What If Exxon Had to Pay a Carbon Tax for Its Recent Methane Leak?

February 6, 2020 by Weston Coward

Should Exxon have to pay a carbon tax for its recent methane leak?

Recent headlines show why the United States, or at least state governments, should adopt a carbon tax to help reduce the emission of greenhouse gases.


A February 2018 blowout at a natural gas well in Belmont, Ohio forced approximately 100 residents to evacuate the area. The story received some media attention.  But now, Exxon Mobile, the owner of the well, is facing international scrutiny because researchers have determined that the well leaked more methane than initially thought.[1]


Researchers from the Netherlands used data from a European Space Agency satellite to analyze methane levels in Ohio after the blowout, and the results were startling.[2]  The well explosion discharged methane for nearly twenty days at a rate of about 120 metric tons an hour.[3]  That rate was twice as fast as the four-month Aliso Canyon leak in 2015, the second largest methane leak in American history.[4]  Although the Aliso Canyon leak had higher overall admissions than the Belmont leak, the Belmont leak still released more methane than the oil and gas industries in France, Norway, and the Netherlands emit in an entire year.[5]


This leak raises serious environmental concerns because methane is one of the most powerful greenhouse gases.[6]  In fact, over a 100-year period, methane is actually thirty-four times stronger than carbon dioxide.[7]  That short-term strength is why methane is responsible for approximately one-quarter of all global warming that greenhouse gases caused in 2019.[8]


All of this information begs the question: How much will Exxon pay for this methane leak?  One might reasonably begin answering this question by calculating the carbon tax; however, Exxon will pay zero dollars in carbon taxes because neither the United States nor the state of Ohio has a carbon tax.[9]


If Exxon did have to pay a carbon tax for the Belmont leak, which resulted in the release of 60,000 tons of methane, one law professor calculated that the bill would total $75 million.[10]  Requiring Exxon to pay such large fines would not only incentivize oil and gas companies to curb their emissions, but it would also reduce the number of accidents because these companies would likely monitor their wells with more scrutiny and implement better leak-detection systems.[11]


Solutions like carbon taxes, or similar cap-and-trade systems that allow companies to buy and sell carbon permits, are critical to helping mitigate the threat that greenhouse gases pose to our climate.

[1] See, e.g., Hiroko Tabuchi, A Methane Leak, Seen from Space, Proves to Be Far Larger Than Thought, N.Y. Times (Dec. 16, 2019), https://www.nytimes.com/2019/12/16/climate/methane-leak-satellite.html.

[2] See Sudhanshu Pandey et al., Satellite Observations Reveal Extreme Methane Leakage from a Natural Gas Well Blowout, Proc. of the Nat’l Acad. of Sci. of the U.S. (Dec. 16, 2019).

[3] Id. at 3.

[4] Id.

[5] Id. at 4; see also Kevin Crowley, Exxon Well Blast Caused Huge Methane Leak in Ohio, Study Shows, Bloomberg (Dec. 16, 2019), https://www.bloomberg.com/news/articles/2019-12-16/exxon-well-blast-causes-huge-methane-leak-in-ohio-study-shows.

[6] Joshua Dean, Methane, Climate Change, and our Uncertain Future, EOS (May 11, 2018), https://eos.org/editors-vox/methane-climate-change-and-our-uncertain-future.

[7] Id.

[8] Rafi Letzter, Catastrophic Ohio Methane Leak Stayed Hidden Until a Satellite Found It, Space.com (Dec. 22, 2018), https://www.space.com/giant-methane-leak-exxon-pennsylvania.html.

[9] See, e.g., Kyle Pomerleau & Elke Asen, Carbon Tax and Revenue Recycling: Revenue, Economic, and Distributional Implications, Tax Found (Nov. 6, 2019), https://taxfoundation.org/carbon-tax/; see also Patrick Gleason, There Is No Carbon Tax in the U.S., but the Midterms Could Change That, Forbes (Nov. 5, 2018, 10:59 AM), https://www.forbes.com/sites/patrickgleason/2018/11/05/there-is-no-carbon-tax-in-the-u-s-but-the-midterms-could-change-that/#40651a8d6f2b.

[10] Dave Owen, Exxon’s $75 Million Methane Leak, Envtl. L. Prof. Blog (Dec. 17, 2019), https://lawprofessors.typepad.com/environmental_law/2019/12/exxons-75-million-methane-leak.html.

[11] Id.