“Right now, emitters do not have sufficient financial incentive to reduce methane emissions because the market value of the lost methane is much smaller than the environmental costs,” said Brian Prest, a fellow at Resources for the Future, an environmental group.
In a new paper released today, Prest argues a fee would have only small effects on natural gas prices.
A fee of $500/tonne would increase wholesale natural gas prices by $0.07-0.10/MMBTU and could nearly cut the leak rate in half, he found, while a $2,000/tonne fee would increase wholesale natural gas prices by $0.18-$0.26/MMBTU and cut leaks by as much as 70 per cent.
“There’s a back and forth over finding the sweet spot,” Prest told ES. “The methane fee that would have smaller impacts on the prices of gas while also achieving acceptable levels of reductions in methane emissions.”