# What the Methane Border Adjustment Mechanism Act Does

This bill creates a new tax on imported oil and natural gas based on how much methane pollution was released during their production. The tax is designed to penalize countries that don't control methane emissions as strictly as the United States does, while giving an advantage to American oil and gas producers who meet tougher environmental standards.

Here's how it works in practice: When oil or natural gas arrives at U.S. ports from another country, the government would calculate a tax based on that country's overall methane emissions from oil and gas production. If a country produces oil and gas with high methane leakage, imported products from that country would face a larger tax. The tax amount is proportional—if a country's total methane charges would be $100 million under U.S. rules, and your shipment represents 1% of that country's production, you'd pay 1% of that charge. This means American importers and ultimately consumers could face higher prices on imported oil and gas, while domestic producers face no such tax and become more price-competitive.

The bill also directs the Treasury Department to work with other major oil and gas importing countries to get them to adopt similar taxes, partnering with the European Union which already has its own methane border measure. Over time, the government would study whether to expand the tax to other products made with oil and gas as ingredients, like plastics or chemicals. The tax takes effect on January 1, 2025, and the bill includes provisions for companies to potentially pay lower taxes if they can prove their specific supply chain has lower methane emissions than their country's average.