The bipartisan climate plan that’s advancing in the U.S. Senate, which would provide the first step for the United States to impose its first carbon import tax, will drive up costs for U.S. consumers while its benefits for the environment will be scarce to nil if the legislation is approved in anything close to its current form, according to energy experts.
The legislation, dubbed the PROVE It Act and which enjoys broad support, advanced out of the Senate Environment and Public Works Committee on Jan. 18 following a 15–4 vote.
The bill’s lead sponsor is Sen. Chris Coons (D-Del.), and its backers include Sens. Lindsay Graham (R-S.C.), Bill Cassidy (R-La.), Kevin Cramer (R-N.D.), and other prominent GOP figures.
PROVE IT stands for Providing Reliable, Objective, Verifiable Intensity, and Transparency. If approved, the measure will give the Department of Energy (DOE) two years to complete a detailed study of the intensity of greenhouse gas emissions related to domestically produced energy and metals products, as compared to those of other nations.
Observers expect that the DOE’s findings won’t fall into a void but will form the basis for far-reaching policy changes, starting with tariffs on high-emission goods from China and other nations that harm the environment. Carbon taxes will soon follow.
As summers get ever hotter and alarm about the climate and the fate of the planet grows, the bill’s sponsors hope to foster more ecologically responsible production and alleviate the climate crisis by encouraging reliance on more sustainable supply chains.
What some may consider the strongest argument from a political standpoint—that it will punish the Chinese regime for irresponsible and abusive trade practices—fails to convince all the experts. In the end, the legislation may be more popular among U.S. lawmakers than anyone else, they say.
“The PROVE IT Act seems to be a way for these members to say they are ‘doing something’ about climate change—and get a nice pat on the back from the lobbies and constituencies they are trying to please—without actually doing anything,” Brent Bennett, policy director of Life:Powered, an initiative of the Texas Public Policy Foundation, told The Epoch Times.
Minimal Reductions
If tariffs are to come into effect, pushing importers to raise prices on goods they sell domestically, it’s worth conducting a careful cost-benefit analysis, Mr. Bennett and other experts in the energy industry say. They don’t expect tangible results on the benefit side of the ledger.Any reduction in emissions stemming from a carbon tax on imports will be minimal, he told The Epoch Times. The net result will amount to only a tiny fraction of a greenhouse gas objective that is itself slight at best, he argued.
“Given that eliminating all U.S. greenhouse gas emissions by 2050 will reduce global temperatures in 2100 by less than 0.1 degrees, the impact of reducing the emissions of our imports won’t even be measurable,” Mr. Bennett said.
“But the cost will be very measurable in the form of higher prices that Americans will pay for imported goods. Like every climate policy proposed to date, there is no way this policy could pass a true cost-benefit test.”
He alluded to the heavy dependence of domestic U.S. manufacturing and energy production on imported materials and products and the steps that manufacturers are likely to take to offset the higher cost of importing them. Energy costs for the average citizen will go up sharply, he predicted.
While the need to discipline China for its abusive trade policies and practices is understandable, the PROVE IT Act will penalize not just China but dozens of exporters, including friends and allies of the United States, with its imposition of a blanket import tax on products linked to carbon emissions, according to Mr. Bennett. He views targeted actions that specifically punish the regime in Beijing as a more viable strategy.
Another consideration is the likelihood that trading partners would retaliate, he warned.
“Most of our trading partners, including China, could rightly point to the fact that their per capita carbon emissions are lower than ours, because the United States is among the top five countries in per capita carbon emission in the world. There are not that many products made in other countries that would have a lower carbon emissions intensity if they were U.S.-made, again pointing to the fact that this tax would do little if anything to reduce emissions,” Mr. Bennett said.
Bearing the Costs
Even organizations with a boldly pro-ecological stance and agenda are sober about what imposing a carbon tax would mean on a practical level, according to Mr. Bennett. He noted that the U.N. Intergovernmental Panel on Climate Change has estimated that a carbon tax would have to be hundreds of dollars per ton—higher even than the taxes that European regulators are rolling out—to exert a real influence on energy consumption and thereby curb emissions.The social consequences of such a burden aren’t pleasant to envision, he said.
“It’s hard to imagine a carbon import tax in the United States rising to that level without massive public revolt,” Mr. Bennett said.
He pointed to Germany, where efforts to advance a green agenda have foundered on economic realities and stirred legal and political controversy.
“Look at Germany, which was using budget tricks to hide its spending on wind and solar electricity generation and is now being forced by its high court to properly count that spending,“ Mr. Bennett said. ”The budget cuts being proposed to balance this spending are triggering massive protests in Berlin, and the same would happen in the United States if this tax was made large enough.”
Squeezing Consumers
On the surface, the PROVE IT Act may have an innocuous purpose, requiring the DOE to study carbon emissions without obligating any policy changes based on the findings of such research. However, Alexander Stevens, manager of policy and communications at the Washington-based Institute for Energy Research, believes that the goal of the legislation is to establish a basis for a carbon tariff on imports.One of the backers of the proposal, Mr. Cassidy, introduced legislation in November 2023 with a view toward introducing carbon tariffs for imports, Mr. Stevens pointed out. Most lawmakers who support carbon tariffs also support carbon taxes. The shift in favor of such a tariff may help make the idea of a domestic carbon tax seem more mainstream, although not all understand the singular fiscal burden that such a tax would represent for working people.
In either case—whether importers raise prices to recoup their losses from having to pay tariffs or consumers must pay an additional tax—it is the latter who find themselves pinched, he said.
“The economic consequences of tariffs are straightforward. Tariffs essentially function as taxes on imported goods, and consumers are the ones bearing the ultimate cost. In today’s global economy, most consumer products incorporate components from foreign markets,“ Mr. Stevens told The Epoch Times. ”Considering that energy is a fundamental input in the production of various goods, a tariff aimed at reducing greenhouse gas emissions translates to imposing a tax—and subsequently increasing prices—across the board.”
Proponents of the PROVE IT Act might have a stronger case if they could demonstrate that the net effect on climate change will be significant, but Mr. Stevens, like Mr. Bennett, believes that they have failed to make the case.
Mr. Stevens said evidence for the relationship between what purports to be more open trade policies and the environment is mixed and that many people misunderstand the issue.
“There’s a great deal of evidence that indicates that efficiencies and innovation, fostered by competition and freer trade policies, are instrumental in fostering cleaner environments. The implementation of new carbon tariffs is poised to further disrupt international trade relations and undermine the incentives for efficiency and innovation inherent in free trade policies,” he said.
Domestic producers that don’t have to pay tariffs because they are not utilizing supply chains involving foreign providers are likely to politicize the economic issues, spending lavishly in an effort to retain and consolidate their advantage, Mr. Stevens said. That may affect industries outside the energy sector.
“To compound the issue, carbon tariffs may replace the positive outcomes with political dysfunction and corruption, establishing a harmful cycle where successful lobbying efforts for industries benefiting from these tariffs motivate other domestic sectors to seek protectionism through environmental policies,” he said.
Public Sentiment
The public doesn’t share politicians’ belief in tariffs as a means to encourage more responsible trade, according to Mr. Stevens.He cited the results of a recent survey by the American Energy Alliance, a Washington-based advocacy outfit, and the Committee to Unleash Prosperity, a lobbying organization also based in the capital. The survey found that only 3 percent—among the 1,600 likely voters polled across eight states—Pennsylvania, Wisconsin, Arizona, Nevada, Michigan, Missouri, Ohio, and Georgia—see climate change as the most urgent issue that the country faces.
At the same time, 59 percent identified the economy as their top or second concern. Moreover, 51 percent said they oppose a carbon dioxide tax on imports.
While the likely consequences of the PROVE IT Act may not enjoy much public support, that hasn’t stopped some backers of tariffs and taxes from trying to sell the legislation as a means of punishing China’s authoritarian regime, according to Mr. Stevens.
“Because this stuff is so politically unpopular, these climate tariffs are being sold as a way to push back against China because that is the only way to make energy taxes palatable to a conservative audience,” he said.
However, China exporters won’t be the ones paying the tariffs, and despite his sensitivity to issues involving China and his understanding of the need to exert pressure on the communist regime, Mr. Stevens said he’s unconvinced of the efficacy of tariffs.
“In this case, using tariffs to try to weaponize global supply chains is a counterproductive strategy, as that approach will actually reshape supply-chain networks in a manner that expedites China’s ascent rather than hindering it,” he said.
Frustrating Beijing
Some who have followed the trade wars between the United States and its allies on the one hand and the Chinese regime on the other, dissent from the view that Beijing won’t suffer in any way from approval of the PROVE IT Act.“It has long been known that U.S. manufacturing, which must comply with strict labor and environmental laws, is more expensive than overseas manufacturing that lacks worker or ecosystem protections,” Michael E. Webber, chairman of the Department of Mechanical Engineering at the University of Texas at Austin, told The Epoch Times.
Before the United States and aligned powers can levy appropriate penalties against Beijing for exporting products around the world that harm the environment, research is needed to gauge the precise degree of harm that such pollutants inflict relative to those of other nations, according to Mr. Webber.
“Measuring the pollution associated with overseas manufacturing facilitates possible future efforts to put a price on that pollution, which would have the net effect of making ‘cheap’ (but dirty) goods made elsewhere more expensive, and thus make cleaner domestic goods more price-competitive,” he said.
“What’s interesting is that an odd mix of bedfellows—environmentalists, protectionists, and security hawks—might all see something they like in this act.”
Department of Energy officials didn’t respond by press time to a request by The Epoch Times for comment.
