Waste Emissions Charge for Petroleum and Natural Gas Systems

The proposed Waste Emissions Charge for Petroleum and Natural Gas Systems (WEC) is part of the Methane Emissions Reduction Program created under the Inflation Reduction Act. The US Environmental Protection Agency (EPA) proposed a regulation to implement this requirement in January 2024.
The WEC applies to applicable facilities that report more than 25,000 metric tonnes of CO2 equivalent per year to the Greenhouse Gas Reporting Program (GHGRP) Petroleum and Natural Gas Systems source category (subpart W). These facilities must pay for emissions that exceed the statutorily-specified waste emissions thresholds based on subpart W methodologies. The charge starts at $900 per metric ton for 2024 emissions and increases to $1,200 for 2025 and $1,500 for 2026 and each year thereafter. 
Waste emissions thresholds are calculated using the following industry segment-specific methane intensity factors:

• 0.20% for onshore and offshore production;
• 0.05% for gathering and boosting, processing, LNG storage, LNG imports and exports;
• 0.11% for transmission compression, underground storage and transmission pipelines.

A facility's WEC applicable emissions are positive when the methane emissions reported under GHGRP subpart W are greater than the waste emissions threshold. The WEC applicable emissions of facilities under common ownership or control of a single owner or operator may be summed to calculate net WEC emissions.

The WEC is in part dependent on state actions in response to federal New Source Performance Standards for methane issued by the EPA under the Clean Air Act. The EPA's January 2024 proposed rule would revise GHGRP subpart W to allow facilities to submit empirical data to ensure the accuracy of their reported emissions, thus changing the methodology for WEC calculations. In addition, the IRA specifies that the WEC will be charged only until all states have adopted their own methane regulation for existing facilities that are at least as stringent as the EPA's Final Rule for Oil and Natural Gas Operations released in December 2023, pursuant to Section 111(d) of the Clean Air Act. Once the EPA has approved all state plans and determined that compliance with these plans will result in equivalent or greater emissions reductions as would be achieved under the proposed EPA rules, exemption to the WEC will be available to all facilities.
Additional exemptions to the WEC include:

• Emissions from wells that are permanently shut-in and plugged in accordance with all applicable closure requirements;
• Emissions in the onshore and offshore production segments that result from unreasonable delay in environmental permitting of gathering or transmission infrastructure necessary for offtake of increased volume as a result of methane emissions mitigation implementation.

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