BENEFITS OF THE BUILD BACK BETTER ACT’S METHANE FEE

This briefing by Energy Innovation analyzes the projected impacts of the methane fee included in the Build Back Better Act (H.R. 5376). The analysis indicates that the fee would significantly reduce industrial greenhouse gas emissions, stimulate job growth, and increase U.S. GDP with minimal financial impact on the oil and gas industry's profitability.

• The methane fee is a primary driver of industrial greenhouse gas (GHG) reductions within the Build Back Better Act, accounting for 65 percent of the Act's total industrial GHG emissions reductions from 2023 to 2050. By 2050, it is projected to avoid 172 million metric tons (MMT) of carbon dioxide equivalent (CO2e) annually, which is equivalent to 11 percent of current U.S. industry sector emissions or the annual emissions of over 36 million gasoline-powered passenger vehicles.
• The fee is projected to have a positive economic impact, creating more than 70,000 jobs by 2050 and adding more than $250 billion to the U.S. GDP cumulatively between 2023 and 2050. By 2050, the fee's contribution to the economy is expected to exceed $10 billion per year, representing approximately one third of the Build Back Better Act's total GDP impact for that year.
• The methane fee applies to petroleum and natural gas systems starting in 2023, targeting leakage exceeding specific thresholds: 0.2 percent for oil and gas production, 0.11 percent for natural gas transmission, and 0.05 percent for other systems. The fee is set at $1,500 per ton of methane leaked above these thresholds, which equals $60/ton CO2e based on a 100-year global warming potential (GWP) value of 25.
• Methane abatement can be achieved through low-cost, existing methods such as monitoring leaks and improving equipment maintenance, without requiring new technology. More than 95 percent of abatement potential costs less than $40/ton CO2e, with a weighted average cost of $19/ton CO2e. Total industry costs for abatement and fee payments from 2023 to 2050 are estimated at $133 billion, representing only 0.77 percent of projected industry revenues ($17.2 trillion), which is below the average 4 percent profit margin.

APA

RISSMAN, J. (2021). BENEFITS OF THE BUILD BACK BETTER ACT’S METHANE FEE. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Benefits-of-the-Build-Back-Better-Act-Methane-Fee.pdf

Chicago

RISSMAN, JEFFREY. BENEFITS OF THE BUILD BACK BETTER ACT’S METHANE FEE. Energy Innovation, 2021. https://energyinnovation.org/wp-content/uploads/Benefits-of-the-Build-Back-Better-Act-Methane-Fee.pdf.

Wikipedia

{{cite report |last1=RISSMAN |first1=JEFFREY |title=BENEFITS OF THE BUILD BACK BETTER ACT’S METHANE FEE |publisher=Energy Innovation |date=October 2021 |url=https://energyinnovation.org/wp-content/uploads/Benefits-of-the-Build-Back-Better-Act-Methane-Fee.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rissman2021benefits, author = {RISSMAN, JEFFREY}, title = {{BENEFITS OF THE BUILD BACK BETTER ACT’S METHANE FEE}}, institution = {Energy Innovation}, year = {2021}, month = oct, url = {https://energyinnovation.org/wp-content/uploads/Benefits-of-the-Build-Back-Better-Act-Methane-Fee.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }