U.S. Carbon Border Bill Means a Push for Domestic Carbon Pricing is On the Way; BCA Seen Raising $16 Billion (1)

–Bill Assumes U.S. May be Finally About to Get a Domestic Carbon Price
–Adjustment Would not Apply to Least Developed Nations, Ramping up Pressure on G20 Countries

By Mathew Carr


JULY 29, 2021 — LONDON: U.S. Senator Chris Coons and House Representative Scott Peters, both Democrats, a week ago published the “Fair, Affordable, Innovative, and Resilient (FAIR) Transition and Competition Act”, which would establish a border carbon adjustment (BCA) as a fee on imports, starting Jan. 1, 2024.

This could raise $16 billion and follows the July 14 release of the European Commission’s emissions cutting plan for 2030 — which also include BCAs for imports into the European Union, according to a bulletin by Toronto lawfirm Resilient LLP.

What’s covered? See this snip:

p5 https://www.coons.senate.gov/imo/media/doc/GAI21718.pdf

This clause is interesting in the runup to the UN climate talks in Glasgow in November:

INTERNATIONAL NEGOTIATIONS.—The Secretary of State and the United States Trade Representative shall engage with other countries regarding reducing global greenhouse gas emissions through trade and ensuring fairness in the application of emissions-based tariffs.

The Bill mentions “domestic environmental cost incurred” by businesses about six times, so U.S. carbon prices of some type seem like they are on their way, finally. At least the Democrats are going to give them something of a push.

Here is a link to Resilient LLP’s bulletin, followed by a snip of how its structure might help domestic and global climate justice:
Border carbon adjustment. The Secretary would administer the BCA through regulation and guidance. The Secretary of State and the United Stated Trade Representative would engage with other countries to reduce global GHG emissions and ensure fairness in the application of the emissions-based tariffs. A fee would be applied to any covered good (either a covered fuel or product produced within a sector) to be determined based on the domestic environmental cost incurred multiplied by the production of GHG emissions of the product or the upstream GHG emissions of the covered fuel. The BCA would not apply to (i) countries on the Least Developed Countries list of the OECD and (ii) countries that do not impose a BCA on products from the U.S. and enforce laws and regulations designed to limit or reduce GHG emissions that are at least as ambitious as similar U.S. laws and regulations

Allocation of BCA revenue. Revenue from the BCA (estimated at $16b annually) will be used, in part, to support high-impact research, development, demonstration, technology transfer, commercialization, and export of technologies that reduce or eliminate GHG emissions. 

Resilient Communities Grant Program. The Act would create a Resilient Communities Grant to be distributed to States to:

  • provide transition job training with an emphasis on fossil fuel-related industries;
  • assist municipalities and counties with developing and implementing climate vulnerability assessments and adaptation plans, which may include projects such as climate-smart infrastructure, agriculture climate solutions, and natural climate solutions to build climate resilience and support carbon sequestration;
  • assist frontline communities experiencing severe threats from climate change;
  • alleviate historical burdens on communities of colour, low-income communities, Tribal and Indigenous communities, fossil fuel-dependent communities, and other vulnerable populations;
  • provide relocation assistance as a result of climate change or energy transition threats; and
  • assist small businesses that are disproportionately impacted by the BCA.

    (Adds Tweeet; I earlier added some of the bold emphasis, more to come)

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