Climate Border Patrol

Federal Legislation, Opinions, Policy

July 20, 2021

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by Matthew Choi (Politico’s Morning Energy) Sen. Chris Coons (D-Del.) and Rep. Scott Peters (D-Calif.) unveiled legislation Monday to create a carbon border fee mechanism, putting into legislative text a system to tax carbon-heavy imports, like steel or aluminum, to protect U.S. companies that are likely to face stronger domestic climate regulations. Their hope is that the bill, the FAIR Transition and Competition Act, would be folded into Democrats’ $3.5 trillion budget plan for some of their more partisan climate and social policies. Read the bill text here.

The fees could raise as much as $16 billion from imports from countries with less stringent climate measures, like China. The lawmakers intend to match the tariffs with the costs U.S.-based companies face to comply with state and federal climate regulations.

The bill’s backers call the mechanism a “fee,” and not a tariff, in an attempt to skirt compliance issues at the World Trade Organization. While the WTO rules would generally not allow for carbon tariffs, they may allow countries to adjust their internal carbon taxes for imports at the border. Zack Colman and Gavin Bade have more for Pros. READ MORE

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