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Big Oil to be fined for methane emissions following new climate law

Under a new climate law introduced by the Biden administration, US oil and gas companies will soon have to pay a fee for methane emissions that exceed a certain threshold. Could this be an effective deterrent for repeat offenders?

It’s a poorly kept secret that methane is an ecological scourge on our planet. In-fact, the gas is responsible for a quarter of recorded climate warming linked to greenhouse gas emissions.

Within the US, a nation which trails only to China for its carbon emission toll, methane plays a significant role in the big picture of the region’s dirty footprint.

Methane, after all, is the second-most abundant greenhouse gas after CO2 and is reportedly 80 times as potent in terms of short-term warming – meaning achieving the terms of our immediate climate goals looks increasingly pie-in-the-sky without drastic change.

This lesser talked about ecological foe enters the atmosphere by the metric ton from leaky pipelines, drill sites, and storage facilities. The US witnesses some of this from a distant perch using dedicated satellites set up by the UN, though blind spots still persist.

As well as inadvertent damage, it’s become common practice for energy facilities to burn excess gas at a production site in a process known as flaring, releasing huge volumes of methane, black soot, and nitrous oxide in the process. You’ve seen Mad Max, right?

This problematic disposal method has been ongoing for decades, but the Biden administration’s latest efforts to curb the damage of methane are a cause for cautious optimism.

Last week, it was announced that a new climate law will soon dole out penalty fees to companies burning off vast amounts of methane or failing to stem leaks in their infrastructure.

In cahoots with the Environmental Protection Agency (EPA), fossil fuel firms will reportedly be charged $900 for every ton of methane exceeding government-set levels. This regulation will come into effect this year, with fees rising to $1,200 per ton in 2025, and plateauing at $1,500 in 2026.

With US oil barons generating methane emissions in ungodly amounts, it’s inevitable that penalty charges will quickly rack up to millions of dollars for those refusing to abide.

This legislation arrives on the back of several methane-reduction changes instated by government bodies since 2022.

Last month, the EPA announced it would require companies to detect and fix any gas leaks from pipelines and wells, and congress authorised over $1 billion in grants to help communities improve their monitoring methods for methane.

The obvious negative to be gleaned here, is the need for a grant to begin with implies that the onus will be on energy producers to report their own methane emissions directly. How the government plans to verify this information has yet to be ratified, at least in writing.

Despite these trepidations, the EPA believes these fees will ‘help to level the playing field’ between those fixing their methane leaks, and those pumping out emissions with no regard for the consequences.

History shows that a respectful plea for compliance simply won’t cut it, thus this change of tact – if handled diligently – will be a welcome one. Hit offending energy companies where it really hurts, their pockets.