Joint Trades Letter Opposing the Methane Fee in House Energy & Commerce Committee

Dear Chairman Pallone and Ranking Member McMorris Rodgers:

Last week, the undersigned organizations wrote to you to oppose the Methane Emissions Reduction Act of 2021, introduced by Senators Whitehouse, Booker, and Schatz in March 2021, and its inclusion in the reconciliation package as a punitive pay-for targeted solely on the oil and natural gas industry that would harm the U.S. economy and cost good-paying American jobs. The good news is that the Build Back Better Act (BBBA) slated for a full committee markup in the Energy and Commerce Committee tomorrow has not adopted the fundamentally flawed Methane Emissions Reduction Act. The bad news is that the BBBA includes a methane fee that is equally problematic.

The Methane Emissions Reduction Act’s default tax on methane was steep at $1,800 per ton. The amount of the BBBA methane tax remains significant at $1,500 per ton. Given natural gas and petroleum together account for nearly 70% of energy consumption in the U.S., new taxes on the industry are likely to have a ripple effect across the U.S. economy – at a time when inflation is already skyrocketing.

The scope of oil and gas facilities subject to the tax is unclear. The legislation instructs EPA to lower the Greenhouse Gas Reporting Program (GHGRP) reporting threshold for oil and gas facilities from the current threshold of 25,000 metric tons of GHGs to 10,000 metric tons of GHGs. The number of facilities and the emission profile of those facilities that fall between the 10,000 and 25,000 metric tons limits are unknown. Additionally, the resulting emission and cost impacts of lowering the reporting threshold cannot be estimated. What is certain, however, is that a substantial number of smaller operators who have never before been subject to EPA’s GHGRP will not only be subject to EPA reporting regulations, but also a new targeted tax. …