No official summary available for this bill.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3523 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3523
To amend the Internal Revenue Code of 1986 to create a carbon border
adjustment based on carbon intensity, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 17, 2025
Mr. Whitehouse (for himself, Mr. Blumenthal, Mr. Heinrich, Mr. Schatz,
Mr. Welch, and Mr. Van Hollen) introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to create a carbon border
adjustment based on carbon intensity, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clean Competition Act''.
SEC. 2. CARBON INTENSITY CHARGE.
(a) In General.--Chapter 38 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter E--Carbon Intensity Charge
``Sec. 4691. Calculation of carbon intensity.
``Sec. 4692. Imposition of carbon intensity charge.
``Sec. 4693. Rebate.
``Sec. 4694. Carbon clubs.
``Sec. 4695. Definitions.
``SEC. 4691. CALCULATION OF CARBON INTENSITY.
``(a) Domestic Reporting Requirements.--Not later than June 30,
2026, and annually thereafter, any covered entity shall, for each
eligible facility operated by such entity, report to the Secretary, the
Administrator, and the Secretary of Energy with respect to the
following:
``(1) Any information required to be reported to the
Administrator under the Greenhouse Gas Reporting Program (as
would be required to be reported notwithstanding any other
provision of law prohibiting the implementation of or use of
funds for such requirements) for the preceding calendar year.
``(2) The total amount of electricity used at such facility
during the preceding calendar year, including--
``(A) whether such electricity was provided through
the electric grid or a dedicated generation source,
``(B) the terms of any power purchase agreements
with respect to such facility, and
``(C) with respect to any electricity which was not
provided through the electric grid, the greenhouse gas
emissions associated with the production of such
electricity, provided that such emissions are not
reported pursuant to paragraph (1).
``(3) The total relevant quantity of each covered primary
good produced at such facility during the preceding calendar
year.
``(4) Any other information determined necessary by the
Secretary for purposes of the administration of subsection (b).
``(b) Calculation.--
``(1) Carbon intensity.--
``(A) Eligible facility.--For purposes of this
subchapter, for each calendar year, the carbon
intensity with respect to any eligible facility shall
be an amount equal to the quotient of--
``(i) the covered emissions (as determined
under paragraph (2)) with respect to such
facility, divided by
``(ii) the total relevant quantity of
covered primary goods produced at such facility
during the preceding calendar year.
``(B) Covered national industry.--
``(i) In general.--For purposes of this
subchapter, the carbon intensity with respect
to any covered national industry shall be an
amount (as determined by the Secretary) equal
to the quotient of--
``(I) an amount equal to the sum of
the covered emissions (as determined
under paragraph (2)) with respect to
all eligible facilities which produce
covered primary goods which are
included within such covered national
industry for the calendar year, divided
by
``(II) the total relevant quantity
of covered primary goods within such
covered national industry which are
produced at all such eligible
facilities during such year.
``(ii) Covered primary goods
determination.--For purposes of this
subchapter--
``(I) a covered primary good shall
initially be included within the
covered national industry with which it
is associated under the most recent
concordance table published by the
Bureau of the Census comparing
classifications under the Harmonized
Tariff System and the North American
Industry Classification System, and
``(II) the Secretary (in
coordination with the relevant parties)
may subsequently determine which types
of eligible facilities or processes
within facilities (and any related
covered primary goods) are included or
excluded within a covered national
industry, provided that such
determination--
``(aa) facilitates a fair
comparison of carbon
intensities across similar
eligible facilities (based on a
comparison of the energy-
intensive processes and the
material outputs of such
facilities),
``(bb) does not
meaningfully reduce the scope
of greenhouse gas emissions
covered by this subchapter, and
``(cc) ensures that each
covered primary good is only
included within a single
covered national industry.
``(iii) Excluded facilities.--In the case
of any eligible facility which, pursuant to
clause (ii), is excluded from a covered
national industry and is not included in any
other covered national industry, such facility
shall be deemed to not be included in any
covered national industry.
``(C) Petition for specific goods.--
``(i) In general.--In the case of any
covered national industry which produces more
than 1 covered primary good, a covered entity
may file a petition with the Secretary to--
``(I) remove 1 or more covered
primary goods from inclusion under any
covered national industry,
``(II) establish a new covered
national industry for purposes of the
goods described in subclause (I),
``(III) determine the carbon
intensity with respect to the covered
national industry established under
subclause (II), and
``(IV) determine a classification
for defining such covered national
industry for purposes of this
subchapter, such as--
``(aa) the applicable 6-
digit subheading (or
subheadings) of the Harmonized
Tariff Schedule of the United
States of the goods described
in subclause (I),
``(bb) the relevant
production process,
``(cc) a set of material
characteristics, or
``(dd) any combination of
the methods for classification
described in items (aa) through
(cc).
``(ii) Review.--With respect to any covered
primary good which is included in a petition
described in clause (i), the Secretary (in
coordination with the Administrator and the
Secretary of Energy) shall approve such
petition if--
``(I) the chemical, physical, or
mechanical production processes for
such good or goods are substantially
different as compared to other covered
primary goods produced within the same
covered national industry,
``(II) the properties of such good
or goods are distinct such that its
uses cannot be easily replaced by other
covered primary goods produced within
the same covered national industry, and
``(III) the carbon intensity
determined with respect to such good or
goods is at least 25 percent greater
than the carbon intensity determined
for other covered primary goods
produced within the same covered
national industry.
``(iii) Recalculation.--In the case of any
petition described in clause (i) which is
approved by the Secretary pursuant to clause
(ii), the Secretary (in coordination with the
Administrator) shall redetermine the carbon
intensity, as well as the baseline carbon
intensity, with respect to the covered national
industry or industries which previously
included production of the covered primary good
or goods which are the subject of such petition
by excluding any covered emissions associated
with the production of such good or goods for
purposes of the determination made under
subparagraph (B) for such industry.
``(iv) Goods-level data.--In the case of
any petition described in clause (i) which is
approved by the Secretary pursuant to clause
(ii), the Secretary (in coordination with the
Administrator) shall use a methodology for
determining the carbon intensity of the covered
primary good or subset of primary goods (as
determined using the eligible facility
information reported under subsection (a)), and
shall publish the methodology and the results
of such determination, in a manner which--
``(I) is compatible with existing
Federal carbon accounting rules and
standards,
``(II) includes the related
chemical, physical, or mechanical
production processes responsible for
differences in carbon intensity and
covered emissions, and
``(III) prioritizes ease of
administration and compliance.
``(D) Determination.--Any determination of carbon
intensity under this paragraph shall be made by the
Secretary in coordination with the Administrator and
the Secretary of Energy.
``(E) Relevant quantity.--For purposes of this
subchapter, the relevant quantity of a covered primary
good shall be determined based on--
``(i) the weight (expressed in metric tons)
of such good, or
``(ii) if the Secretary, in coordination
with the Administrator and the Secretary of
Energy, determines that using an alternate
physical unit of measurement (such as volume at
a specific pressure or energy content) would
better facilitate a fair comparison of carbon
intensities across the covered primary goods in
the covered national industry, an alternate
physical unit of measurement.
``(2) Covered emissions.--
``(A) In general.--For purposes of this subsection,
for each calendar year, the amount of covered emissions
with respect to any eligible facility shall be an
amount (as determined by the Secretary, in coordination
with the Administrator) equal to the sum of--
``(i) the total greenhouse gas emissions
associated with the production of covered
primary goods at such facility during the
preceding calendar year (as reported pursuant
to subsection (a)), plus
``(ii) the total greenhouse gas emissions
associated with any electricity used at such
facility for the production of such goods
during the preceding calendar year.
``(B) Emissions for electricity used.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the amount of greenhouse
gas emissions associated with electricity
provided through the electric grid shall be
determined based on the average carbon
intensity for the regional grid in which the
eligible facility is located for the preceding
calendar year.
``(ii) Exception.--In the case of an
eligible facility which is subject to a power
purchase agreement (or its foreign equivalent)
which guarantees that any electricity provided
under such agreement is generated within the
same hour as it is used by such facility and
within the same regional transmission zone (or
its foreign equivalent) as such facility--
``(I) clause (i) shall not apply
with respect to the amount of
electricity provided under such
agreement, and
``(II) the amount of greenhouse gas
emissions associated with such
electricity shall be determined based
on the average carbon intensity of the
electricity provided under such
agreement.
``(3) Imported goods.--
``(A) In general.--In the case of any covered
primary good which is imported into the United States,
the carbon intensity with respect to such good shall be
determined as follows:
``(i) Economy-wide default.--Subject to
clauses (ii), (iii), and (iv), the carbon
intensity with respect to the covered primary
good shall be equal to the product of--
``(I) an amount equal to the
quotient of--
``(aa) the carbon intensity
of the general economy of the
country of origin of such good,
divided by
``(bb) the carbon intensity
of the general economy of the
United States, multiplied by
``(II) the carbon intensity of the
covered national industry in the United
States for such good for the preceding
calendar year.
``(ii) Industry data.--If the Secretary (in
coordination with the relevant parties)
determines that transparent, verifiable, and
reliable information is available with respect
to any covered national industry in the country
of origin of the covered primary good and that
such country of origin is a transparent market
economy, the carbon intensity with respect to
the covered primary good shall be equal to the
relevant covered national industry carbon
intensity of the country of origin of such
good.
``(iii) Manufacturer data.--If a petition
under subparagraph (C) has been approved, the
carbon intensity with respect to the covered
primary good shall be equal to the average
carbon intensity with respect to the production
of such good by the manufacturer within the
country of origin.
``(iv) Estimates for significant imports.--
If the Secretary (in coordination with the
relevant parties) determines that--
``(I)(aa) greater than 10 percent
of the value of imports of covered
primary goods in a covered national
industry come from a single country of
origin, or
``(bb) when applied to imports of
covered primary goods in a covered
national industry from a country of
origin, the carbon intensity determined
under clause (i) fails to maintain the
integrity and efficacy of this
subchapter, and
``(II)(aa) transparent, verifiable,
and reliable information is not
available to determine the carbon
intensity of the covered national
industry in such country of origin, or
``(bb) such country of origin is
not a transparent market economy,
the Secretary (in coordination with the
relevant parties) shall estimate the
carbon intensity of the covered
national industry in the country of
origin using best available data (such
as the production processes used by the
facilities in the country).
``(B) Carbon intensity of the general economy.--For
purposes of this subchapter, with respect to any
country, the carbon intensity of the general economy of
such country shall be an amount equal to the quotient
of--
``(i) the greenhouse gas emissions of such
country for the most recent year for which the
Secretary determines there is reliable
information, divided by
``(ii) the gross domestic product of such
country for the year described in clause (i).
``(C) Petition for foreign manufacturer data.--
``(i) In general.--In the case of any
entity which imports a covered primary good for
which the carbon intensity can be determined
under subparagraph (A)(ii) from a country of
origin where there is no evidence of inter-firm
resource shuffling, such entity may file a
petition with the Secretary to determine the
charge under section 4692, if any, based on the
average carbon intensity with respect to the
production of such good by the manufacturer
within the country of origin.
``(ii) Aggregation rule.--For purposes of
this subparagraph, the average carbon intensity
with respect to the production of a covered
primary good shall be determined based upon
greenhouse gas emission and production data
from all facilities which produce such good
which are under common control of the
manufacturer of such good, including any
subsidiary, parent company, or joint venture of
such manufacturer within the country of origin.
``(iii) Data provision.--In the case of an
entity which files a petition described in
clause (i), such entity shall provide the
Secretary with an environmental product
declaration containing--
``(I) any information which would
otherwise be required to be reported
under subsection (a) if the facilities
which produced the covered primary good
to which the petition applies were
subject to the reporting requirements
under the Greenhouse Gas Reporting
Program, and
``(II) any other information which
is necessary (as determined by the
Secretary, in coordination with the
relevant parties) to calculate the
carbon intensity of the covered primary
good in accordance with any relevant
methodologies for allocating the carbon
intensity of the covered primary good
under paragraph (1)(C)(iv).
``(iv) Data standards.--The Secretary shall
only grant such a petition if the information
provided pursuant to clause (iii) meets the
quality, verification, and completeness
requirements of the equivalent Federal carbon
accounting rules and standards that would apply
if the covered primary good were produced
domestically.
``(D) Inputs.--With respect to any covered primary
good which is imported into the United States and for
which other covered primary goods (other than
petroleum, natural gas, coal, or any waste or scrap
product) from other covered national industries were
used as inputs in the production of the imported
covered primary good, the quantity of such inputs used
in the production of the imported covered primary good
shall be treated as separate covered primary goods
that, without double-counting emissions, shall be
considered to be imported for purposes of this
subchapter.
``(E) Exclusion.--
``(i) In general.--Subject to clause (ii),
in the case of any covered primary good
(including any covered primary good which is an
input of a finished good) which is imported
into the United States and was produced in a
relatively least developed country (as
described in section 124 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151v)), this
paragraph shall not apply.
``(ii) Exception.--Clause (i) shall not
apply if the country described in such clause
produces at least 3 percent of total global
exports by value of the covered primary good.
``(F) Inter-firm resource shuffling.--For purposes
of this paragraph, the term `inter-firm resource
shuffling' means any buying, selling, trading,
exchanging, or other transfer of control of production
facilities between entities based on the carbon
intensity of such facilities for the purpose of
creating entities with relatively lower carbon
intensity and entities with relatively higher carbon
intensity.
``(G) Trading partners.--For countries with which
the United States has agreements that facilitate trade,
commit the parties to refrain from imposing new trade
barriers, and establish high standards for labor and
environmental protection and human rights, the
Secretary (working with the relevant parties) shall
make best efforts to work with the government of such
country to improve data sharing, accuracy, and
transparency such that imports of covered primary goods
from such country have their carbon intensity
determined under subparagraph (A)(ii).
``(c) Publication.--The Secretary (in coordination with the
relevant parties) shall--
``(1) annually publish any carbon intensity which has been
determined under subsection (b) with respect to any eligible
facility, covered national industry, covered primary good,
foreign manufacturer, or country of origin (including the
physical unit of measurement which serves as the relevant
quantity with respect to any covered primary good),
``(2) publish (and update, as appropriate) a list of each
covered primary good, as categorized by the covered national
industry in which such good is included, and
``(3) publish (and update, as appropriate) a list of each
good that qualifies as a finished good, as determined by the
Secretary pursuant to section 4695(9).
``SEC. 4692. IMPOSITION OF CARBON INTENSITY CHARGE.
``(a) In General.--
``(1) Importation of goods.--
``(A) In general.--
``(i) Covered primary goods.--Subject to
section 4694, in the case of any covered
primary good imported into the United States
during any calendar year beginning after
December 31, 2025, there is hereby imposed a
charge in an amount (rounded to the nearest
dollar) equal to the product of--
``(I) the amount (if any) by which
the carbon intensity determined under
section 4691(b)(3) with respect to such
good exceeds an amount equal to the
applicable percentage of the baseline
carbon intensity of the covered
national industry which includes such
good, multiplied by
``(II) the total relevant quantity
of the good imported into the United
States, multiplied by
``(III) the cost of pollution (as
determined under subsection (c)).
``(ii) Finished goods.--
``(I) In general.--Subject to
section 4694, in the case of any
finished good which is imported into
the United States during any calendar
year beginning after December 31, 2027,
there is hereby imposed a charge in an
amount equal to the sum of the amounts
determined under subclause (II) with
respect to each covered primary good
which is an input of such finished
good.
``(II) Components.--The amount
determined under this subclause with
respect to any covered primary good
which is an input of a finished good is
an amount equal to the product of--
``(aa) the amount (if any)
determined under clause (i)(I)
if such clause were applied
with respect to such good,
multiplied by
``(bb) the total relevant
quantity of the covered primary
good, multiplied by
``(cc) the cost of
pollution (as determined under
subsection (c)).
``(B) Charge due.--The charge imposed under this
paragraph with respect to any goods imported during any
calendar year shall be paid by the entity which
imported such goods not later than September 30 of the
calendar year subsequent to such year.
``(C) Exclusion.--
``(i) In general.--Subject to clause (ii),
in the case of any covered primary good
(including any covered primary good which is an
input of a finished good) which is imported
into the United States and was produced in a
relatively least developed country (as
described in section 124 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151v)), this
paragraph shall not apply.
``(ii) Exception.--Clause (i) shall not
apply if the country described in such clause
produces at least 3 percent of total global
exports by value of the covered primary good.
``(D) Foreign carbon prices.--If the Secretary (in
coordination with the relevant parties) determines that
a foreign country has implemented policies which impose
explicit and verifiable fees, costs, or penalties on
the emission of greenhouse gases which--
``(i) are economically similar to the
charges imposed pursuant to the provisions of
this subchapter, and
``(ii) have not been rebated by such
foreign country,
the charge (or a portion of the charge which is
equivalent to the fees or costs imposed by the foreign
country) which would otherwise be imposed under this
section with respect to covered primary goods produced
in such foreign country may be waived.
``(2) Domestic production of covered primary goods.--
``(A) In general.--In the case of any eligible
facility, for each calendar year beginning after
December 31, 2025, there is hereby imposed a charge in
an amount (rounded to the nearest dollar) equal to the
product of--
``(i) the amount (if any) by which the
carbon intensity of such facility (as
determined under section 4691(b)(1)(A)) exceeds
an amount equal to the applicable percentage of
the baseline carbon intensity for the covered
national industry (as determined under section
4691(b)) which includes any covered primary
good produced by such facility, multiplied by
``(ii) the total relevant quantity of any
covered primary goods produced by such facility
during such calendar year, multiplied by
``(iii) the cost of pollution (as
determined under subsection (c)).
``(B) Charge due.--The charge imposed under this
paragraph with respect to any calendar year shall be
paid by the covered entity not later than September 30
of the calendar year subsequent to such year.
``(b) Applicable Percentage.--For purposes of paragraphs (1)(A) and
(2)(A) of subsection (a), the applicable percentage shall be--
``(1) for calendar year 2026, 100 percent,
``(2) for calendar years 2027 through 2030, the applicable
percentage for the preceding calendar year, reduced by 2.5
percentage points,
``(3) for calendar years 2031 through 2047, the applicable
percentage for the preceding calendar year, reduced by 5
percentage points, and
``(4) for any calendars years subsequent to calendar year
2047, 0 percent.
``(c) Cost of Pollution.--
``(1) In general.--For purposes of paragraphs (1)(A) and
(2)(A) of subsection (a), the cost of pollution shall be--
``(A) for calendar year 2026, $60, and
``(B) for each calendar year subsequent to the
calendar year described in subparagraph (A), an amount
equal to the sum of--
``(i) the cost of pollution for the
preceding year, plus
``(ii) an amount equal to--
``(I) the amount described in
clause (i), multiplied by
``(II) the percentage by which the
CPI for the preceding calendar year
exceeds the CPI for the second
preceding calendar year, increased by 6
percentage points.
``(2) CPI.--Rules similar to the rules of paragraphs (4)
and (5) of section 1(f) shall apply for purposes of this
subsection.
``(3) Rounding.--Any applicable amount determined under
this subsection which is not a multiple of $1 shall be rounded
to the nearest dollar.
``(d) Carbon Removal.--
``(1) In general.--With respect to the amount of any
charges imposed under subsection (a) during a calendar year,
such amount shall be reduced by an amount (rounded to the
nearest dollar) equal to the product of--
``(A) the total amount (as measured in metric tons)
of greenhouse gas emissions which are captured directly
from the ambient air during such calendar year pursuant
to the requirements under paragraphs (2) and (3), and
``(B) the cost of pollution (as determined under
subsection (c)).
``(2) Removal requirements.--The requirements described
under this paragraph with respect to captured greenhouse gas
emissions are that such emissions are captured during the
preceding calendar year and--
``(A) disposed of in secure geological storage (in
compliance with the regulations established under
section 45Q(f)(2)), or
``(B) utilized in a manner (other than for enhanced
oil or gas recovery and in compliance with the
regulations established under section 45Q(f)(5))
whereby such emissions are not combusted or otherwise
emitted into the atmosphere.
``(3) Direct air capture.--For purposes of this subsection,
with respect to any greenhouse gas emissions which are captured
directly from the ambient air, the operator of the facility
which captured such emissions may--
``(A) apportion such emissions removal amongst any
eligible facilities which are under common control of
such operator, or
``(B) enter into binding and exclusive agreements
(which meet such requirements as determined necessary
by the Secretary to ensure fair and accurate emissions
accounting) with--
``(i) any operator of an eligible facility,
for the purpose of permitting such operator to
reduce the charge imposed under subsection (a)
with respect to any eligible facilities which
are under common control of such operator, or
``(ii) any importer of covered primary
goods, for the purpose of permitting such
operator to reduce the charge imposed under
subsection (a) with respect to any of their
imported covered primary goods.
``(4) Limitation.--For purposes of this subsection, in the
case of any covered primary good imported or produced at an
eligible facility, the amount of any reduction of the charge
imposed under subsection (a) with respect to such covered
primary good or production of such good shall not exceed the
lesser of--
``(A) the amount of the charge imposed under such
subsection, or
``(B) an amount equal to the product of--
``(i) the first quartile in terms of carbon
intensity with respect to facilities operating
in the United States which produce covered
primary goods which are included within the
same covered national industry, as determined
by the Secretary (in coordination with the
relevant parties), multiplied by
``(ii) the relevant quantity of such
covered primary good, multiplied by
``(iii) the cost of pollution (as
determined under subsection (c)).
``(5) Ensuring integrity.--The Secretary, in coordination
with the Administrator and the Secretary of Energy, shall issue
such regulations as may be necessary to prevent double-counting
and to ensure the additionality and permanence of captured
emissions.
``(e) Regulations and Trade Actions.--The Secretary shall issue
such regulations as may be necessary to carry out this subchapter and
shall work closely with the relevant parties to pursue such trade
actions as may be necessary to maintain the integrity and efficacy of
this subchapter.
``SEC. 4693. REBATE.
``(a) Exportation of Covered Primary Good.--Subject to subsections
(c) and (d), in the case of a person who exports any covered primary
good from the United States which was produced in an eligible facility
for which a charge has been imposed under section 4692, a refund shall
be allowed to such person in the same manner as if it were an
overpayment of the charge imposed by such section in an amount equal to
the charge that would be imposed under subsection (a)(1)(A)(i) of such
section with respect to such good.
``(b) Exportation of Finished Good.--Subject to subsection (c), in
the case of a person who exports any finished good from the United
States for which a charge has been imposed under section 4692 on such
finished good or any of its components, a refund shall be allowed to
such person in the same manner as if it were an overpayment of the
charge imposed by such section in an amount equal to the charge that
would otherwise be imposed under such section with respect to such
finished good (as determined pursuant to subsection (a)(1)(A)(ii) of
such section).
``(c) Exception for Certain Foreign Policies.--In the case of any
exports from the United States for which a charge has been imposed
under section 4692, if--
``(1) the covered primary good or finished good is imported
by a country with policies that impose tariffs, fees, or
penalties on the emission of greenhouse gases associated with
imports, and
``(2) the country described in paragraph (1) would credit
the charge imposed under section 4692 against such tariffs,
fees, or penalties,
any portion of a rebate otherwise allowable under this section shall
not be allowed to the extent that it would reduce the amount credited
by such country against such tariffs, fees, or penalties.
``(d) Preventing Domestic Resource Shuffling.--For purposes of
determining the amount of any refund pursuant to subsection (a), the
carbon intensity with respect to the eligible facility shall be
determined by applying section 4691(b)(1)(A) by substituting `all
eligible facilities by the covered entity which produced the covered
primary good described in section 4693(a)(1)' for `such facility' each
place it appears in such section.
``SEC. 4694. CARBON CLUBS.
``(a) In General.--To accelerate the pace of global decarbonization
and expand markets for goods with lower carbon intensities, the
President may, in coordination with the Secretary and the relevant
parties--
``(1) enter into negotiations with 1 or more foreign
countries to establish or expand a carbon club agreement under
this section,
``(2) perform any enforcement activities necessary to
uphold the requirements under such agreement, and
``(3) remove any foreign country from a carbon club
agreement if such country is determined to have failed to
comply with the requirements described in subsection (b) or any
additional requirements established under such agreement.
``(b) Requirements.--Any foreign country which has entered into a
carbon club agreement under this section shall be subject to the
following requirements:
``(1) Ensure its methodologies for the measurement,
reporting, and verification of the carbon intensity of covered
national industries match, or are interoperable with, those
used to determine the carbon intensity of covered national
industries in the United States.
``(2) Permit any other country which is a party to such
agreement to regularly validate the measurement, reporting, and
verification of the carbon intensity of their covered national
industries.
``(3) Ensure, in law and in practice, that all workers in
the territory of the country are guaranteed the following
internationally recognized rights and freedoms, including those
guaranteed in the Declaration on Fundamental Principles and
Rights at Work of the International Labour Organization and its
Follow-up:
``(A) Freedom of association and the effective
recognition of the right to collective bargaining.
``(B) Elimination of all forms of forced or
compulsory labor.
``(C) Effective abolition of child labor, a
prohibition on the worst forms of child labor, and
other labor protections for children and minors.
``(D) Elimination of discrimination in respect of
employment and occupation.
``(E) Acceptable conditions of work with respect to
minimum wages, hours of work, and occupational safety
and health.
``(4) Create or maintain, as well as implement and
verifiably enforce--
``(A) domestic policies (including any investments
made possible by assistance provided under section 2(d)
of the Clean Competition Act) which reduce the carbon
intensity of its covered national industries in a
magnitude greater than that which would feasibly be
induced as a result of--
``(i) the charges imposed under section
4692(a)(1), or
``(ii) similar fees on the emissions of
greenhouse gasses associated with the
production of imports levied by other countries
which are parties to such agreement,
``(B) trade policies, such as the charge imposed
under section 4692(a)(1), which give preference to
goods with lower carbon intensities,
``(C) domestic policies which reduce pollutants
other than greenhouse gases, and
``(D) policies that prevent such country from
facilitating transshipment from other countries.
``(c) Prioritization.--In negotiations with respect to any carbon
club agreement under this section, the President shall seek to reach an
agreement with foreign countries which prioritizes the following goals
in the following order of importance:
``(1) Reduction of global greenhouse gas emissions.
``(2) Securing access for the United States to materials
and inputs necessary to manufacture products with lower carbon
intensity, particularly those that are not feasibly produced
domestically.
``(3) Strengthening the global market competitiveness of
lower carbon intensity goods.
``(4) Advancing the national security and diplomatic
interests of the United States.
``(d) Benefits.--With respect to any country which has entered into
a carbon club agreement under this section, if such country--
``(1) is not contributing to global industrial overcapacity
(as determined by the United States Trade Representative, in
coordination with other relevant parties), the charge which
would otherwise be imposed under section 4692(a)(1) with
respect to covered primary goods produced in a foreign country,
as well as any similar fees on the emissions of greenhouse
gasses associated with the production of imports levied by
other countries which are parties to such agreement, may be
waived, provided that such country establishes or maintains
policies that reduce the emission of greenhouse gases from its
covered national industries with commensurate effect as the
carbon intensity charges imposed under section 4692(a)(2), and
``(2) has a low-income economy, lower-middle-income
economy, or upper-middle-income economy (as determined based on
classification of the economy of such country by the World
Bank), such country shall receive preference for assistance
provided under section 2(d) of the Clean Competition Act.
``(e) Phase-In.--
``(1) In general.--Subject to paragraph (2), for purposes
of any carbon club agreement under this section, a country may
limit application of such agreement to certain covered national
industries, in which case any requirements or benefits provided
pursuant to such agreement shall be limited to such industries
and any covered products produced by such industries.
``(2) Limitation.--Not later than 10 years after the date
on which any country enters into a carbon club agreement under
this section, all covered national industries of such country
shall be subject to the requirements of such agreement.
``SEC. 4695. DEFINITIONS.
``For purposes of this subchapter--
``(1) Administrator.--The term `Administrator' means the
Administrator of the Environmental Protection Agency.
``(2) Baseline carbon intensity.--The term `baseline carbon
intensity' means, with respect to a covered national industry,
the carbon intensity of the covered national industry in the
United States for calendar year 2025.
``(3) CO2-e.--
``(A) In general.--Subject to subparagraph (B), the
term `CO2-e' means, with respect to a greenhouse gas,
the quantity of such gas that has a global warming
potential equivalent to 1 metric ton of carbon dioxide,
as determined pursuant to table A-1 of subpart A of
part 98 of title 40, Code of Federal Regulations, as in
effect on the date of the enactment of this subchapter.
``(B) Methane.--In the case of methane, the term
`CO2-e' means the quantity of methane that has the same
global warming potential over a 20-year period as 1
metric ton of carbon dioxide, as determined by the
Administrator in accordance with the findings of the
most recent Assessment Report of the Intergovernmental
Panel on Climate Change as of the date of enactment of
this subchapter.
``(4) Covered entity.--The term `covered entity' means any
entity which--
``(A) produces any covered primary good, and
``(B) is required to report emissions of greenhouse
gases under the Greenhouse Gas Reporting Program (or
would be required to report such emissions
notwithstanding any other provision of law prohibiting
the implementation of or use of funds for such
requirements).
``(5) Covered national industry.--
``(A) In general.--Except as provided under section
4691(b)(1)(B)(ii), the term `covered national industry'
means any industry which is assigned a 6-digit NAICS
code which is included in any of the following clauses:
``(i) 211120 (petroleum extraction).
``(ii) 211130 (natural gas extraction).
``(iii) 212114 or 212115 (coal mining).
``(iv) 322110 (pulp mills).
``(v) 322120 (paper mills).
``(vi) 322130 (paperboard mills).
``(vii) 324110 (petroleum refineries).
``(viii) 324121 (asphalt paving mixture and
block manufacturing).
``(ix) 324122 (asphalt shingle and coating
materials manufacturing).
``(x) 324199 (all other petroleum and coal
products manufacturing).
``(xi) 325110 (petrochemical
manufacturing).
``(xii) 325120 (industrial gas
manufacturing).
``(xiii) 325193 (ethyl alcohol
manufacturing).
``(xiv) 325199 (other basic organic
chemical manufacturing).
``(xv) 325311 (nitrogenous fertilizer
manufacturing).
``(xvi) 327211, 327212, 327213, or 327215
(glass).
``(xvii) 327310 (cement).
``(xviii) 327410 or 327420 (lime and gypsum
product manufacturing).
``(xix) 331110 (iron and steel).
``(xx) 331313 or 331314 (aluminum).
``(B) Exceptions.--
``(i) Industrial gas manufacturing.--
Subparagraph (A)(xii) shall apply only with
respect to the production of hydrogen.
``(ii) Other basic organic chemical
manufacturing.--Subparagraph (A)(xiv) shall
apply only with respect to the production of
adipic acid.
``(6) Country of origin.--The term `country of origin'
means, with respect to a covered primary good, the country
where an energy-intensive or emissions-intensive process
occurred that transformed the inputs of the good into the
covered primary good.
``(7) Covered primary good.--The term `covered primary
good' means any good which is produced as part of a trade or
business operating within a covered national industry--
``(A) including (except as otherwise provided under
subparagraphs (B)(ii) and (C) of section 4691(b)(1))
any good classifiable under the same 6-digit subheading
of the Harmonized Tariff Schedule of the United States,
and
``(B) excluding any waste or scrap byproducts which
are not sold.
``(8) Eligible facility.--The term `eligible facility'
means any facility (as such term is defined for purposes of the
Greenhouse Gas Reporting Program) which is--
``(A) operated by a covered entity for the
production of any covered primary good, and
``(B) located within the United States.
``(9) Finished good.--
``(A) In general.--The term `finished good' means
any good (as determined pursuant to a 6-digit
subheading of the Harmonized Tariff Schedule of the
United States) which is not a covered primary good and
which, as determined by the Secretary--
``(i) for calendar years 2028 and 2029--
``(I) typically contains greater
than 1,000 pounds of any combination of
any covered primary goods, or
``(II) is typically produced from
inputs of any combination of covered
primary goods, the combined value of
which comprise more than 90 percent of
the total value of the material inputs
involved in the production of such
good,
``(ii) for calendar years 2030 and 2031--
``(I) typically contains greater
than 500 pounds of any combination of
any covered primary goods, or
``(II) is typically produced from
inputs of any combination of covered
primary goods, the value of which
comprise more than 75 percent of the
total value of the material inputs
involved in the production of such
good, and
``(iii) for any calendar year after
calendar year 2031--
``(I) typically contains greater
than such amount as is determined by
the Secretary (as determined in
coordination with the relevant parties,
and which shall not be greater than 500
pounds) of any combination of any
covered primary goods, or
``(II) is typically produced from
inputs of any combination of covered
primary goods, the value of which
comprise more than such percentage as
is determined by the Secretary (as
determined in coordination with the
relevant parties, and which shall not
be greater than 75 percent) of the
total value of the material inputs
involved in the production of such
good.
``(B) Exception.--The term `finished good' shall
not include any waste or scrap product which is
imported or exported.
``(10) Greenhouse gas.--The term `greenhouse gas' has the
meaning given such term under section 211(o)(1)(G) of the Clean
Air Act, as in effect on the date of the enactment of this
subchapter.
``(11) Greenhouse gas emissions.--The term `greenhouse gas
emissions' means the amount of greenhouse gases, expressed in
metric tons of CO2-e, which were emitted to the atmosphere.
``(12) Greenhouse gas reporting program.--The term
`Greenhouse Gas Reporting Program' means the Greenhouse Gas
Reporting Program established under part 98 of title 40, Code
of Federal Regulations, as in effect on January 1, 2025.
``(13) Market economy.--The term `market economy' means any
country which is not designated as a nonmarket economy country
pursuant to section 771(18) of the Tariff Act of 1930 (19
U.S.C. 1677(18)).
``(14) NAICS.--The term `NAICS' means the North American
Industrial Classification System.
``(15) Regional grid.--The term `regional grid' means the
smallest defined region of interconnected power grid (including
power generation assets) from which a facility draws power that
accounts for the total power supplied to the facility by the
grid and for which there is reliable data.
``(16) Relevant parties.--The term `relevant parties'
means--
``(A) the Administrator,
``(B) the Secretary of Energy,
``(C) the Secretary of Commerce,
``(D) the Secretary of Homeland Security,
``(E) the United States Trade Representative, and
``(F) the Chair and Vice Chair of the United States
International Trade Commission.''.
(b) Clerical Amendment.--The table of subchapters for chapter 38 of
the Internal Revenue Code of 1986 is amended by adding at the end
thereof the following new item:
``subchapter e--carbon intensity charge''.
(c) Investing in Industrial Competitiveness.--
(1) Definitions.--In this subsection:
(A) Administrator.--The term ``Administrator''
means the Administrator of the Environmental Protection
Agency.
(B) Advanced industrial technology.--The term
``advanced industrial technology'' means a technology
that--
(i) is directly involved in an industrial
process described in paragraphs (1) through (6)
of section 454(c) of the Energy Independence
and Security Act of 2007 (42 U.S.C. 17113(c));
and
(ii) is designed to accelerate greenhouse
gas emissions reduction progress to net-zero at
an eligible facility, as determined by the
Secretary.
(C) Ambition level.--The term ``ambition level''
means the level of reduction in carbon intensity
described in each of subclauses (I) through (III) of
paragraph (3)(C)(iv).
(D) Applicable fair market value.--The term
``applicable fair market value'', with respect to an
eligible good, means the average market dollar value of
1 unit of the relevant quantity of that eligible good,
as determined by the Secretary using publicly available
market prices and other market data.
(E) Baseline carbon intensity.--The term ``baseline
carbon intensity'' has the meaning given the term in
section 4695 of the Internal Revenue Code of 1986 (as
added by subsection (a)).
(F) Benchmark carbon intensity.--The term
``benchmark carbon intensity'', with respect to a
covered primary good or eligible good, means the carbon
intensity of the covered national industry in the
United States for that covered primary good or eligible
good for the preceding calendar year.
(G) Best-in-class carbon intensity.--The term
``best-in-class carbon intensity'', with respect to any
proposed eligible facility, means that the carbon
intensity of such facility would be not greater than
the carbon intensity of the existing facility with the
lowest carbon intensity within the relevant covered
national industry, as determined as of the date of the
application for a grant under the program.
(H) Carbon intensity.--The term ``carbon
intensity'' has the meaning given the term under
section 4691(b)(1) of the Internal Revenue Code of 1986
(as added by subsection (a)).
(I) Covered primary good.--The term ``covered
primary good'' has the meaning given the term in
section 4695 of the Internal Revenue Code of 1986 (as
added by subsection (a)).
(J) Covered program.--The term ``covered program''
means each of the programs established under paragraphs
(2)(A) and (3)(A).
(K) Covered national industry.--The term ``covered
national industry'' has the meaning given the term in
section 4695 of the Internal Revenue Code of 1986 (as
added by subsection (a)).
(L) Eligible entity.--The term ``eligible entity''
means any person that operates an eligible facility or
will operate a proposed eligible facility.
(M) Eligible facility.--The term ``eligible
facility'' has the meaning given the term in section
4695 of the Internal Revenue Code of 1986 (as added by
subsection (a)).
(N) Eligible good.--The term ``eligible good''
means a covered primary good determined eligible for a
contract for difference by the Secretary under
paragraph (3)(B).
(O) Eligible goods class.--The term ``eligible
goods class'' means an eligible goods class as
described in paragraph (3)(C)(iii).
(P) Price discovery.--The term ``price discovery''
means a process of determining the true and accurate
price of producing 1 unit of the relevant quantity of
an eligible good using a unique production process.
(Q) Relevant quantity.--The term ``relevant
quantity'' has the meaning given the term under section
4691(b)(1)(E) of the Internal Revenue Code of 1986 (as
added by subsection (a)).
(R) Secretary.--The term ``Secretary'' means the
Secretary of Energy (or a designee).
(S) Strike price.--The term ``strike price'' means
the dollar value of 1 unit of the relevant quantity of
an eligible good.
(2) Investments in advanced industrial technology.--
(A) Establishment.--The Secretary shall establish a
competitive program (referred to in this paragraph as
the ``program'') to award to eligible entities grants,
rebates, or low-interest loans, as determined
appropriate by the Secretary, to support investments in
advanced industrial technology, including in dedicated
power generation and storage--
(i) in the case of an existing eligible
facility, to reduce the carbon intensity of the
existing eligible facility by at least 20
percent;
(ii) in the case of a proposed eligible
facility, to ensure at least best-in-class
carbon intensity of that proposed eligible
facility, with a goal of achieving net-zero
carbon intensity; and
(iii) in the case of existing and proposed
eligible facilities--
(I) to increase the technological
and economic competitiveness of covered
national industries in the United
States;
(II) to increase the viability and
competitiveness of United States
industrial exports; and
(III) to achieve emissions
reduction in covered national
industries.
(B) Application process.--The Secretary shall
develop an application process for the program similar
to the application process for the national grant
program of the Administrator under subtitle G of title
VII of the Energy Policy Act of 2005 (42 U.S.C. 16131
et seq.).
(C) Preference.--In awarding funding under the
program, the Secretary shall give preference to
eligible entities--
(i) for projects that would--
(I) result in the greatest decrease
in carbon intensity;
(II) support the demonstration and
catalyze the deployment of first-of-a-
kind technologies and processes;
(III) provide the greatest benefit
for the greatest number of people
within the area in which the eligible
facility is located;
(IV) advance United States global
strategic interests;
(V) provide the greatest potential
for direct and indirect domestic job
creation; and
(VI) maximize improvement in local
air quality; and
(ii) for facilities located in--
(I) economically distressed
communities that have experienced a
loss of manufacturing jobs; and
(II) communities with high
cumulative pollution burdens, as
determined by the Administrator.
(D) Cost share.--The Secretary shall require an
eligible entity to provide not less than 50 percent of
the cost of a project carried out pursuant to the
program.
(E) Recapture of funds.--The Secretary shall
recapture, pursuant to such regulations or other
guidance issued by the Secretary, the funding awarded
to an eligible entity if the eligible entity fails--
(i) within 3 years of the award of funding,
to complete the proposed investments or achieve
an interim progress milestone agreed to with
the Secretary; or
(ii) during the 10-year period after the
proposed investments are placed in service--
(I) in the case of an existing
eligible facility, to achieve and
maintain the reduction in carbon
intensity proposed in the application;
or
(II) in the case of a proposed
eligible facility, to achieve and
maintain the best-in-class carbon
intensity proposed in the application.
(F) Outreach.--The Secretary shall conduct
outreach--
(i) to notify the public about the program;
and
(ii) to inform eligible entities of
technologies that can reduce facility carbon
intensity or ensure best-in-class carbon
intensity.
(3) Contracts for difference.--
(A) Establishment.--The Secretary shall establish a
program (referred to in this paragraph as the
``program'') to enter into contracts for difference
(referred to in this paragraph as ``covered
contracts''), on a competitive basis, with eligible
entities for payment of costs associated with the
production of eligible goods manufactured by those
eligible entities--
(i) to accelerate the deployment of
commercially available advanced industrial
technology;
(ii) to demonstrate and advance the
commercialization of first-of-a-kind advanced
industrial technology;
(iii) to increase the technological and
economic competitiveness of covered national
industries in the United States;
(iv) to increase the viability and
competitiveness of United States advanced
industrial technology exports; and
(v) to reduce the carbon intensity of
covered national industries in the United
States.
(B) Eligible goods.--
(i) In general.--The Secretary shall
determine which covered primary goods are
eligible for covered contracts under the
program.
(ii) Priority.--In making determinations
under clause (i), the Secretary shall give
priority to covered primary goods--
(I) that contribute a greater
proportion of total covered emissions
relative to other covered primary goods
in the same covered national industry;
(II) the market conditions for
which are conducive to fair and
competitive auctions;
(III) that have transparent and
accurate price indices;
(IV) that face large marginal costs
of decarbonization that cannot feasibly
be equalized by the carbon intensity
charge levied under section 4692 of the
Internal Revenue Code of 1982 (as added
by subsection (a));
(V) that provide the greatest
potential for direct and indirect
domestic job creation;
(VI) that are feasibly expected to
continue to have robust market demand
for the duration of the applicable
covered contract; and
(VII) that have the greatest
ability to reduce hazardous local air
quality if awarded a covered contract.
(C) Auctions.--
(i) In general.--To award covered contracts
under the program, the Secretary shall hold
competitive auctions for each eligible goods
class.
(ii) Application.--To participate in an
auction under clause (i), an eligible entity
shall submit to the Secretary an application
that includes--
(I) a description of the eligible
goods covered under the proposed
covered contract;
(II) information on any existing or
proposed facilities that will produce
the eligible goods covered under the
proposed covered contract, including
location, employment numbers, and any
planned or ongoing investments in or
retrofits of the facilities;
(III) a description of the method
of production, including technologies
and feedstocks, that will be used to
manufacture the eligible goods covered
under the proposed covered contract;
(IV) the details of any investments
or retrofits required to produce the
eligible goods covered under the
proposed covered contract, including
the construction of new facilities;
(V) the expected carbon intensity
of the eligible goods covered under the
proposed covered contract for each year
of the duration of the proposed covered
contract;
(VI) the proposed strike price of
the eligible goods covered under the
proposed covered contract;
(VII) the expected annual
production volume (expressed in the
relevant quantity) of the eligible
goods covered under the proposed
covered contract for each year of the
proposed covered contract; and
(VIII) any other information
determined necessary by the Secretary.
(iii) Eligible goods class.--
(I) In general.--For each auction
under clause (i), the Secretary shall
assign each eligible good to an
eligible goods class, which may
comprise a single eligible good or
multiple eligible goods.
(II) Class of multiple eligible
goods.--In determining the eligible
goods that shall be grouped into a
single eligible goods class for
purposes of an auction under clause
(i), the Secretary shall--
(aa) only group eligible
goods that can reasonably
compete with each other for
market share in the economy and
on the basis of carbon
intensity in the auction; and
(bb) prioritize the
creation of eligible goods
classes that are conducive to
fair and competitive auctions.
(III) Benchmark carbon intensity.--
The benchmark carbon intensity for an
eligible goods class with eligible
goods from multiple covered national
industries shall be the mean benchmark
carbon intensity of those covered
national industries (after converting
to the same relevant quantity, if
necessary).
(iv) Ambition level.--If the Secretary
determines that there are conditions to support
sufficient auction competitiveness, the
Secretary may hold separate auctions within an
eligible goods class for projects that yield
each of the following percentages of reduction
in carbon intensity:
(I) A reduction in carbon intensity
from benchmark carbon intensity of not
less than 20 percent but not more than
50 percent.
(II) A reduction in carbon
intensity from benchmark carbon
intensity of not less than 50 percent
but not more than 80 percent.
(III) A reduction in carbon
intensity from benchmark carbon
intensity of more than 80 percent.
(v) Selection.--The Secretary shall
determine the winners of each auction under
clause (i) by selecting projects in rank order
from the lowest to the highest value of the
quotient obtained by dividing--
(I) the expected per-unit payment
amount described in subparagraph
(F)(ii)(II), which shall be determined
by the Secretary using the proposed
strike price of the eligible entity and
the fair market value at the time of
auction; by
(II) an amount equal to the
difference between--
(aa) the benchmark carbon
intensity; and
(bb) the carbon intensity
of the eligible good under the
proposed covered contract.
(vi) Administration.--
(I) In general.--The Secretary
shall design and manage competitive
auctions under clause (i) to maximize
fairness, competitiveness, accurate
price discovery, and the most efficient
utilization of public funds to achieve
reductions in carbon intensity and the
other goals of the program.
(II) Auction budget.--The Secretary
shall establish a budget for each
auction held under the program.
(D) Requirements.--
(i) Carbon intensity reduction.--Each
covered contract awarded under the program
shall be required to achieve at least a 20
percent reduction in carbon intensity as
compared to the benchmark carbon intensity on
the date of commencement of the contract.
(ii) Labor.--An eligible entity awarded a
covered contract under the program shall be
required--
(I) to pay prevailing wages for any
work performed, including for the
execution of any investments or
retrofits necessary to produce the
applicable eligible goods; and
(II) to establish a community
benefits agreement in conjunction with
the production of the applicable
eligible goods, including the execution
of any investments or retrofits
necessary to produce those eligible
goods.
(E) Contract terms.--Each covered contract under
the program shall include the following:
(i) A description of the project under the
covered contract, including--
(I) details on the eligible goods,
including relevant distinguishing
qualities and properties and the
methodology of producing those eligible
goods;
(II) the execution of any
investments or retrofits necessary to
produce those eligible goods; and
(III) performance requirements for
the project and procedures and
penalties if those requirements are not
met.
(ii) The maximum payment amount determined
pursuant to subparagraph (F)(iv).
(iii) The expected carbon intensity of each
eligible good covered under the covered
contract, estimated for each year of the
duration of the covered contract.
(iv) The strike price for each eligible
good under the covered contract, including any
procedures for adjusting the strike price over
time, pursuant to subparagraph (F)(iii).
(v) The methods and data sources to be used
for calculating covered emissions and the
applicable fair market value of eligible goods,
as established by the Secretary.
(vi) Details of the community benefits
agreement established pursuant to subparagraph
(D)(ii)(II).
(vii) The duration of the covered contract,
subject to any early termination rules
established by the Secretary.
(viii) Any other terms determined necessary
by the Secretary.
(F) Payments.--
(i) In general.--Under each covered
contract entered into under the program, the
Secretary shall make at least 1 payment
annually.
(ii) Amount.--The amount of a payment under
clause (i), with respect to an eligible good
produced by an eligible entity over a
designated period of time, as determined by the
Secretary, shall equal the product obtained by
multiplying--
(I) the quantity of the eligible
good (expressed in the relevant
quantity) produced by the eligible
entity during the designated period of
time; and
(II) the per-unit payment amount,
which shall be the difference between--
(aa) the strike price; and
(bb) the average applicable
fair market value of the same
eligible good during the
designated period of time, as
determined by the Secretary.
(iii) Dynamic indexing.--The Secretary
shall adjust the strike price established in
each covered contract over time to account
for--
(I) inflation; and
(II) changes in the cost of key
inputs to the production of the
eligible good, as determined by the
Secretary, including, at a minimum--
(aa) natural gas;
(bb) hydrogen; and
(cc) electricity.
(iv) Maximum payment amount.--For each
covered contract under the program, the
Secretary shall establish a maximum amount that
may be paid under that covered contract, which
amount--
(I) takes into consideration
expected levels of--
(aa) the quantity of
eligible goods covered under
the covered contract (expressed
in the relevant quantity)
produced over the duration of
the covered contract; and
(bb) the per-unit payment
amount described in clause
(ii)(II);
(II) maximizes the deployment of
available appropriations and the
achievement of the goals of the
program; and
(III) ensures that obligated
expenditures do not exceed available
appropriations.
(G) Penalties.--The Secretary may impose financial
and other penalties on any eligible entity that fails
to meet the performance requirements established by the
Secretary for the covered contract of that eligible
entity.
(H) Public notice.--Not later than 180 days before
each auction is held under the program, the Secretary
shall publish guidance on the auction process,
including--
(i) the timeline and selection process;
(ii) a list of eligible goods, eligible
goods classes, and ambition levels, if
applicable;
(iii) the auction budget for each eligible
goods class and ambition level, if applicable;
(iv) the benchmark carbon intensity for
each eligible goods class;
(v) the applicable fair market value for
each eligible goods class, measured as the
average applicable fair market value over the
preceding 12 months; and
(vi) any additional information needed to
facilitate a fair and competitive auction, as
determined by the Secretary.
(I) Rulemaking.--
(i) In general.--The Secretary shall--
(I) not later than 1 year after the
date of enactment of this Act,
promulgate rules for the implementation
of the program; and
(II) update those rules at least
once every 5 years thereafter.
(ii) Effect on contracts.--Any update made
under clause (i)(II) shall not apply to covered
contracts under the program in effect before
the date of effectiveness of the update.
(4) Emissions reduction goal.--In awarding funding under
the covered programs, the Secretary shall seek to keep the
aggregate carbon intensity of each covered national industry in
the United States below the value of the applicable percentage
of the baseline carbon intensity for that covered national
industry.
(5) Allocation of funding.--In awarding funding under the
covered programs, the Secretary shall, to the maximum extent
practicable, allocate funds to eligible entities that produce
covered primary goods that are included within a covered
national industry in approximate proportion to the share of
total greenhouse gas emissions that the covered national
industry is responsible for emitting.
(6) Offices.--The Secretary may establish 1 or more offices
within the Department of Energy to administer the covered
programs.
(7) Evaluation and report.--Not later than January 1, 2032,
the Secretary shall submit to Congress a report evaluating the
efficacy of the covered programs.
(8) Appropriations.--
(A) In general.--For fiscal year 2027 and each
subsequent fiscal year, in addition to amounts
otherwise available, there are appropriated, out of any
funds in the Treasury not otherwise appropriated, to
the Secretary to carry out this subsection an amount
equal to the amount determined under subparagraph (B)
with respect to such fiscal year.
(B) Appropriation.--
(i) Fiscal year 2027.--For fiscal year
2027, the amount appropriated for purposes of
paragraph (2) shall be $75,000,000,000.
(ii) Subsequent fiscal years.--For fiscal
year 2028 and each subsequent fiscal year, the
amount appropriated for purposes of paragraph
(2) shall be equal to the applicable amount (as
determined under subparagraph (C)) for the
preceding fiscal year.
(C) Applicable amount.--For purposes of this
paragraph, the term ``applicable amount'' means--
(i) for any fiscal year beginning prior to
the date on which the Secretary of the Treasury
determines the total increase in revenues to
the Treasury by reason of the application of
subchapter E of chapter 38 of the Internal
Revenue Code of 1986 (as added by subsection
(a)) is equal to or greater than
$100,000,000,000, $0; or
(ii) with respect to any fiscal year
beginning after the date described in clause
(i), an amount equal to 25 percent of the
increase in revenues to the Treasury during
such fiscal year by reason of the application
of subchapter E of chapter 38 of the Internal
Revenue Code of 1986 (as added by subsection
(a)).
(d) Economic Support Fund of Department of State.--
(1) In general.--For fiscal year 2027 and each subsequent
fiscal year, in addition to amounts otherwise available, there
are appropriated, out of any funds in the Treasury not
otherwise appropriated, to the Department of State an amount
equal to the amount determined under paragraph (2) with respect
to such fiscal year, with such amount to be made available for
bilateral and multilateral assistance to support climate and
clean energy programs.
(2) Preference.--In providing assistance under paragraph
(1), the Secretary of State (in conjunction with the Secretary
of the Treasury, the Secretary of Energy, and the Administrator
of the Environmental Protection Agency) shall allocate such
assistance in a manner which prioritizes the following goals in
the following order of importance:
(A) Facilitating the negotiation of carbon club
agreements pursuant to section 4694 of the Internal
Revenue Code of 1986 (as added by subsection (a)).
(B) Providing assistance to countries described in
section 4694(d)(2) of such Code.
(C) Maximizing the reduction of global greenhouse
gas emissions.
(D) Securing access for the United States to
materials and inputs necessary to manufacture products
with lower carbon intensity, particularly those that
are not feasibly produced domestically.
(E) Supporting human development and reductions in
poverty.
(F) Advancing the national security and diplomatic
interests of the United States.
(3) Appropriation.--
(A) Fiscal year 2027.--For fiscal year 2027, the
amount appropriated for purposes of paragraph (1) shall
be $25,000,000,000.
(B) Subsequent fiscal years.--For fiscal year 2028
and each subsequent fiscal year, the amount
appropriated for purposes of paragraph (1) shall be
equal to the applicable amount (as determined under
paragraph (4)) for the preceding fiscal year.
(4) Applicable amount.--For purposes of this subsection,
the term ``applicable amount'' means--
(A) for any fiscal year beginning prior to the date
on which the Secretary of the Treasury determines the
total increase in revenues to the Treasury by reason of
the application of subchapter E of chapter 38 of the
Internal Revenue Code of 1986 (as added by subsection
(a)) is equal to or greater than $100,000,000,000, $0,
or
(B) with respect to any fiscal year beginning after
the date described in subparagraph (A), an amount equal
to 25 percent of the increase in revenues to the
Treasury during such fiscal year by reason of the
application of subchapter E of chapter 38 of the
Internal Revenue Code of 1986 (as added by subsection
(a)).
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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