Biden Administration Proposes Methane Emissions Tax for Oil and Gas Companies

The proposed regulation, part of the Inflation Reduction Act, would impose escalating fines starting this year, marking the first direct federal tax on emissions in the U.S.

The Biden administration has proposed a new regulation that would impose fines on oil and gas companies for methane emissions, starting this year.
The policy would require companies to pay a penalty of $900 per every ton of methane emitted beyond limits established by the government, 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.
The proposal would become the first direct federal tax on emissions in the U.S. if it is finalized and implemented as planned.
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.
Energy producers have criticized the proposal for adding complexity to the regulatory environment and potentially driving up energy costs for consumers.