Some private gains are created by shifting costs onto others. The Accord prices those costs at the source: carbon, methane, speculation, systemic financial risk, pavement destruction, public-health harms, aquifer depletion, interchange extraction, and labor-market undercutting.
Methane is the second-largest contributor to current-decade warming after CO₂, but it's been priced almost nowhere. Per IPCC AR6, methane has a 20-year global warming potential of approximately 80× CO₂ — meaning a ton of CH₄ leaked or vented today does about 80 tons of CO₂-equivalent damage over the next two decades. The US emits roughly 25–30 million tons of CH₄ per year across three source categories: fossil-fuel venting and pipeline leakage (largest), agricultural enteric fermentation (cattle and dairy), and manure management.
Today's federal architecture prices a narrow oil-and-gas slice (the IRA §136 Methane Emissions Reduction Program) but does not comprehensively price CH₄ across sources. The result is a substantial uncaptured externality that frontline communities (oil-and-gas-region residents, downwind agricultural communities) and the climate system absorb without compensation.
The Methane Accountability and Reduction Levy at $1,200/ton CH₄ in Year 1, escalating $240/year automatically to a $2,880/ton cap (~Year 16). The rate is calibrated to the social cost of methane on a 20-year warming-potential basis, not the 100-year basis that produces an artificially lower number.
Intentional dumping (non-emergency venting, routine flaring beyond regulatory tolerance) faces a 5× multiplier and is non-creditable — operators cannot offset intentional emissions through mitigation credits.
Per-head agricultural anchors apply to enteric fermentation: $103/beef-feedlot, $138/dairy. Operators adopting verified mitigation receive stackable Feedstock Adjustment Credits — 3-NOP (Bovaer), asparagopsis seaweed, rotational grazing, manure digesters — reducing the levy up to 75%.
The custody-transfer rule prevents double-counting against carbon: gas leaked before combustion is a methane event; gas burned at a burner tip is a carbon-fee event. Monthly reconciliation via the Natural Methane Reconciliation protocol ensures no molecule pays both.
Three source categories with separate revenue routing. Fossil-fuel operators on venting and pipeline leakage (60/40 routing to Climate Adaptation Trust / General Fund). Agricultural enteric-fermentation operations and manure-management facilities (70/30 routing to Agricultural Transition Fund / General Fund). Routing distinctions reflect the source category's transition pathway: fossil-fuel emissions are a wind-down problem; agricultural emissions are a transition-to-mitigation problem.
Practical bite: largest US oil-and-gas operators in the Permian, Marcellus, and Bakken basins; large beef and dairy operations in the Plains and West; and large manure-management facilities at industrial-scale dairies and CAFOs.
Operators adopting verified mitigation receive Feedstock Adjustment Credits stackable up to 75% of levy — a 50% mitigation reduction, plus another 25% from a second mitigation, gets the operator to 75% credit (rate floor of 25%). The architecture explicitly rewards verifiable mitigation rather than punishing unmitigated emissions in absolute terms.
Smallholder agricultural operations below scale thresholds are exempt. Family farms with small herds face no methane-levy exposure. The bite is at the industrial scale where measurable mitigation is technologically feasible.
Pending canonical scoring.
Methane revenue follows a humped trajectory similar to the carbon fee — growing through the early decades as the rate escalates, peaking somewhere before the cap, then declining as mitigation succeeds. The Climate Adaptation Trust and the Agricultural Transition Fund receive the routed shares; the General Fund receives the rest.
The Agricultural Transition Fund is the architecture's commitment to the rural communities most affected by the levy: revenue from agricultural CH₄ sources funds the transition support (research grants, mitigation-credit verification infrastructure, regional cooperatives) for the producers paying the levy. The fund is structurally separate from the Climate Adaptation Trust to make the agricultural-side commitment visible.
See tax ladder · fiscal scoring
- Carbon-vs-methane substitution
- Custody-transfer rule prevents double-counting AND single-counting. Each molecule pays one event-type at the correct rate.
- Intentional venting
- 5× multiplier, non-creditable. Operators cannot offset intentional emissions through mitigation credits — only unintentional and ambient emissions qualify for credits.
- Routine flaring beyond tolerance
- Treated as intentional dumping under the multiplier rule. Operators with persistent flaring patterns face the elevated rate.
- Underground-economy avoidance
- Source collection at the wellhead/pipeline/feedlot. Distribution-side avoidance is impossible because the levy fires at the production point.
- Cross-border-shopping
- Imports embedded with un-priced methane face border-adjustment treatment alongside carbon. Aligned jurisdictions in the Alliance Incentive network are credit-treated.
The architecture closes the conversion routes between methane and carbon — and the routes that today let intentional emissions go unpriced.
- Carbon fee
- Companion architecture for CO₂. Custody-transfer rule (leaked-pre-combustion = methane; burned = carbon) reconciles monthly.
- Climate Adaptation Trust
- Receives 60% of fossil-fuel methane revenue. Ring-fenced trust funding multi-decade adaptation capital.
- Agricultural Transition Fund
- Receives 70% of agricultural methane revenue. Funds mitigation research, credit verification, and regional cooperatives.
- Externality Limiter (Engine 6)
- Houses the broader climate-policy stack including methane oversight.
- Alliance Incentive (Engine 8)
- Reciprocal market access for jurisdictions aligning methane pricing. Border-adjustment falls on non-aligned imports.
The methane levy is the carbon fee's CH₄ companion, with the custody-transfer protocol ensuring the two instruments don't double-price a molecule. The Agricultural Transition Fund is unique to this stream, reflecting the architecture's commitment to a managed transition for the agricultural producers paying the levy.
Methane levy at $1,200/ton CH₄ rising to $2,880 will materially raise food prices via cattle and dairy. Agricultural producers face mitigation costs ahead of the credit infrastructure being available. Rural communities pay the levy; coastal and urban communities receive the rebate (carbon dividend) — politically untenable.
The Agricultural Transition Fund is the architecture's specific response: 70% of agricultural methane revenue routes to the producers' transition support. Mitigation infrastructure — credit verification, regional cooperatives, research funding — is funded by the levy itself. The transition is structurally bounded by the architecture, not left to ordinary appropriation politics.
Mitigation credits stackable up to 75% mean producers adopting verified mitigation pay only 25% of the headline rate. The technology stack (3-NOP, asparagopsis, rotational grazing, manure digesters) is at commercial-deployment scale today; the levy creates the demand signal that scales it further.
Rural-vs-urban routing concern is real but architecturally addressed: methane is not paired with the carbon dividend. Carbon-fee revenue funds the per-adult per-child Energy Stipend (universal); methane revenue funds the Climate Adaptation Trust and Agricultural Transition Fund (ring-fenced, with the Ag Transition Fund specifically supporting the producers paying the levy). The dividend rural communities receive is the carbon-side rebate, which they qualify for on the same per-capita basis as everyone else.