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US climate law institutes first greenhouse gas fee on oil industry

Methane charge of up to $1,500 a tonne clamps down on pollutant 80 times more potent than carbon

The landmark climate law signed by US president Joe Biden last month contains billions of dollars of financial carrots to reward investment in clean energy. The lone stick has been less heralded: a first-of-its kind fee on leaks of methane from the oil and gas sector.

Methane traps 80 times more heat in the atmosphere than carbon dioxide over a 20-year period, making it a driver of climate change. In the US, the energy sector is the single largest source of methane emissions.

The fee established by the Inflation Reduction Act marks the US’s first nationwide price on a greenhouse gas, as efforts to tax CO₂ fizzle. Oil lobbies were quick to condemn it.

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