How Biden Plans to Cut Methane Emissions

Jonathan Kidwell spoke with Law360 regarding the Biden administration's focus on methane.

Congress and the U.S. Environmental Protection Agency appear ready to quickly act to cut methane emissions, from considering new fees on emitters to strengthening regulatory standards in different industries.

President Joe Biden said Friday that the U.S. and European Union have pledged to reduce global methane emissions by at least 30% below 2020 levels by 2030. He said they hope to recruit other nations to join them and announce the pledge at the United Nations Climate Change Conference in Glasgow in November.

Methane is a potent greenhouse gas and reducing emissions is a key component of the Biden administration's climate change plans. Biden said reducing methane emissions would not only help stem the tide of climate change but also produce other benefits, such as health improvements.

"We're mobilizing support to help developing countries that join and pledge to do something significant," Biden said Friday during a Major Economies Forum on Energy and Climate meeting.

Apart from methane, Biden has committed to reduce domestic greenhouse gas emissions by at least half from 2005 levels by 2030. The administration has also set goals that by 2035 the U.S. power sector will be carbon-free, and that by 2030 half the cars sold in the country will be electric vehicles.

The U.S. is poised to take action on methane on several fronts, said Jonathan Kidwell, a partner at Kirkland & Ellis LLP who leads the environmental group's energy and infrastructure areas. He noted that the House Energy and Commerce Committee just passed a portion of the budget reconciliation package that includes a fee on oil and natural gas companies that are required to report methane emissions.

"The proposed methane fee would make it more expensive to emit methane emissions, and it would bring many more types of emission sources into the regulatory framework," Kidwell said.

If approved, the bill would empower the EPA to collect a fee of $60 per metric ton of methane emitted by covered entities. And while it initially targets the biggest emitters, in two years the program will capture smaller ones as well.

Seventy-five percent of the funds collected under the program would go back to the EPA for administrative expenses as well as grants, rebates and contracts related to the emissions reduction program, among other things.

While Congress moves on that front, the EPA is getting close to strengthening its own emissions regulations for the oil and natural gas sector. The White House is reviewing two proposed rules that would restrict emissions from new and modified oil and gas infrastructure and impose new guidelines for existing sources.

Shannon Broome, a partner at Hunton Andrews Kurth LLP, said EPA regulations for existing sources will be where the administration gets the most bang for its regulatory buck.

"That's most of the inventory that you're targeting," she said. "And what we've seen over the recent past five years is a lot of really aggressive action by companies to address existing sources, even in the absence of a regulatory mandate."

Broome said industry players will be watching the EPA to make sure its rule takes into account what companies have done to be proactive with regard to their emissions from existing sources. She said larger companies have been more aggressive because they have more resources, while smaller and midsize companies may not have been as proactive over the past few years.

"This is a situation where regulation will catch up with what people are doing," she said. "The key is not to penalize early actors."

According to the EPA, methane's global warming impact is about 25 times greater than that of carbon dioxide. But methane only stays in the atmosphere for about 12 years, compared to carbon dioxide, which can take thousands of years to recycle into water or land.

"One reason people are focused on methane emissions is because if you can reduce them now, you can begin to see the benefits sooner than you would with a reduction in carbon dioxide," said Larry Nettles, a partner at Vinson & Elkins LLP and head of the firm's environmental and natural resources practice group.

The EPA said in 2019 that methane accounted for about 10% of all U.S. greenhouse gas emissions from human activities, including leaks from natural gas systems and the raising of livestock.

Sierra Club attorney Andres Restrepo said the U.S.-EU agreement is a step in the right direction, but that more needs to be done.

"The world really needs to address the problem of methane emissions if we want to have any chance of avoiding the worst impacts of climate change," he said.

Restrepo said the Environmental Defense Fund and others have reported calculations showing that global methane emissions can be reduced by closer to 57% by 2030 using existing technology.

In addition to more stringent limits on the fossil fuel sector, emissions from the agricultural sector must be more heavily regulated, Restrepo said. According to the EPA, the oil and natural gas sector accounts for 30% of methane emissions, but the agricultural sector accounts for 36% when including enteric fermentation from livestock — the digestive process that produces methane released through livestock's belching and flatulence and manure management.

"A lot of methane from the agricultural sector comes from ... factory farms, livestock practices, manure management and especially liquefied pools, and that sort of thing," Restrepo said. "And we have endorsed proposals ... that would really require movements away from factory farming toward pasture-based agriculture and grazing."

Kidwell said the methane fee legislation has been criticized because it only targets the oil and gas industry. He added that agriculture isn't the only other industry that could see more regulation.

"Agriculture, waste management and coal are, in addition to oil and gas, the other big sources of methane emissions," he said. "We could see additional regulations on landfills and landfill gas collection systems. … Methane is a big focus of the administration."