Thanks to the Inflation Reduction Act, the EPA is expected to receive a windfall of more than $40 billion over the next 10 years. Americans could find out next week whether the extra money will translate into tougher air quality and climate change regulations.
That’s when the agency is expected to release two proposals aimed at tackling methane, a potent greenhouse gas. The draft rules, which would be final next year, would require oil and gas companies to reduce methane leaks from their operations.
The twin proposals would mark the EPA’s first major regulatory climate action since August, when President Joe Biden signed into law the Cut Inflation Act. The measure includes nearly $370 billion in climate and renewable energy provisions, and would direct $41.5 billion to the EPA over 10 years, which would massively benefit new and existing climate and quality programs. air.
It’s a huge bump for the agency — the EPA’s annual budget typically hovers around $9 billion — and the money could help the EPA justify tougher regulations, as it would allow the agency to balance higher compliance costs with federal assistance to industry (climate wireAugust 8).
The EPA has previously signaled that the Expenditure Act could impact its regulatory work, though it remains to be seen how that will play out. Reuters first reported last month that the EPA planned to review its March heavy-duty truck emissions proposal to determine whether the Cut Inflation Act incentives for zero-emission vehicles warranted cuts. stricter standards for model years 2027 to 2029.
Agency officials also hinted at changes. Last month, EPA acting air chief Joseph Goffman told a meeting of the agency’s Clean Air Act advisory committee that the new law would require the EPA to “harmonize regulatory work with the influx of funding and grants, according to slides the EPA shared with E&E News.
Experts say the EPA should also factor Inflation Reduction Act programs into future rules for stationary sources of pollution, as it does for trucks. An example: when developing power plant carbon rules, the EPA could take stock of the law’s support for carbon reduction technologies such as sequestration and storage. By regulating oil and gas methane, he could consider newly available federal support for leak detection and monitoring.
Funding the Cut Inflation Act “makes ambition cheaper and easier,” said Miles Keogh, executive director of the National Association of Clean Air Agencies.
When the EPA’s Goffman said he wanted to “harmonize” his incentive programs and rules, Keogh said, “I think he recognized there were a bunch of new pieces on the chessboard.”
IRA fees, incentives
There is still a significant chance, however, that the upcoming methane proposals will say little about the influence of the Inflation Reduction Act on EPA regulations.
The reason is the moment.
The proposals traveled to the White House for vetting on August 15 – the day before the spending law was signed into law. And while the Office of Management and Budget and the EPA may have modified it during the review or added requests for comment, a full-scale analysis of the law’s effects would require more time.
Even so, part of the Inflation Reduction Act could help the EPA demonstrate that finding and fixing natural gas leaks is cheaper now than it would have been without the law. The Inflation Reduction Act includes a Methane Emissions Reduction Program, or MERP. The program could help the EPA justify a requirement for increased monitoring.
The statutory methane tax and its generous set of incentives could also play a role, experts say.
The charge provides an exemption for fossil fuel emission sources that meet EPA methane standards or fall below a certain emissions threshold. This could encourage companies to cut emissions years ahead of what the EPA would otherwise require. This, in turn, could reduce the cost of monitoring and control equipment.
Edwin LaMair, an attorney for the Environmental Defense Fund, said operators would likely rely on state agencies to complete implementation plans for existing sources so they can comply and be exempted from paying fees. Statutory methane charges go into effect in 2024, while state implementation plans typically take years to develop and go through the approval process, especially if a state resists the law. federal regulations.
LaMair said operators of existing infrastructure cannot avoid paying the methane charge in the absence of a final rule from the EPA.
“What they can do voluntarily, and I anticipate many of them will do, is start adopting the technologies and standards that are in the EPA rules in advance,” he said. -he declares.
This could help bring their emissions below a threshold to be subject to a fee, he said. And again, this could put downward pressure on compliance costs by developing the market for equipment and services.
Experts say the act’s $1.5 billion in incentives for methane monitoring and reduction could do even more than grease the skids for tougher methane standards.
The Cut Inflation Act grants the EPA $850 million over six years to provide technical and financial support to operators and communities seeking to improve monitoring and data collection of fossil fuel emissions , to make their facilities more resilient to the climate and other investments.
The EPA has wide discretion in how it allocates these resources, and a separate $700 million to clean up low-producing wellheads. These can soften the blow of tough new rules. But by absorbing some of those costs, the money can also help the EPA enact and advocate for stricter requirements for monitoring, repairing and upgrading equipment.
The EPA noted in its initial draft last November how best to introduce a new monitoring program for frontline communities whose health may be affected by oil development. The Cut Inflation Act provides revenue that can help the EPA operationalize this proposal while improving emissions data and operator compliance, LaMair said.
Oil well flaring
The oil sector is the country’s largest industrial source of methane — a gas that has 80 times more warming potential than carbon dioxide over two decades and is responsible for half of current warming.
The EPA’s initial proposal last fall would cover new and existing oil and gas infrastructure for the first time. Environmentalists generally applauded the project, but expressed dismay that it would allow wellheads with “the potential to emit less than three tonnes per year” of methane to carry out an initial inspection and never check the results again. leaks.
The estimate does not take into account blowouts at old wellheads which may not be well maintained because they no longer produce much product, environmentalists say. But these operations are responsible for a large part of the emissions.
“Recent scientific work has shown that although these types of wells only account for about 6% of oil and gas production, they account for half of methane emissions,” said Jon Goldstein, senior business manager. regulations of the Petroleum Environmental Defense Fund. and gas. “We can’t leave half the problem on the table and expect to get the reductions we need to get and protect local communities from pollution.”
Darin Schroeder, an attorney for the Air Quality Task Force, said he is also seeking the EPA to stand firm on the original proposal’s requirement for air controllers that emit no pollution. And he hoped the EPA would step in to ban routine flaring of gas from oil wells that lack the infrastructure to transport it to market. Flares often malfunction, he said, spewing methane gas into the atmosphere.
Last year’s proposal boiled down to “‘you can’t flare unless you tell us you have to flare,’ with very little explanation of what would be needed there,” he said. he declares. “So I’ll be curious to see if they can actually put some meat on that.”
The American Petroleum Institute, which recently passed the direct federal methane rule, submitted comments in January asking the EPA to allow a wider range of pneumatic control valves to qualify under the final rule. .