On Wednesday, Senator Sheldon Whitehouse (D-RI) introduced a new bill that proposes a border-adjusted carbon tax.
The bill is called ‘Clean Competition Act’ and intends to advance decarbonization efforts both within the US and beyond its borders.
This new carbon border adjustment is one of the latest ideas proposed by lawmakers as a means to mitigate the climate crisis, as reconciliation negotiations appear to have come to a halt.
The carbon border adjustments are also part of the current bipartisan energy talks led by Senator Joe Manchin.
A similar law is expected to be implemented in the European Union, the idea of which is to provide a level playing field for local and foreign manufacturers.
Some of the most important components of the proposed border-adjusted carbon tax bill are as follows:
- Domestic Carbon Tax – will be collected at carbon-intensive industry sites that manufacture primary goods. These taxes will then be passed from the manufacturer onto their customers producing either finished or intermediary goods.
- Carbon Tax Rate – the rate of $55 per ton of CO2 would come into effect starting from 2024 and will increase at a real growth rate of 5%.
- Import Taxes – intended to mirror the domestic carbon tax, certain imported carbon-intensive goods would be taxed the same way as domestic manufacturers of the same primary goods starting in 2024. Only imported goods from the least developed nations would be exempt from these taxes.