Why We Support Blocking the Waste Emissions Charge
Methane emissions remain one of the most potent drivers of climate change, and the challenge of accurately measuring and mitigating these emissions has grown more complex as regulators and industry actors search for more effective solutions. The Waste Emissions Charge (WEC), a controversial policy tool that was recently disapproved, was introduced in the 2022 Inflation Reduction Act to incentivize companies to monitor and reduce methane leaks by imposing a financial penalty on reported emissions.
At first blush, the WEC seemed like a sensible approach: create an annually rising cost for emissions and thus set a gradually rising cost of inaction. However, the unintended consequence was a shift toward cheaper, less reliable sensor platforms, undermining the goal of meaningful emissions reductions. It follows that canceling the WEC could, counterintuitively, accelerate real material progress in methane emissions abatement by driving the adoption of higher-quality, continuous monitoring solutions.
The Problem with the Waste Emissions Charge
The WEC was designed to compel oil and gas operators to monitor and reduce their methane emissions by attaching a financial cost to reported emissions. There were two ways to calculate a company’s WEC:
Use EPA-provided leak rate estimates
Use direct measurements for site-specific reporting
Let’s take a look at the incentive here: in an environment where reducing reported emissions (rather than actual emissions) determines financial penalties, any rational economic actor would shift focus from real mitigation to tactical reporting. In short, profit-driven entities were driven towards the least-cost path to regulatory compliance rather than meaningful emissions reduction.
This dynamic created an artificial market for low-cost, unreliable sensor platforms that provide just enough data to avoid penalties under the WEC but offer little actionable insight into actual leak reduction. Limitations of these platforms include:
Discontinuous operation – Many sensors such as drones and satellites operate on a snapshot basis rather than continuously, meaning leaks could be underestimated or missed altogether in between measurements.
Limited spatial resolution – Cheaper sensors such as metal oxide semiconductor (MOS) sensors struggle to localize leak sources, making leak quantification difficult - in turn making mitigation efforts more difficult.
Missing smaller leaks altogether – MOS sensors, by relying on air sampling detection, often fail to detect small leaks as they rely on the wind to transport methane towards the sensors - but wind also mixes and dilutes the methane.
In summary, enforcing the WEC could result in a system where operators could game the Subpart W reporting metrics without genuinely addressing emissions. High-quality sensors with continuous monitoring capabilities were effectively penalized by the WEC since they produced more accurate (and often higher) emissions data, which in turn could increase WEC liability.
How Removing the WEC Could Improve Methane Monitoring
Avoiding the WEC would shift the priority away from tactical emissions reporting and toward comprehensive emissions reduction. Without an artificial incentive to under-report or game the system, operators would have greater motivation to:
Shift from Compliance to Performance
Without the WEC, operators would no longer face a financial penalty for procuring sensors that deliver more accurate data. This promotes true meritocratic capitalism, resulting in the adoption of state-of-the-art technologies that improve detection and mitigation rather than just minimizing reported emissions - helping operators identify, characterize and mitigate costly leaks.Encourage Continuous Monitoring
Continuous monitoring technologies like optical path-integrated sensors are capable of reliably detecting even low-level emissions in real time across entire facilities. This attribute is especially important considering the relatively high intermittency of oil & gas methane emissions.More Accurate Data = Better Mitigation Strategies
Accurate, high-cadence emissions data allows operators to implement more effective leak detection and repair (LDAR) programs - and reliably evaluate their success. Operators need real-time data to respond to a leak within hours rather than waiting for quarterly or annual inspections, and need accurate data to evaluate the effectiveness of mitigation actions - and, in many cases, to assess the leak propensity of equipment used at one or more facilities.Better Market Incentives for Monitoring Technology
With a focus on actual emissions reduction instead of compliance, market forces should reward the methane monitoring technologies with the highest performance at the lowest cost (in the long term). Sensor manufacturers should have strong incentives to develop more sensitive, affordable, and easy-to-deploy systems - which is the only way to drive down costs for accurate continuous monitoring over time, expanding market access and accelerating global adoption.
The Future of Methane Monitoring Without the WEC
Disapproving the WEC creates a more rational market for methane monitoring technologies.
What do we expect to see more of in the coming years?
Advanced optical and open-path sensors – Platforms like TrelliSense provide precise and continuous data across entire facilities, no matter how large.
AI-enhanced monitoring platforms – Even basic machine learning algorithms like those used by TrelliSense enhance leak quantification and can help inform predictive maintenance.
Integrated satellite and ground-based networks – Combining regular satellite imaging with continuous ground-based data such as TrelliSense’s can provide comprehensive emissions mapping at both the macro and micro levels.
A Market-Driven Path to Methane Reduction
Sustained, effective methane reduction ultimately depends on accurate measurement and rapid mitigation. The WEC could have distorted this equation by penalizing accuracy and encouraging under-reporting - and effectively canceling the WEC allows market forces to drive methane monitoring and reduction.
Of course, economics are important here, and worthy of their own blog post. At this point in time, we have plenty of reason to believe that the price of gas will rise in the coming years, especially in the US. Not only do we expect continuing unprecedented electric load growth for the first time in decades, the Trump administration has reinstated LNG export permitting (and is currently on an approval spree), expanding international market access for US gas. These trends, among others, will serve to make leaks more costly over time - and especially in today’s “energy emergency”, keeping methane in the pipe enjoys bipartisan support. The below graph from the IEA (source) demonstrates the relatively small cost of fixing leaks relative to the value lost.
By eliminating the incentive to deploy low-cost, unreliable sensors, regulators and industry leaders can create a system where high-quality, continuous monitoring becomes the norm - rewarding operational excellence and technological innovation, rather than punishing operators.
The methane monitoring market is still developing, but the pathway to progress is clear: by focusing on real emissions reduction rather than compliance metrics, we can create a more effective, market-driven approach to tackling one of the most potent drivers of climate change.
