The Biden administration is finalizing a new rule that will require oil and natural gas companies to pay a federal fee if they exceed certain levels of methane emissions.

The measure, which the Environmental Protection Agency (EPA) will announce on Tuesday at the COP29 international climate conference in Azerbaijan, aims to reduce one of the most potent greenhouse gases.

Follow the adcongressional directive included in the 2022 climate law, which is expected to be finalized early next year after its publication in the Federal Register.

Methane, a major component of natural gas, is known to be a powerful climate “super pollutant” with a much stronger warming effect than carbon dioxide in the short term.

The oil and gas sector is the largest industrial source of methane emissions in the United States.

How much will the methane rate cost?

The tariff, which could start at $900 per ton in 2024 and rise to $1,500 per ton in 2026, is expected to face opposition from industry groups, which may challenge the rule in court, particularly any retroactive charges.

EPA Administrator Michael Regan said in a statement that the new fee, officially called the Waste Emissions Charge, would complement other recent EPA efforts to curb methane emissions.

He emphasized that he would encourage the adoption of emissions-reducing technologies while supporting jobs and U.S. leadership on climate action.

The oil and gas industry, along with some Republican-led states, have already challenged the Biden administration’s previous methane rule in court.

How methane contributes to global warming

The EPA has defended its authority to regulate methane emissions, saying the rules are within its legal scope and necessary for public health.

According to the EPA, large oil and gas companies that already meet methane reduction goals are unlikely to be affected by the fee.

The agency estimates that the rule will reduce methane emissions by 1.2 million metric tons by 2035, which is equivalent to taking nearly eight million gasoline-powered cars off the roads for a year.

Cumulative climate benefits could reach up to $2 billion, the EPA added.

Should the industry be held accountable?

Despite industry opposition, environmental groups have praised the rule, arguing that the oil and gas sector should be held accountable for its contributions to global warming.

Methane is often flared or vented during oil extraction, which many companies find cheaper than making necessary improvements to prevent leaks.

Over time, the EPA expects the number of companies subject to the fee to decrease as more adopt emissions-reducing technologies.

This article contains additional reporting from The Associated Press.