Latest carbon border tax proposal gets mixed review

Kevin Dempsey, president and CEO of the Washington-based American Iron and Steel Institute (AISI), says the Clean Competition Act introduced in early December by Sen. Sheldon Whitehouse contains a welcome and an unwelcome aspect for AISI member companies.

The legislation would establish carbon border fees on some imported goods with higher greenhouse gas (GHG) emissions intensity than the emissions intensity of competing U.S.-made goods but also includes provisions taxing some domestic output. 

“The AISI welcomes Sen. Whitehouse’s proposed system of carbon intensity-based tariffs on higher-emitting foreign imports that are one aspect of the Clean Competition Act,” Dempsey says. “As the American steel industry leads the world in low-carbon steel production, a carbon tariff approach will help level the playing field for American steel producers and ensure that domestic industry investments in cleaner production processes are not undercut by high-carbon-emitting steel made overseas.”

However, less encouraging is a provision aimed at some domestic producers. “AISI strongly opposes the Clean Competition Act’s proposed tax on domestic carbon emissions," the group says. "This provision penalizes domestic producers who are making great strides toward decarbonization and would deprive domestic steel producers of the very capital needed to continue investing billions of dollars in decarbonization and innovation in the United States.”

The Clean Competition Act follows the Foreign Pollution Fee Act of 2023, which was introduced to the U.S. Senate by Sen. Bill Cassidy.

Cassidy’s bill is focused not only on steel. It lists energy products such as natural gas, oil, hydrogen, minerals, solar panels and wind turbines and industrial products such as steel, aluminum, cement, glass, iron, petrochemicals and paper as covered products.

That act also received only partial endorsement from AISI. As affirmation, Dempsey said last month, “Establishing a comprehensive GHG border fee that requires higher-emitting imports to pay for those emissions will help level the playing field and ensure U.S. producers investing in cleaner production processes are not undercut.”

Because Cassidy’s bill exempted several nations, he added, “AISI is concerned that this legislation as currently drafted would exempt some countries from being subject to the border fee, even if products made in those countries have higher GHG emissions intensity than that of comparable American-made goods.”