The United States does not have a carbon border tax. But legislation recently introduced by a bipartisan group of senators could very well put the country on track to implement one.
If the U. S. were to implement a carbon border tax, you’d want to know which types of commercial products emit the most emissions from their production and which countries are the worst carbon emitters. Sens. Christopher A. Coons, D-Del. , and Kevin Cramer, R-N. D. , want to start following this information.
On June 7, lawmakers introduced the 2023 law offering reliable, objective, and verifiable emissions intensity and transparency, also known as the PROVE IT Act. The law would require the Department of Energy to track the amount of emissions emitted by domestic and foreign production of many products, adding aluminum, glass, iron, steel, natural gas, plastics and lithium-ion batteries.
In addition to tracking foreign emissions, the law would also provide valuable insights for U. S. policymakers seeking to assess the effect of U. S. environmental criteria and production practices. The U. S. government is a U. S. citizen, the senators said in a statement. Lawmakers hope the data can lay the groundwork for a carbon tax on the U. S. border, according to the Washington Post.
At a time when Republicans and Democrats fail to align on many issues, let alone politics, the bill draws attention for its strong bipartisan support. The measure is co-sponsored by Sen. Bill Cassidy, R-La. ; Lindsey Graham, RSC; Martin Heinrich, D. N. M. ; John W. Hickenlooper, D-Colo. ; Angus S. King Jr. , I-Maine; Lisa Murkowski, R-Alaska; and Sheldon Whitehouse, D. R. I.
The senators can come together because they share an interest in protecting American businesses. For Democrats, the measure could have the added benefit of driving future climate policy. Coons told the Post that he hopes that the United States will collaborate with allies that have developed strong climate policies.
And the PROVE IT Act can help fill a very important data gap. There is a popular foreign accounting for measuring and managing emissions called the Greenhouse Gas Protocol. However, the popular one partly comes to multiple estimates and counts, according to two researchers: Robert S. Kaplan, a senior researcher and professor emeritus at Harvard Business School, and Karthik Ramanna, a professor at the University of Oxford. Part of the challenge comes from how one type of emissions, called scope 3 emissions, is calculated. Scope 3 emissions are similar to a business and come with similar emissions to commuting, business travel, and investments.
Although Scope 3 emissions are not emitted directly through a company, they have come under increased scrutiny in recent years as they help give companies a broader view of their environmental impact and how third parties, such as suppliers, contribute to it. Kaplan and Ramanna recently developed a technique to help corporations track those emissions more accurately. In the meantime, the PROVE IT Act may be helpful in addressing this data problem, as it would require the Department of Energy to identify knowledge gaps and issues similar to verifying emissions knowledge.
This isn’t the first time lawmakers have floated the concept of a carbon border tax. In 2021, Coons introduced the FAIR Competition and Transition Act of 2021, which would have charged fees and used a portion of the proceeds for a network grant program. Cassidy has called for a carbon border adjustment mechanism and is lately drafting legislation.
However, the PROVE IT Act is the first time that a factor law has garnered such strong bipartisan support and may have some sustainability, thanks to developments such as the EU’s upcoming Carbon Border Adjustment Mechanism and increased scrutiny of the countries with the highest emissions. Lawmakers are concerned about emissions from several countries, but they are specifically concerned about China.