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 greenhouse gas, as efforts to tax C02 fizzle. Oil lobbies were quick to condemn it.

“Fundamentally, we don’t think the government should raise taxes, particularly in the middle of a recession. And in the middle of a global energy crisis,” said Frank Macchiarola, senior vice-president at the American Petroleum Institute.

Beginning in 2024, the law imposes a charge of $900 a tonne of methane emitted by oil and gas companies from wells, pipelines, liquefied natural gas terminals and other facilities. After two years the fee rises to $1,500 a tonne.

The fee has the potential to cut total US methane pollution by nearly a fifth at the end of the decade as compared to 2020 levels, according to a University of Maryland study released this week. The US under the Biden administration has