Biden Admin Unveils ‘Natural Gas Tax’ Proposal

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The Biden administration proposed a new regulation Friday that would impose fines on oil and gas companies for methane emissions, the Environmental Protection Agency (EPA) announced.

The policy would require companies to pay a penalty of $900 per every ton of methane emitted beyond limits established by the government starting this year, 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, according to the EPA. While the agency touts the proposal as a tool to reduce methane emissions, energy producers have slammed it for adding complexity to the regulatory environment and potentially driving up energy costs for consumers.

“Today’s proposal, when finalized, will support a complementary set of technology standards and historic resources from the Inflation Reduction Act, to incentivize industry innovation and prompt action,” Michael Regan, the EPA’s administrator, said of the proposal. “We are laser-focused on working collectively with companies, states and communities to ensure that America leads in deploying technologies and innovations that aid in the development of a clean energy economy.” (RELATED: Biden Admin Kicks Off 2024 By Unleashing $1 Billion Worth Of New Regulations)

The proposal would become the first direct federal tax on emissions in the U.S. if it is finalized and implemented as planned, according to The New York Times. 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.

The EPA estimates that methane drives one third of the warming occurring today and identifies the energy sector as the most significant industrial source of methane emissions in the country, according to its announcement. Environmentalists malign natural gas production in particular as a source of methane emissions, but natural gas burns more cleanly in comparison to other fossil fuels, such as coal, according to the U.S. Energy Information Administration.

“As the world looks to U.S. energy producers to provide stability in an increasingly unstable world, this punitive tax increase is a serious misstep that undermines America’s energy advantage,” Dustin Meyer, the senior vice president of Policy, Economics and Regulatory Affairs for the American Petroleum Institute, said of the proposal. “While we support smart federal methane regulation, this proposal creates an incoherent, confusing regulatory regime that will only stifle innovation and undermine our ability to meet rising energy demand.”

The policy is a de facto “natural gas tax” that will almost certainly drive up costs for Americans, Larry Behrens, the communications director for Power The Future, told the Daily Caller News Foundation. Shortly after House Speaker Mike Johnson took over as the speaker of the House in October, dozens of Republicans in his caucus wrote to him urging that he endeavor to repeal the enabling statute behind the regulation that the EPA proposed Friday.

“It’s a proposal that follows the direction set by Congress in the Inflation Reduction Act, and we are looking forward to comments and input from industry and the public before finalizing it,” an EPA spokesperson told the DCNF, adding that the “estimated energy cost increases are minimal.”

Friday’s proposal complements a December 2023 EPA proposal for methane detection requirements, which independent oil and gas companies strongly oppose because the increased compliance costs would put them at a disadvantage relative to the major firms.

Editor’s Note: This article has been updated to include a statement from an EPA spokesperson.

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