WASHINGTON , -- The Democratic plan to impose a methane emission fee from oil and natural gas wells has passed a critical hurdle but faces opposition from the oil industry and criticism from Sen. Joe Manchin.
House Democrats included the proposed methane fee in their massive social and environmental policy bill.
The Senate bill will move to Manchin. Manchin is a moderate from West Virginia who has forced other Democrats to abandon one their most important climate proposals: A clean-electricity program which would increase wind and solar power and phase out coal- or gas-fired power stations.
Manchin, whose state produces the most natural gas and coal, expressed concern that a methane tax might be used to drive companies out of business. Before the House vote, he stated that he wanted to ensure the fee was structured to encourage innovation and not "punish" them.
After the House vote, Manchin's spokeswoman declined to comment. However, Democrats in both the House and Senate stated that they were confident that the fee would remain in the Senate bill despite a 50-50 split. This chamber gives every Democrat veto authority. The bill is opposed unanimously by Republicans.
The House approved language that would place a growing fee on oil and gas facilities that emit excess carbon, at $1,500 per ton by 2025. There would also be $775 million in subsidies to companies that reduce their emissions.
Frank Pallone (D-N.J.), who chairs House Energy and Commerce Committee said that he and other Democrats had been working with senators regarding the methane fee. Manchin is the Senate Energy and Natural Resources Committee's chair.
Pallone stated at Friday's news conference that "we have this very important provision regarding methane emissions which was worked on by the senators and was also discussed with House members over a few weeks," "So, I believe that this is it. "It may have some changes but I believe we are pretty solid in this area in terms both of the payment and the substantive authorizing language.
Pallone stated that while the Senate might make minor changes over the next few week, "nothing significant, in my opinion'' will change or be taken out.
Delaware Senator Tom Carper, a Democrat, is also optimistic that the methane tax -- formally known under the Methane Emissions Reduction Program - will be included in final bill.
Carper stated that instead of punishing the industry, his program encourages good behavior and phases in over time. Then, it ramps up (fees over time) as well. It's good for the environment and good for job creation. This is a win-win situation in my book.
Biden made a pledge at the U.N. climate summit, in Glasgow, Scotland earlier this month that he would work with the European Union, and dozens other countries to reduce global methane emission by 30% by 2030.
The Environmental Protection Agency's long-awaited rule to tighten methane regulations in the oil and gas industry is the centerpiece of U.S. action. This rule, which would be the first to target reductions in existing oil and natural gas wells across the country, instead of focusing on new wells like previous regulations, is a landmark step forward.
Biden stated in Glasgow that the new U.S. rule and the global pledge should make a "significant difference" in combating climate change as well as improving health and reducing asthma.
The White House stated that the proposed requirements will reduce methane emissions from U.S. drill operations and equipment by around 75% by 2030 compared to 2005 levels.
The nation's largest source of methane from the oil and gas industry supports regulation, but it opposes the congressional tax as an unneeded tax that could increase energy costs and lead to the loss of thousands.
Frank Macchiarola (senior vice president, American Petroleum Institute), the industry's leading lobbying group, stated that "This tax on American natural gas makes us less competitive."
He said that the Senate should repeal the proposal because it is a flawed policy to increase energy producer costs in a time of rising costs. Independent analysts estimate that the methane fee will likely cost producers around $1 billion per year once it's fully implemented.
Methane reduction is considered by environmental groups to be the most cost-effective and fastest way to reduce global warming. The current rules regarding methane emissions from U.S. crude oil and gas wells are only applicable to wells that were constructed or modified after 2015. This leaves more than 90% of the country's almost 900,000 well sites unregulated. Many of these sites have smaller, less-productive wells.
A group of Texas Democrats represented in the House initially opposed methane fees, but eventually supported the compromise. Only Jared Golden (Maine Rep.) was against the House legislation.
"No bill can be perfect," said Rep. Henry Cuellar (D-Texas), who voted in favor of the measure, despite concerns over methane. He stated that the House bill would increase access to affordable pre-kindergarten and child care, expand Medicaid coverage, and help to combat climate change.
Cuellar stated that he would lobby the Senate to remove the methane fee.