A new bill passed recently by a US Senate committee would require the federal government to study the greenhouse gas emissions associated with products from selected industries and US trade partners.
On January 18, a bipartisan group of senators with the US Senate Committee on Environment and Public Works passed a new bill—the Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act—by a margin of 14 to 5. Of several bills that have been proposed to address concerns regarding climate and trade, the PROVE IT Act is the first bill to advance through a congressional committee. The bill, cosponsored by Senators Kevin Cramer (R-ND), Chris Coons (D-DE), and others would require a study of the greenhouse gas emissions associated with a set of 22 products. The covered products generally are produced by industries that use large amounts of energy and are traded globally, such as iron and steel, aluminum, cement, pulp and paper, and petrochemicals.
Under the legislation, the US Department of Energy would have two years to determine the emissions released per metric ton or per dollar of sales of a given product—a value known as the “emissions intensity” of a product. The agency would study emissions intensities in both the United States and certain foreign countries, including the Group of Seven, countries that have signed free-trade agreements with the United States, and countries that the United States has designated “foreign countries of concern.”
Notably, the PROVE IT Act does not introduce fees on either imported goods or goods that are produced domestically. The PROVE IT Act simply authorizes an exercise to gather information, with the goal of using the resulting data to understand and address the emissions associated with imported goods.
The exclusive focus on data collection in the PROVE IT Act stands in contrast to other recent bills that have gone further, proposing the assessment of fees on imported goods based on the emissions intensity of those goods. For example, the Foreign Pollution Fee Act, introduced by Senator Bill Cassidy (R-LA), would impose a fee on imported goods that have a higher emissions intensity than goods produced in the United States. Likewise, the Clean Competition Act, introduced by Senator Sheldon Whitehouse (D-RI), imposes an import fee and a parallel fee on domestic producers which have emissions intensities that exceed a declining threshold. Though the PROVE IT Act only authorizes the collection of data, its limited scope has not stopped opponents from calling the bill the first step toward a “domestic tax on carbon dioxide.”
Although Resources for the Future (RFF) does not take positions on specific legislation, RFF scholars have worked extensively with congressional staffers from both parties to inform the development of policies related to climate and trade. Such policies quickly are changing from theoretical to consequential; the European Union began implementing a carbon border adjustment in October 2023, although like the PROVE IT Act, the carbon border adjustment focuses on data collection and reporting during its initial implementation phase up to 2025.
As a part of a body of work on border adjustments, RFF has published resources for a variety of audiences, including a “Border Carbon Adjustments 101” explainer; an article in Resources magazine that discusses high-level considerations for border adjustments; and a recent report that unpacks and compares the design elements of the Foreign Pollution Fee Act, Clean Competition Act, and the European Union’s Carbon Border Adjustment Mechanism. Previous issue briefs have detailed a domestic benchmark approach for carbon border adjustments as well as considerations for establishing a “performance alliance” of countries.
The incorporation of carbon emissions into trade measures is a complex endeavor, though ultimately necessary if countries are serious about decarbonizing internationally traded, industrial products. And that endeavor will require the types of additional supporting data that would be generated under the PROVE IT Act. As the congressional conversation around border adjustments continues to evolve, RFF will continue to expand our understanding of these trade instruments, including recently initiated research efforts to model the economic, emissions, and trade effects of border adjustments globally. Stay tuned for more research on this important topic area in the months to come.