Thread by @arvindpawan1

Here are #methane details:

- $850M to EPA for methane monitoring/mitigation
- Fee at $900/t in 2024 going up to $1500/t in 2026.
- EPA methane regs compliant facilities exempt if equivalence can be demonstrated
- EPA required to update inventory estimates in 2 years

https://twitter.com/marianne_levine/status/1552437743875399680

Here's the thing:

$900/t CH4 in 2024 is ~$17/mcf of gas, roughly 2x current Henry Hub price. That's a strong incentive for #methane reductions.

$1500/t CH4 is ~$29/mcf. These high prices will incentivize operational changes (e.g., switch gas engines to electric drive motors).

Fees applied to emissions intensities over:
- Production: 0.2% of gas, 10 mt/mbbl of oil
- Transmission: 0.11%
- LNG & other facilities: 0.05%

Only facilities reporting to EPA (>25000 mt CO2e/year emissions) will be subject to #methane fees.

Here's what this means: These emission thresholds (<0.2%) are low - proving it is going to take a LOT more than 1/yr or even 4/yr aerial surveys.

To get 0.2% within 10% error means you will likely need quasi-continuous monitoring.

See variability here: chemrxiv.org/engage/chemrxi…

Key clause: If facilities comply with upcoming EPA #methane regs & demonstrate equivalent reductions, they will be exempt from #methane fees.

How do you demonstrate that? Unclear.

But given high fees, likely to be much cheaper to comply with EPA regs.

https://twitter.com/arvindpawan1/status/1455555209711820803?s=20&t=t1glpHIPBzkFh1NCEcKXjQ

The most important part is the requirement for EPA to update #methane inventory in 2 years, using data from direct measurements. This is critical to bridge gap between inventory & measurements. I will have more to say on this soon, but see our recent work: nature.com/articles/s4146…

We will likely see a race to lowest #methane emissions from operators. We were already going in that direction as demand for #certified gas increases globally. Large buyers don't like to pay more & will prefer low-emissions suppliers.

I talk about it here:houstonchronicle.com/business/energ…

You know what's interesting?

If O&G producers achieve #methane leakage shown here, #hydrogen produced using NG and CCS (blue #H2) will be eligible for production tax credits if life cycle emissions <4 kg CO2e/kg H2.

<1% methane leakage will achieve this. pubs.rsc.org/en/content/art…