TLDR: The oil and gas industry’s knee jerk reaction to a tax on methane is another indication that their methane pollution is worse than are leading us to believe.
Earlier this month members of the House Energy and Commerce Committee added a methane fee provision to the reconciliation bill moving through congress. The fee would require the oil and gas industry to pay for methane pollution (which is 86 times more potent than carbon dioxide) that they put into the atmosphere.
Major oil companies and their trade groups have begun a full court press to stop the bill…and, this, despite claiming support for a carbon tax, which is a fee on another climate pollutant. In doing so they have implicitly admitted that their methane emissions are much higher than they have reported.
According to CitiGroup a methane fee based on the oil and gas industry’s self reported data would amount to only 1% of its projected earnings for 2023. Just a penny on every dollar.
But CitiGroup also found that if the fee is based on actual measurements of methane emissions — which are much higher than what companies self-report –it would cost 8% of earnings.
So, why is the industry worried?
If the oil and gas industry is telling the truth, they have nothing to worry about. So why are they worried?
Methane emissions data that oil and gas companies self-report is the source of the EPA’s Greenhouse Gas Inventory. But data from satellite imagery, aircraft flyovers, and optical gas imaging published by peer reviewed scientists has shown that the industry drastically underreports its methane pollution.
In 2019 it’s estimated that methane pollution levels from oil and gas were twice as high as what operators collectively reported. If the higher numbers are right, then not only would companies have to pay more in methane fees, but the Biden Administration and all the member countries of the Global Methane Pledge have a lot more work to do to tackle methane.
Our field work has revealed that the industry does not have a grasp of its own methane pollution and relies mostly on estimates based on manufacturers’ pollution rate equations to calculate their emissions, rather on direct monitoring or detailed in-person analysis. In fact, the industry has fought tooth and nail to keep common sense measures, like monthly equipment inspections, out of any proposed federal safeguards.
No Turning Back Now
All of this highlights that oil and gas methane pollution is an issue we must address immediately to maintain hope in keeping temperatures below 1.5 degrees celsius. One of the ways (but not the only way) we can do this is by instituting a methane fee through congress.
But the methane fee cannot act as a replacement for common sense methane rules or other climate action.
The EPA is currently finishing rules to cut methane emissions from the oil and gas industry through the Clean Air Act. If they use the full extent of this powerful law we will see a 65% reduction in methane from the sector by 2025. As impressive as that might seem, it is still not enough. Avoiding the worst impacts of the climate crisis will require declaring a national climate emergency, stopping fossil fuel exports and beginning a managed decline of fossil fuel infrastructure that centers industry workers in the transition.
The methane fee provides an incentive for the federal government to discover the truth about oil and gas methane pollution and a way to hold accountable those responsible for underestimates. With the oil and gas industry finally on the cusp of being held financially accountable for the climate costs of its methane pollution, it finally comes clean: its opposition to the methane fee implicitly acknowledges its methane pollution is much higher than it reports.