Cassidy Convenes Industry, Republican Officials for US CBAM Effort

President Donald Trump will be receptive to Sen. Bill Cassidy's proposal to impose a carbon border tax, predicted Dave Banks, a former energy and environment expert in the National Economic Council and National Security Council during the first Trump term.

Banks, who was moderating a panel at an event hosted Oct. 16 by Cassidy, R-La., in Baton Rouge, said, "Obviously, President Trump's very, very focused on resurrecting U.S. leadership and manufacturing, and that is what really sort of pushed his position when it comes to trade policy. It wasn’t just the fact that he has never met a tariff he doesn't like." He said if the foreign pollution fee -- as Cassidy likes to call his proposal (see 2311030006) -- creates a competitive advantage for U.S. manufacturers, Trump will support it.

Banks, and other panelists, emphasized that Congress needs to have more urgency about imposing a carbon border tax. Banks said China might invade Taiwan in a year, three years or five years, and such a law is needed before then.

Catrina Rorke, senior vice president for policy and research at the Climate Leadership Council, agreed. "It is urgent, and we need to move quickly and the senator’s leadership has brought together a whole lot of interesting stakeholders to do so."

Maureen Hinman, co-founder of the Silverado Policy Accelerator, and former environmental director in the Office of the U.S. Trade Representative, told the audience that the U.S. and China are in a race "to determine which nation, and more importantly, which values will lead to the 21st century."

She noted China's dominance in materials used to make solar cells, advanced batteries and chips, as well as their dominance in the building blocks of those goods; she said China makes 97% of solar wafers and 94% of battery anodes. In the case of the minerals, the country has shown "a willingness to throttle or restrict supply in the face of geopolitical disputes," she said. "All this points to the need for better tools in our arsenal to defend fairness and American interests in the global economy. We don’t have time to have a political debate."

Hinman said the scope of the cheating China does is vast, and there are no consequences for cheating. She said the cost savings state-owned enterprises have from cutting environmental corners is "very substantial."

She said that battery materials are 40% cheaper in China than in the West, and the lack of environmental compliance is a big reason why.

Jim Connaughton, former director of White House Office of Environmental Policy during the George W. Bush administration, praised Cassidy's bill for its emphasis on partnerships.

Mexico, Canada, South Korea and other countries with U.S. free trade agreements wouldn't have to pay any fees unless the product were more than 50% dirtier than U.S. production, and there would be an opportunity for lower income countries, such as Brazil or India, to get special treatment on a product-by-product basis if they engaged in negotiations with the Office of the U.S. Trade Representative.

Connaughton said, "We need to reengage our buddies. That's at the core of Sen. Cassidy's bill. Creating new partnerships, new alignment on national security, on energy security, on economic security and on environmental security."

Hinman agreed, saying that as a former trade negotiator, she likes how the bill gives the U.S. leverage.

"One of the most valuable things about this bill, and this policy, is the ability to bring people to the table, incentivize that and to give the U.S. tremendous leverage that is ongoing, to get countries to supply information," she said, and it would promote environmentally sound trade.

A panel of industry officials later in the event, however, suggested some of the thickets the effort might get caught in as it winds its way through Congress.

Kevin Gundersen, who leads government affairs at the Huntsman Corporation, a multinational chemical manufacturer, said he sat in shock when Hinman said that if Congress gives Washington the tools they need to promote cleaner trade, they'll do it.

He said EPA regulation of chemicals over the last decade "hasn't been a pretty picture."

While he called Cassidy's bill a well-intentioned idea, he said, "One of the risks that we see with respect to organizing trade around carbon emissions is the implementation."

Linda Dempsey, vice president for public affairs at CF Industries, the nation's largest ammonia producer, said her company likes the idea of a pollution fee on dirtier foreign ammonia producers, because it will level the playing field and protect the investments CF is making to reduce its carbon footprint.

However, she noted that Russian ammonia and Chinese ammonia are cheaper due to government subsidies and cut corners. "Our farmers want the lowest price product." She said they will need to be convinced of the value of cleaner ammonia. "We need to bring our farmer customers along with us, or we won’t be successful."