably, the fee will only affect larger oil and gas facilities, leaving out about 60 percent of the industries responsible for methane, Kleinberg estimates.
The fee on methane is one of the only sticks in a bill full of carrots. But there are plenty of incentives to reduce the gas too, and Kleinberg says they are more likely to produce results. For example, $1.5 billion in subsidies is included in the bill to help facilities subject to the fee pay for technological fixes to reduce their emissions.
What still needs to happen?
A report on the methane provision compiled by the Congressional Research Service noted that estimating the greenhouse gas emission reduction from the new climate law’s methane fee will depend on factors ranging from the final EPA regulations on methane to the price of natural gas.
The EPA is set to publish updated methane regulations early next year. These rules will dictate the point at which methane emissions from a single facility are subject to the fee.
“The regulations need to be comprehensive,” says Grossman. “They need to be strong in requiring rigorous leak detection and repair. They need to address the wasteful and polluting practice of routine flaring.”
And while fossil fuel producers are a good place to start, experts say, the regulations in the new law don’t address the cow in the room.
“The companies that deal with oil and gas are well funded and they have the technical expertise to minimize their methane emissions. It’s logical for them to take the lead,” says Kleinberg. But, he adds, “The agriculture, landfill, and waste sectors are just as important.”
Landfills, which produce methane as food waste breaks down, are low-hanging fruit, says Kleinberg, and several technological solutions exist that can be adapted to capture the gas from landfills and use it for fuel.
Yet, of all the sources producing methane in the U.S., raising livestock creates nearly as many emissions as oil and gas. A cow’s digestive system breaks down food through a process called enteric fermentation, resulting in methane-filled burps. With nearly 40 million cows being raised for beef and dairy in the U.S. those expulsions produce nearly a third of the country’s methane emissions every year, according to the EPA.
Despite research investigating how cattle feed sprinkled with seaweed reduces the methane in cow burps, any actions that require changes to the ag sector would be next to impossible to get through the divided Congress. Few politically possible options exist at a scale capable of meaningfully reducing emissions.
“I think agriculture is a really hard one,” says Shindell. “It’s going to be an enormous amount of work to get legislation affecting agriculture.”
For now, the focus will remain on methane fees paid by oil producers and the subsidies they will receive to further reduce their emissions. That’s a huge step in the right direction and a signal to other methane-producing countries that the U.S. is willing to lead by example.
“I think overall it’s tremendous progress,” says Grossman.