Carbon Border Adjustment Bill Sponsor Talks Up the Approach
Sen. Chris Coons, D-Del., told an Atlantic Council webinar that although business executives have told the bipartisan Climate Caucus that they want a carbon tax, it's more likely that a carbon adjustment tax would come first in Congress. Coons, speaking Aug. 3, said, “It seems that we may actually be able to move first, to assessing what the regulatory price already is on carbon in our economy and setting a border carbon adjustment” tax. He said it makes sense to work on that now because Canada, the United Kingdom and the European Union are all planning similar strategies.
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“One of the concerns most often raised by my Republican colleagues [in the caucus] is that if we put a price on carbon, if we put in a clean electricity standard, if we put in greater regulatory pressure on carbon emissions here in the United States, carbon leakage is the biggest problem,” he said, noting that those Republicans say that “China and India will simply continue to build new coal-fired power plants, to industrialize and export their higher-carbon products to the United States.”
The border adjustment tax would take care of that concern, he believes. “The version of that bill I’ve drafted would initially only apply to some of the highest carbon intensity and easiest-to-measure industrial sectors like cement and steel,” he said, but over the next two years, could be broadened to more products to match what Europe and Canada are doing. If these major economies make imports from countries with lower climate ambitions more expensive, “that would put further pressure on China and India and Indonesia and others to be bolder on their climate action,” he said.
Coons said he and other senators are also talking about how to tax carbon domestically, but there are a lot of questions about how that revenue would be distributed -- back to families, spent on climate resiliency, or subsidizing green technology research and green technology adoption?
Sen. Mike Braun, R-Ind., another Climate Caucus member, did not talk about carbon adjustment taxes in his brief remarks but said that industry leaders “want to be part of the solution.”