No one would say that bipartisanship is having its moment in Washington. Yet there is at least a sign of it in legislation dealing with climate and trade.
Republican Senator Bill Cassidy of Louisiana “is making his hardest sell yet on conservative legislation linking climate action with trade policy,” Emma Dumain wrote December 12 in E&E Daily. Along with Senator Lindsey Graham (R-SC), Cassidy recently unveiled a slimmed-down, 20-page “discussion draft” of their year-old Foreign Pollution Fee Act.
GOP leaders are talking about putting together two budget reconciliation packages, and Cassidy believes his bill could be a prime candidate for inclusion. “It’s consistent with what the Trump administration wants to do,” Cassidy told reporters. “It could actually raise revenue for a reconciliation bill, and so therefore we want to get it more into the discussion now.” The legislation’s goal is to leverage data showing that the U.S. produces certain materials “cleaner” than other nations — namely China — and impose a fee on certain imports.
“The fee,” Dumain reported. “would still only affect foreign products, continuing to ignore the argument from many Democrats and advocates that a domestic price on carbon is necessary for any new trade policy to meet compliance with the World Trade Organization.”
The original bill included energy imports like oil, natural gas, hydrogen, minerals, solar panels and wind turbines. So-called “covered products” in the new bill would include only aluminum, cement, glass, iron, fertilizer and steel.
A Cassidy spokesperson said the senator and his team suggested the final list of products was the result of a yearlong listening tour with different industries “to better understand their trade profile and their challenges in countering unfair competition from China.”
Shuting Pomerleau, director of energy and environmental policy at the center-right group American Action Forum, said she noticed a major bright spot in the two-page summary sheet of the measure that Cassidy’s office released: The “polluters’ fee” would be designed to “correlate to the environmental performance of U.S. production and U.S. imports to qualify for the WTO’s environmental policy exceptions.”
“It shows me they are trying to make this a climate bill,” she said. “They are trying to find WTO compliance without a domestic carbon price.”
Some green-oriented groups are somewhat clear-eyed about what Cassidy is hoping to accomplish. Zach Friedman, senior director for federal policy at Ceres, said the bill was always going to be a “trade and competition bill with environmental benefits” rather than strictly a climate measure.
Senator Sheldon Whitehouse, the Rhode Island Democrat who has championed the effort on Capitol Hill to combat climate change, commended his Republican colleagues. “I give [Cassidy and Graham] a lot of credit for what they’ve done,” he said during a forum at Harvard’s Salata Institute for Climate and Sustainability. “Obviously, there’s a lot of fossil fuel blowback against them, but they’ve stuck to their guns so good on them.”
Whitehouse added that while bipartisan negotiations on carbon pricing are positive developments and the American public is widely supportive of placing the cost of pollution on polluters themselves, “we have to fight through enormous fossil fuel intervention,” including billions in dark money, in order to enact effective climate reform and enforce it.
The European Union’s Carbon Border Adjustment Mechanism (CBAM)—a tariff that mainly will affect imported goods from the cement, electricity, fertilizer, some metals, and hydrogen sectors from countries outside the EU—will take effect in 2026. That should create added momentum for Congress to price carbon, noted Catherine Wolfram, a professor of energy economics at the MIT Sloan School of Management and a former official at the U.S. Treasury. “The economic logic behind product pricing is so potent and so persuasive, I think that the U.S. will come to this realization,” Wolfram said.
Senator Whitehouse agreed but also pointed to obstacles that hinder carbon pricing legislation. Several bills proposing a federal carbon tax have been floated and failed in recent years, but, Whitehouse said, a new wave of them holds some promise.
Whether the U.S. will adopt meaningful carbon pricing legislation depends on whether politicians can understand that “there are now no remaining known scenarios for a pathway to climate safety that don’t include carbon pricing,” Whitehouse said. “…There can be no more quarrel on that.”