Democrats float new methane fee in spending bill

·2 min read
FILE PHOTO: U.S. Senator Joe Manchin (D-WV) walks through the U.S. Capitol in Washington

WASHINGTON (Reuters) - The U.S. could charge oil and gas operators if they release methane above a limit and offer $775 million to help reduce and monitor the greenhouse gas, according to a draft of President Joe Biden's social and climate spending plan released Thursday.

The provision tucked into the 1,600 page House Build Back Better proposal replaces a previous proposal to establish a methane fee for oil and gas operators that release the gas above a certain threshold. The previous plan was opposed by Texas Democrats and West Virginia Senator Joe Manchin.

Democrats initially wanted to force oil and natural gas producers to pay $1,500 for each metric ton of methane they emit above specific intensity thresholds, but Democrats scrambled to save the measure over the last few days with several changes.

Biden on Thursday presented a $1.75 trillion budget reconciliation plan, with $555 billion earmarked for climate measures, that he said unified Democrats, but some members of his party quickly rebuffed it.

He plans to tout the broad framework when he arrives in Glasgow next week to attend the COP26 climate conference although it is unclear if the methane fee will get enough support in the Senate.

The current House proposal phases in the fees - from $900 in emissions reported in 2023 to $1,500 for emissions reported in 2025.

The proposal also includes $775 million in grants, rebates and loans to assist oil and gas operators with monitoring and reducing methane emissions.

Anne Bradbury, CEO of the American Exploration & Production Council, which represents independent oil and gas producers, called the latest proposal "a poorly constructed natural gas tax" that will add to the costs of complying with methane regulations from the Environmental Protection Agency.

The EPA is expected to unveil its initial proposal to regulate existing oil and gas operations for the first time early next week, according to sources familiar with the process.

The United States has also recently announced it will participate in a voluntary Global Methane Pledge to cut methane emissions 30% by 2030.

(Reporting by Valerie Volcovici. Editing by Gerry Doyle)