PA energy, business, labor, manufacturing groups join push against federal methane tax

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The Pennsylvania Chamber of Business and Industry, the Pennsylvania Manufacturers’ Association, and the Pennsylvania Independent Oil and Gas Association joined 130 energy, manufacturing, business and labor trade organizations across the natural gas and oil supply chain opposed to a pending federal bill that would place a fee on methane. 

Specifically, the groups denounced the Methane Emissions Reduction Act of 2021, which was introduced earlier this year by Democrats in both houses of Congress and is under consideration for inclusion in the reconciliation bill, as a pay-for — in other words, pay-as-you-go budgeting.

If enacted, the bill “would levy an unreasonable, punitive fee on methane emissions only from oil and natural gas facilities that could jeopardize affordable and reliable energy with likely little reduction in greenhouse gas (GHG) emissions,” according to a Sept. 7 letter led by the American Petroleum Institute (API) and sent to U.S. Sens. Tom Carper (D-DE) and Shelley Moore Capito (R-WV), chairman and ranking member, respectively, of the U.S. Senate Environment and Public Works Committee.

Among those that joined API in signing the letter was API Pennsylvania, the Pennsylvania Grade Crude Oil Association, the Pennsylvania Independent Petroleum Producers, the Pennsylvania Petroleum Association, the PennAg Industries Association, the Pennsylvania Aggregates and Concrete Association, the Pennsylvania and Delaware Cleaners Association, the Pennsylvania Builders Association, the Pennsylvania Food Merchants Association, the Pennsylvania Forest Products Association, and the Pennsylvania Septic Management Association.

“We are proud to join @API_Penna @ChamberPHL @MarcellusGas @PIOGA4PA @pabuilders @PaAggConAssn @PAManufacturers & dozens of local chambers and associations across the country to oppose punitive energy taxes, currently being proposed in Washington DC,” tweeted the Pennsylvania Chamber on Sept. 8.

The organizations wrote that the proposed bill would tax methane emissions at a default rate of $1,800 per ton in 2023, increasing 5 percent above inflation annually, with fees for individual companies assessed via a complicated formula based on their share of production or handling and not on actual emissions, as well as the average emissions intensity in the oil and gas basin in which they operate. 

“Alternatively, companies could engage in a likely costly and burdensome process of tracking their own emissions,” the groups wrote. 

The bill also includes an import fee, which will be levied on each company that imports crude oil, natural gas or natural gas liquids into the United States, and could likely raise consumer costs, distort markets, and incentivize retaliatory actions from U.S. trading partners, according to their letter. 

“The bill has never been the subject of a congressional hearing, and therefore never scrutinized or debated among lawmakers,” the groups wrote. “Congress has never discussed the potential impacts of the methane fee on consumers or the U.S. energy market.”

The organizations also wrote that a tax on methane is unnecessary. The U.S. Environmental Protection Agency (EPA) and several states already directly regulate methane emissions from the oil and natural gas sector, and the EPA plans to release additional regulations on the sector later this year. 

“An approach that doubles down on the oil and natural gas industry, regardless of its compliance with federal regulations, in the form of a tax penalty is duplicative and unnecessary,” they wrote. “What’s more, a methane tax will be difficult to implement.” 

Instead, according to their letter, cost-effective regulation would be a better approach, particularly because the bill’s current approach also could alter where oil and natural gas is produced and thereby impact the balance sheets of state governments. 

“If the objective is to reduce methane emissions, direct regulation of methane is the best method to implement such a government policy and do so in an equitable manner that is tied to actual emissions,” wrote the groups. “EPA is best-suited to address the challenges in reducing methane emissions. A regulatory approach would likely be much less disruptive to state budgets than the tax this bill would impose.”