Congressional Carbon Border Action May Have to Wait for EU Tariffs, Senator Says
Although climate advocate Sen. Sheldon Whitehouse, D-R.I., has hopes of introducing a bipartisan carbon border adjustment tax, he said it may take American exports being hit with carbon border tariffs in Europe to get Congress to move.
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Whitehouse, who was being interviewed by a Center for Strategic and International Studies fellow July 20, said, "We’re particularly in touch with the EU folks because they’re the first movers" on carbon border adjustment. "They’re sending strong signals they would welcome a bill like this. If we just sit here truculently on our hands, not doing anything, yeah, they are going to tariff us. And they should.
"That might be the motivating factor for some of my colleagues to get off their duffs and do this."
A Senate majority, much less 60% of the Senate, has not been able to agree to offer benefits to green energy players or to spend money to accelerate a clean energy transition. Agreeing to punish polluting firms, domestic and foreign, which would be likely to increase prices for at least some commodities, is less politically palatable.
"At the moment the prospects for anything serious on climate in reconciliation, while not dead, are so small that the prudent course is to resort to executive action," Whitehouse said. He said that if the administration advances rigorous regulation and litigation, it might improve the chances of getting congressional action on climate.
He said the Biden administration also should make its conversations with the EU and Canada around their plans for border adjustments for carbon very public.
He said he welcomed the U.S. trade representative's talks with Europe about how to preference trade in clean steel and aluminum. He called this "putting a toe in the water," because it doesn't cover all carbon-intensive industries, but said that it could work through a lot of the analytical and trade issues that measuring carbon intensity and using trade to encourage cleaner production brings up.
"The ultimate goal has to be a full border adjustment across the affected industries," he said.
Whitehouse blamed the fossil fuel industry's lobbying for the difficulty Congress has had putting a domestic price on carbon, which is needed as a foundation for a carbon border tax. But he said the fact that the largest domestic cement manufacturer supports his bill is big.
"The American business community is beginning to realize that getting right on climate is our best move by a ton," he said.