On July 24, 2023, the EPA, the U.S. Department of Energy (DOE), and the DOE’s National Energy Technology Laboratory (NETL) released a Notice of Intent (NOI) announcing the first in a series of funding opportunities to monitor and reduce methane emissions from the oil and gas sector and for environmental restoration of well sites.
Methane emissions are classified as “one of the biggest drivers of the climate crisis,” according to an EPA news release.
“Through a newly initiated Interagency Agreement, EPA and DOE will also partner to offer technical assistance to help companies monitor and reduce methane emissions from leaks and daily operations,” the news release says. “Through this combination of technical and financial assistance, EPA and DOE will help reduce inefficiencies of U.S. oil and gas operations, create new jobs in energy communities, and realize near-term emission reductions.”
The Methane Emissions Reduction Program was created through the Inflation Reduction Act. It provides $1.55 billion in funding, including financial and technical assistance, to improve methane monitoring and reduce methane and other greenhouse gas (GHG) emissions from the oil and gas sector, with the co-benefit of reducing non-GHG emissions such as volatile organic compounds and hazardous air pollutants.
The program allows financial and technical assistance for a number of activities, including preparing and submitting GHG reports, monitoring methane emissions, and reducing methane and other GHG emissions by improving and deploying equipment, supporting innovation, permanently reducing wasteful methane emissions from low-producing conventional wells, mitigating health effects in low-income and disadvantaged communities, improving climate resiliency, supporting environmental restoration, and mitigating legacy air pollution.
Another component of the program is the Waste Emissions Charge, which “establishes a waste emissions charge for methane from applicable facilities that report more than 25,000 metric tons of CO2 equivalent per year to the Greenhouse Gas Reporting Program (GHGRP) petroleum and natural gas systems source category and that exceed statutorily specified waste emissions thresholds,” according to the EPA Methane Emissions Reduction Program website. “Waste emissions charge starts at $900 per metric ton for emissions reported in 2024, increasing to $1,200 for 2025 emissions, and $1,500 for emissions years 2026-on. [It] includes flexibilities and exemptions [and requires] revisions to GHGRP regulations for petroleum and natural gas systems (Subpart W) within two years.”
The NOI details funding available in this initiative, which provides up to $350 million in formula funding to eligible states to assist industry in voluntarily identifying and permanently reducing methane emissions from low-producing (marginal) conventional wells.
“These investments are expected to improve the economic competitiveness of small and medium-sized producers while reducing associated harmful air pollution, mitigating health effects in nearby communities, and creating jobs in energy communities,” the news release adds. “States also will be able to use a portion of their award for environmental restoration and to invest in their monitoring capacity for low-producing conventional wells, which will improve their ability to identify sources of methane emissions and to effectively prioritize their mitigation. NETL plans to issue the funding opportunity announcement later this summer.”
Next steps for the initiative, following this noncompetitive solicitation, include one or more competitive solicitations to monitor and mitigate methane emissions from the oil and gas sector, which will be available to a broader range of applicants. These subsequent funding opportunities are expected to advance the deployment of technologies and practices to monitor and reduce emissions of methane and other GHGs. A separate financial assistance program for tribal governments is also expected to be offered.