The Carbon Pricing Politics of Methane: The Minor Miracle of the US Methane Fee
2026-06-22
Carbon pricing attempts have been repeatedly thwarted at the federal level in the United States. Yet, in 2022, the United States adopted a federal price on oil and gas methane emissions as part of the Inflation Reduction Act (IRA), imposing a cost on an industry with significant political clout using a politically unpopular policy instrument. What made the first US federal carbon pricing scheme politically feasible? Using interviews with key insiders in the IRA negotiations, I provide the first study of the political history behind the methane fee. Synthesizing and expanding on the extant literature, I suggest that four enabling conditions rendered carbon pricing politically feasible: industry division, effective ideational arguments, a conducive legislative pathway, and quiet politics. While carbon pricing is sometimes written off as a political nonstarter, theorizing political feasibility as the product of multiple, conditional factors recognizes that opportunities for pricing reforms—though circumscribed—are also contingent.