On January 12th, EPA released its proposed rule on the “Waste Emission Charge”, established in the Inflation Reduction Act of 2022. The WEC program applies to facilities in the oil and gas sector that exceed certain calculated emission thresholds by imposing “a charge on high-emitting oil and gas facilities to incentivize actions to reduce wasteful methane emissions while EPA and states work toward full implementation of the Clean Air Act rule.” The proposed rule has been published in the Federal Register and is now open for public comment.
WEC is seen as bridge to full implementation of the Quad-O plans, and EPA believes operators would be exempted from any charge once compliance is achieved. Facility CO2e emissions over 25,000 metric tonnes reported annually as a part of the Greenhouse Gas Reporting Program would make a facility applicable for the WEC. Reported methane emissions would then be compared to a calculated emission threshold based on facility throughput, with any overage being assessed a charge on the “waste emissions” of methane. Proceeds from the charge would be provided to the general Treasury and not available to the EPA.
The process for determining the charge for the onshore oil and gas production sector is provided below. Calculation of the threshold differs between different segments of the oil and gas industry, e.g., oil and gas production, gas processing, and oil and gas gathering and boosting. Examples of the calculations are provided by the EPA at https://www.epa.gov/inflation-reduction-act/waste-emissions-charge.
While EPA will be gathering and evaluating comments from industry participants as a part of finalizing the rule, the WEC is expected to be an additional obligation that operators must manage going forward. First reporting will be for the full year 2024, due in early 2025.
EcoVapor, a DNOW company, is focused on reducing venting and flaring emissions especially from storage tank batteries at upstream operations. The company’s technology has been adopted by a number of oil and gas operators – from small independents to super majors in all major oil-producing basins in the lower 48 states.
