Among some senators, a carbon tax on imports is gaining ground
“There are a handful of climate topics that offer real opportunity for productive bipartisan conversation. And this is one of them,” said Nat Keohane, president of the Center for Climate and Energy Solutions, a Washington think tank. “People see it as something that could solve a lot of problems at once.”
While senators are far from agreeing on the terms of such a policy – let alone adopting it – a group of centrist MPs from both parties is talk about what is called a carbon border adjustment to address both the climate crisis and growing reliance on China’s manufacturing and industrial sectors.
Among them are Republicans Bill Cassidy of Louisiana, Kevin Cramer of North Dakota, and Mitt Romney of Utah, as well as Democrats Chris Coons of Delaware, Joe Manchin of West Virginia, and Sheldon Whitehouse. , of Rhode Island.
Under such a policy, tariffs would be imposed on goods imported into the United States if they exceeded certain levels of greenhouse gas emissions.
The policy is based on the belief that the relatively strict environmental laws of the United States mean manufacturers here produce far fewer emissions than their overseas counterparts. This puts them at a disadvantage – clean air is not cheap. But if a border adjustment tax were introduced, manufacturers in China and other countries with looser environmental standards would have to pay a penalty for their higher emissions.
“It would start to level the playing field, frankly relocate or near a lot of industries and protect American jobs,” said Senator Cassidy during an event at the Council on Foreign Relations earlier this month.
The question that dominates the discussions is whether a border adjustment should include a national mechanism for pricing carbon emissions, as is done in the European Union and Canada. The EU and Canada are establishing their own border adjustments.
Whitehouse said last week he would introduce legislation creating a carbon border adjustment teamed up with an emissions standard that would also penalize U.S. manufacturers who emit excessive amounts of greenhouse gases — effectively a carbon tax on the biggest polluters.
“There have been some really good bipartisan discussions on adjusting carbon borders,” he said, “and I think that’s an avenue to take a big step forward.”
Romney and Cassidy have expressed a similar thought. But the concept of a domestic carbon levy or tax, however it might be built, is unlikely to sit well with more conservative Republicans, said George David Banks, a fellow at the Bipartisan Policy Center and former chief Republican strategist. of the House Select. Commission on the Climate Crisis.
“That’s going too far for a lot of Republicans,” Banks said. “Sen. Cramer is the thought leader among conservative Republicans on this, and he supports an emissions performance standard, but he only wants to apply it to inbound imports, not domestically.
Such a strategy would potentially trigger a fight within the World Trade Organization, which acts as an international arbiter on international trade. Without a domestic carbon price, other countries could argue that a carbon adjustment at the US border unfairly hinders their trade.
“It’s easier to introduce border adjustment if you have a national carbon price in place,” said Catrina Rorke, senior vice president for policy and research at the nonprofit Climate Leadership Council.
But not everyone is convinced that the WTO is something to worry about. Republicans and Democrats have discussed working with US allies such as Germany, South Korea and the UK to create an international carbon performance standard, so higher-emitting products can be subject to tariffs by participating countries.
As Republicans and Democrats push to enact trade measures protecting American workers and industry, going against WTO free trade policies may not be as concerning as it was a decade ago. .
“If we can convince other countries to do this with us, it will be difficult for the WTO to challenge,” Banks said. “The only people who care about the WTO are trade lawyers and a small minority of free-traders. Clearly, the leadership of the GOP and Democrats is going the other way.
With less than six months to go until the midterm elections and inflation pushing up the prices of consumer goods, Congress is unlikely to act on a carbon border adjustment this year. But in the years to come, as both sides seek to tackle climate change and reduce their dependence on foreign industry, such a policy could become increasingly attractive, supporters say.
But clear divisions are emerging. Environmentalists are loath to adopt a carbon policy that does not impose controls on national emissions. A recent editorial in the conservative Washington Times criticized Cassidy and Cramer by name, asking, “Who would want to raise the price of energy when oil and natural gas prices are two or three times higher than a year ago?”
Yet among climate action advocates, any discussion is a source of optimism.
“I want to be clear, it’s pretty early. But there’s interest,” Keohane said. to talk about what the components of a national carbon policy might look like.”