,,ii #aagth ,,congress #b;d ,session ,s4 #dcee ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #g1 #bjbb,mr4 ,whitehouse 7for himself1 ,mr4 ,coons1 ,mr4 ,schatz1 and ,mr4 ,heinrich7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to create a carbon border adjustment based on carbon intensity1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,clean ,competition ,act4 #b4 ,carbon intensity charge 7a7 ,in general ,chapter #ch of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subchapter3 ,e ,carbon intensity charge ,sec4 #dfia4 ,calculation of carbon intensity4 ,sec4 #dfib4 ,imposition of carbon intensity charge4 ,sec4 #dfic4 ,rebate4 ,sec4 #dfid4 ,definitions4 #dfia4 ,calculation of carbon intensity 7a7 ,reporting requirements ,not later than ,june #cj1 #bjbe1 and annually thereafter1 any covered entity shall1 for each eligible facility operated by such entity1 report to the ,secretary with respect to the following3 7#a7 ,any information required to be reported to the ,administrator under the ,greenhouse ,gas ,reporting ,program 7or which would be required to be reported notwithstanding any other provision of law prohibiting the implementation of or use of funds for such requirements7 for the preceding calendar year4 7#b7 ,the total amount of electricity used at such facility during the preceding calendar year1 including-- 7,a7 whether such electricity was provided through the electric grid or a dedicated generation source1 7,b7 the terms of any power purchase agreements with respect to such facility1 and 7,c7 with respect to any electricity which was not provided through the electric grid1 the greenhouse gas emissions associated with the production of such electricity1 provided that such emissions are not reported pursuant to paragraph 7#a74 7#c7 ,the total weight 7expressed in tons7 of each covered primary good produced at such facility during the preceding calendar year4 7b7 ,calculation 7#a7 ,carbon intensity 7,a7 ,eligible facility ,for purposes of this subchapter1 for each calendar year1 the carbon intensity with respect to any eligible facility shall be an amount equal to the quotient of-- 7i7 the covered emissions 7as determined under paragraph 7#b77 with respect to such facility1 divided by 7ii7 the total weight 7expressed in tons7 of covered primary goods produced at such facility during the preceding calendar year4 7,b7 ,covered national industry ,for purposes of this subchapter1 the carbon intensity with respect to any covered national industry shall be an amount equal to the quotient of-- 7i7 an amount equal to the sum of the covered emissions 7as determined under paragraph 7#b77 with respect to all eligible facilities which produce covered primary goods which are included within such industry for calendar year #bjbd1 divided by 7ii7 the total weight 7expressed in tons7 of covered primary goods produced at all such eligible facilities during such year4 7,c7 ,petition for specific goods 7i7 ,in general ,in the case of any covered national industry which produces more than #a covered primary good1 a covered entity may file a petition with the ,secretary to determine the carbon intensity with respect to a specific covered primary good4 7ii7 ,review ,with respect to any covered primary good which is included in a petition described in clause 7i71 the ,secretary 7in coordination with the ,administrator and the ,secretary of ,energy7 shall approve such petition if-- 7,i7 the chemical1 physical1 or mechanical production processes for such good are substantially different as compared to other covered primary goods produced within the same covered national industry1 and 7,,ii7 the carbon intensity determined with respect to such good is at least #be percent greater than the carbon intensity determined for other covered primary goods produced within the same covered national industry4 7iii7 ,recalculation ,in the case of any petition described in clause 7i7 which is approved by the ,secretary pursuant to clause 7ii71 the ,secretary 7in coordination with the ,administrator7 shall redetermine the carbon intensity with respect to the covered national industry which includes production of the covered primary good which is the subject of such petition by excluding any covered emissions associated with the production of such good for purposes of the determination made under subparagraph 7,b7 for such industry4 7,d7 ,determination ,any determination of carbon intensity under this paragraph shall be made by the ,secretary in coordination with the ,administrator and the ,secretary of ,energy4 7#b7 ,covered emissions 7,a7 ,in general ,for purposes of this subsection1 for each calendar year1 the amount of covered emissions with respect to any eligible facility shall be an amount 7as determined by the ,secretary1 in coordination with the ,administrator7 equal to-- 7i7 the amount equal to the sum of-- 7,i7 the total greenhouse gas emissions associated with the production of covered primary goods at such facility during the preceding calendar year 7as reported pursuant to subsection 7a771 plus 7,,ii7 the total greenhouse gas emissions associated with any electricity used at such facility for the production of such goods during the preceding calendar year1 minus 7ii7 the total greenhouse gas emissions which are captured and disposed of in secure geological storage 7in compliance with the regulations established under section #de,q7f77#b77 during the preceding calendar year4 7,b7 ,direct air capture ,for purposes of subparagraph 7,a77ii71 in the case of any greenhouse gas emissions which are captured directly from the ambient air1 the operator of the facility which captured such emissions may apportion such emissions amongst any eligible facilities which are under common control of such operator4 7,c7 ,emissions for electricity used 7i7 ,in general ,for purposes of subparagraph 7,a77i77,,ii71 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 year4 7ii7 ,exception ,in the case of an eligible facility which is subject to a power purchase agreement which guarantees that any electricity provided under such agreement is generated not less than #ae minutes prior to use by such facility and within the same regional transmission zone as such facility-- 7,i7 clause 7i7 shall not apply1 and 7,,ii7 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 agreement4 7#c7 ,imported goods 7,a7 ,in general ,in the case of any covered primary good which is imported into the ,united ,states1 the carbon intensity with respect to such good shall be determined by the ,secretary 7in coordination with the relevant parties7 based on-- 7i7 the carbon intensity of the general economy of the country of origin of such good1 or 7ii7 if the ,secretary 7in coordination with the relevant parties7 determines that transparent1 verifiable1 and reliable information is available with respect to any covered national industry in the country of origin of such good and that such country of origin is a transparent market economy in which inter-firm resource shuffling is unlikely to occur1 the carbon intensity of the covered national industry in such country which includes production of such good4 7,b7 ,petition 7i7 ,in general ,in the case of any entity which imports a covered primary good for which the carbon intensity can be determined under subparagraph 7,a77ii71 such entity may file a petition with the ,secretary to determine the charge under section #dfib1 if any1 based on the average carbon intensity with respect to the production of such good by the manufacturer within the country of origin4 7ii7 ,aggregation rule ,for purposes of this subparagraph1 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 good1 including any subsidiary1 parent company1 or joint venture of such manufacturer within the country of origin4 7iii7 ,inputs ,with respect to any covered primary good which is imported into the ,united ,states and for which other covered primary goods 7other than petroleum1 natural gas1 or coal7 were used as inputs by the manufacturer in the production of the imported covered primary good1 any greenhouse gas emissions associated with the production of the covered primary goods used as inputs shall be included in the determination of the greenhouse gas emissions associated with production of the imported covered primary good4 7iv7 ,data provision ,in the case of an entity which files a petition described in clause 7i71 such entity shall provide the ,secretary with an environmental product declaration containing any information which would otherwise be required to be reported under subsection 7a7 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 ,program4 7,c7 ,carbon intensity of the general economy ,for purposes of this paragraph1 with respect to any country1 the carbon intensity of the general economy of such country shall be an amount equal to the quotient of-- 7i7 the gross domestic product of such country for the year described in clause 7ii71 divided by 7ii7 the production-based greenhouse gas emissions of such country for the most recent year for which the ,secretary determines there is reliable information4 7,d7 ,exclusion ,in the case of any covered primary good which is imported into the ,united ,states and was produced in a relatively least developed country 7as described in section #abd of the ,foreign ,assistance ,act of #aifa 7#bb ,u4,s4,c4 #baeav771 this paragraph shall not apply4 7,e7 ,inter-firm resource shuffling ,for purposes of this paragraph1 the term inter-firm resource shuffling means any buying1 selling1 trading1 exchanging1 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 intensity4 7c7 ,publication ,the ,secretary 7in coordination with the relevant parties7 shall annually publish any carbon intensity which has been determined under subsection 7b7 with respect to any eligible facility1 covered national industry1 covered primary good1 foreign manufacturer1 or country of origin4 7d7 ,relevant parties ,for purposes of this section1 the term relevant parties means-- 7#a7 the ,administrator1 7#b7 the ,secretary of ,energy1 7#c7 the ,secretary of ,commerce1 7#d7 the ,united ,states ,trade ,representative1 and 7#e7 the ,chair and ,vice ,chair of the ,united ,states ,international ,trade ,commission4 #dfib4 ,imposition of carbon intensity charge 7a7 ,in general 7#a7 ,importation of goods 7,a7 ,in general 7i7 ,covered primary goods ,in the case of any covered primary good imported into the ,united ,states during any calendar year beginning after ,december #ca1 #bjbc1 there is hereby imposed a charge in an amount equal to the product of-- 7,i7 7aa7 in the case of a good for which the carbon intensity is determined under section #dfia7;b77#c77;,a77i71 the amount 7if any7 by which the amount determined under clause 7iii7 with respect to such good exceeds an amount equal to the applicable percentage of the carbon intensity 7as determined under section #dfia7;b77#a77;,b77 for the covered national industry which includes such good1 or 7bb7 in the case of a good for which the carbon intensity is determined under subparagraph 7,a77ii7 or 7,b7 of section #dfia7;b77#c71 the amount 7if any7 by which the carbon intensity determined under such subparagraph with respect to such good exceeds an amount equal to the applicable percentage of the carbon intensity 7as determined under section #dfia7;b77#a77;,b77 for the covered national industry which includes such good1 multiplied by 7,,ii7 the total weight 7expressed in tons7 of the good imported into the ,united ,states1 multiplied by 7,,iii7 the carbon price4 7ii7 ,finished goods 7,i7 ,in general ,in the case of any imported finished good which is imported into the ,united ,states during any calendar year beginning after ,december #ca1 #bjbe1 there is hereby imposed a charge in an amount equal to the sum of the amounts determined under subclause 7,,ii7 with respect to each covered primary good which is a component part of such imported finished good4 7,,ii7 ,components ,the amount determined under this subclause with respect to any covered primary good which is a component part of an imported finished good is an amount equal to the product of-- 7aa7 the amount 7if any7 determined under clause 7i77,i7 if such clause were applied with respect to such good1 multiplied by 7bb7 the total weight 7expressed in tons7 of the covered primary good1 multiplied by 7cc7 the carbon price4 7iii7 ,calculation for certain foreign goods ,for purposes of clause 7i77,i77aa71 the amount determined under this clause with respect to any covered primary good shall be equal to the product of-- 7,i7 an amount equal to the quotient of-- 7aa7 the carbon intensity of the general economy 7as determined under section #dfia7;b77#c77;,c77 of the country of origin of such good1 divided by 7bb7 the carbon intensity of the general economy 7as so determined7 of the ,united ,states1 multiplied by 7,,ii7 an amount equal to the applicable percentage of the carbon intensity 7as determined under section #dfia7;b77#a77;,b77 for the covered national industry which includes such good4 7,b7 ,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 #cj of the calendar year subsequent to such year4 7,c7 ,exclusion ,in the case of any covered primary good 7including any covered primary good which is a component part of an imported finished good7 which is imported into the ,united ,states and was produced in a relatively least developed country 7as described in section #abd of the ,foreign ,assistance ,act of #aifa 7#bb ,u4,s4,c4 #baeav771 this paragraph shall not apply4 7#b7 ,domestic production of covered primary goods 7,a7 ,in general ,in the case of any eligible facility1 for each calendar year beginning after ,december #ca1 #bjbc1 there is hereby imposed a charge in an amount equal to the product of-- 7i7 the amount 7if any7 by which the carbon intensity of such facility 7as determined under subparagraph 7,a7 of section #dfia7;b77#a77 exceeds-- 7,i7 an amount equal to the applicable percentage of the carbon intensity for the covered national industry 7as determined under subparagraph 7,b7 of section #dfia7;b77#a77 which includes any covered primary good produced by such facility1 or 7,,ii7 in the case of a covered primary good produced by such facility which is subject to an approved petition under subparagraph 7,c7 of such section1 an amount equal to the applicable percentage of the carbon intensity determined with respect to such good1 multiplied by 7ii7 the total weight 7expressed in tons7 of any covered primary goods produced by such facility during such calendar year1 multiplied by 7iii7 the carbon price4 7,b7 ,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 #cj of the calendar year subsequent to such year4 7b7 ,applicable percentage ,for purposes of paragraphs 7#a77;,a7 and 7#b77;,a7 of subsection 7a71 the applicable percentage shall be-- 7#a7 for calendar year #bjbd1 #ajj percent1 7#b7 for calendar years #bjbe through #bjbh1 the applicable percentage for the preceding calendar year1 reduced by #b4e percentage points1 and 7#c7 for any calendar year subsequent to calendar year #bjbh1 the applicable percentage for the preceding calendar year1 reduced by #e percentage points 7but not less than zero74 7c7 ,carbon price 7#a7 ,in general ,for purposes of paragraphs 7#a77;,a7 and 7#b77;,a7 of subsection 7a71 the carbon price shall be-- 7,a7 for #bjbd1 #ee1 and 7,b7 for each calendar year subsequent to the calendar year described in subparagraph 7,a71 an amount equal to the sum of-- 7i7 the carbon price for the preceding year1 plus 7ii7 an amount equal to-- 7,i7 the amount described in clause 7i71 multiplied by 7,,ii7 the percentage by which the ,,cpi for the preceding calendar year exceeds the ,,cpi for the second preceding calendar year1 increased by #e percentage points4 7#b7 ,,cpi ,rules similar to the rules of paragraphs 7#d7 and 7#e7 of section #a7;f7 shall apply for purposes of this subsection4 7#c7 ,rounding ,any applicable amount determined under subsection 7a7 which is not a multiple of #a shall be rounded to the nearest dollar4 #dfic4 ,rebate 7a7 ,exports 7#a7 ,in general ,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 #dfib1 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 amount determined under paragraph 7#b74 7#b7 ,recalculation ,in the case of a covered primary good described in paragraph 7#a71 the amount determined under this paragraph is an amount equal to the charge that would be imposed under section #dfib with respect to such good if subsection 7a77#a77;,a7 of such section were applied by substituting the carbon intensity of all eligible facilities 7as determined under subparagraph 7,a7 of section #dfia7;b77#a77 operated by the covered entity which produced the covered primary good described in section #dfic7;a77#a7 for the carbon intensity of such facility 7as determined under subparagraph 7,a7 of section #dfia7;b77#a774 #dfid4 ,definitions ,for purposes of this subchapter-- 7#a7 ,administrator ,the term ,administrator means the ,administrator of the ,environmental ,protection ,agency4 7#b7 ,c#jb-;e 7,a7 ,in general ,subject to subparagraph 7,b71 the term ,,co#b-;e means1 with respect to a greenhouse gas1 the quantity of such gas that has a global warming potential equivalent to #a metric ton of carbon dioxide1 as determined pursuant to table ,a-#a of subpart ,a of part #ih of title #dj1 ,code of ,federal ,regulations1 as in effect on the date of the enactment of this subchapter4 7,b7 ,methane ,in the case of methane1 the term ,,co#b-;e means the quantity of methane that has the same global warming potential over a #bj-year period as #a metric ton of carbon dioxide1 as determined by the ,administrator4 7#c7 ,covered entity ,the term covered entity means any entity which-- 7,a7 produces any covered primary good1 and 7,b7 is required to report emissions of greenhouse gases under the ,greenhouse ,gas ,reporting ,program 7or would be required to report such emissions notwithstanding any other provision of law prohibiting the implementation of or use of funds for such requirements74 7#d7 ,covered national industry 7,a7 ,in general ,the term covered national industry means any industry which is assigned a #f-;digit ,,naics code which is included in any of the following clauses3 7i7 #baaabj 7petroleum extraction74 7ii7 #baaacj 7natural gas extraction74 7iii7 #babaab 7underground coal mining74 7iv7 #cbbaaj 7pulp mills74 7v7 #cbbaba 7paper mills74 7vi7 #cbbabb 7newsprint mills74 7vii7 #cbbacj 7paperboard mills74 7viii7 #cbdaaj 7petroleum refineries74 7ix7 #cbdaba 7asphalt paving mixture and block manufacturing74 7x7 #cbdabb 7asphalt shingle and coating materials manufacturing74 7xi7 #cbdaii 7all other petroleum and coal products manufacturing74 7xii7 #cbeaaj 7petrochemical manufacturing74 7xiii7 #cbeabj 7industrial gas manufacturing74 7xiv7 #cbeaic 7ethyl alcohol manufacturing74 7xv7 #cbeaii 7other basic organic chemical manufacturing74 7xvi7 #cbecaa 7nitrogenous fertilizer manufacturing74 7xvii7 #cbgbaa1 #cbgbab1 #cbgbac1 or #cbgbae 7glass74 7xviii7 #cbgcaj 7cement74 7xix7 #cbgdaj or #cbgdbj 7lime and gypsum product manufacturing74 7xx7 #ccaaaj 7iron and steel74 7xxi7 #ccacac 7aluminum74 7,b7 ,exceptions 7i7 ,industrial gas manufacturing ,subparagraph 7,a77xiii7 shall apply only with respect to the production of hydrogen4 7ii7 ,other basic organic chemical manufacturing ,subparagraph 7,a77xv7 shall apply only with respect to the production of adipic acid4 7#e7 ,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 industry4 7#f7 ,eligible facility ,the term eligible facility means any facility 7as such term is defined for purposes of the ,greenhouse ,gas ,reporting ,program7 which is-- 7,a7 operated by a covered entity for the production of any covered primary good1 and 7,b7 located within the ,united ,states4 7#g7 ,greenhouse gas ,the term greenhouse gas has the meaning given such term under section #baa7o77#a77;,g7 of the ,clean ,air ,act1 as in effect on the date of the enactment of this subchapter4 7#h7 ,greenhouse gas emissions ,the term greenhouse gas emissions means the amount of greenhouse gases1 expressed in metric tons of ,,co#b-;e1 which were emitted to the atmosphere4 7#i7 ,greenhouse ,gas ,reporting ,program ,the term ,greenhouse ,gas ,reporting ,program means the ,greenhouse ,gas ,reporting ,program established under part #ih of title #dj1 ,code of ,federal ,regulations4 7#aj7 ,imported finished good 7,a7 ,in general ,the term imported finished good means any good which-- 7i7 is imported into the ,united ,states1 and 7ii7 7,i7 for calendar year #bjbf and #bjbg1 contains greater than #ejj pounds of any combination of any covered primary goods1 and 7,,ii7 for any calendar year after calendar year #bjbg1 contains greater than #ajj pounds of any combination of any covered primary goods4 7#aa7 ,,naics ,the term ,,naics means the ,north ,american ,industrial ,classification ,system4 4 7b7 ,clerical amendment ,the table of subchapters for chapter #ch of the ,internal ,revenue ,code of #aihf is amended by adding at the end thereof the following new item3 ,subchapter ,e--,carbon intensity charge 4 7c7 ,grant program 7#a7 ,in general ,for fiscal year #bjbe and each subsequent fiscal year1 there are appropriated1 out of any funds in the ,treasury not otherwise appropriated1 to the ,department of the ,treasury amounts equal to applicable amount for the preceding fiscal year1 with such amounts to be used by the ,secretary1 in conjunction with the ,secretary of ,energy and the ,administrator of the ,environmental ,protection ,agency1 to establish a competitive grant program to award grants to eligible entities for investments in new technology-- 7,a7 in the case of an existing eligible facility1 to reduce their carbon intensity1 and 7,b7 in the case of a proposed eligible facility1 to ensure best-in-class carbon intensity4 7#b7 ,modeled on ,diesel ,emissions ,reduction ,act ,for purposes of the program described in paragraph 7#a71 such program shall be administered in a manner similar to the national grant program of the ,environmental ,protection ,agency under subtitle ,g of title ,,vii of the ,energy ,policy ,act of #bjje 7#db ,u4,s4,c4 #afaca et seq474 7#c7 ,awarding of grant amounts ,for purposes of awarding grants under the program described in paragraph 7#a71 the ,secretary 7in conjunction with the ,administrator and the ,secretary of ,energy7 shall-- 7,a7 give preference to proposed investments-- 7i7 that would result in the greatest decrease in carbon intensity1 7ii7 for facilities located in economically distressed communities that have experienced a loss of manufacturing jobs1 7iii7 that would maximize improvement in local air quality1 or 7iv7 for facilities located in communities with high cumulative pollution burdens 7as determined by the ,administrator71 and 7,b7 allocate grant funds to eligible facilities and proposed eligible facilities which produce covered primary goods that are included within a covered national industry in approximate proportion to the share of total greenhouse gas emissions for which such industry is responsible for emitting4 7#d7 ,recapture ,in the case of any eligible entity which has been awarded a grant under the program described in paragraph 7#a7 with respect to any eligible facility or proposed eligible facility1 if such entity fails to-- 7,a7 within #c years of the awarding of such grant1 complete the proposed investments in new technology at such facility1 or 7,b7 during the #aj-year period after such investments are placed in service-- 7i7 in the case of an existing eligible facility1 achieve and maintain the reduction in carbon intensity proposed in the application for such grant1 or 7ii7 in the case of a proposed eligible facility1 achieve and maintain the best-in-class carbon intensity proposed in the application for such grant1 the ,secretary shall recapture1 pursuant to such regulations or other guidance issued by the ,secretary1 the amount of the grant awarded with respect to such facility4 7#e7 ,applicable amount ,for purposes of this subsection1 the term applicable amount means1 with respect to any fiscal year1 an amount equal to #ge percent of the increase in revenues to the ,treasury during such fiscal year by reason of the application of subchapter ,e of chapter #ch of the ,internal ,revenue ,code of #aihf 7as added by subsection 7a774 7#f7 ,definitions ,for purposes of this subsection-- 7,a7 ,in general ,the terms covered national industry1 eligible facility1 and covered primary good shall have the same meaning given such terms under section #dfid of the ,internal ,revenue ,code of #aihf 7as added by subsection 7a774 7,b7 ,best-in-class carbon intensity ,the term best-in-class carbon intensity means1 with respect to any proposed eligible facility1 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 7as determined of the date of the application for a grant under the program described in paragraph 7#a774 7,c7 ,eligible entity ,the term eligible entity means any person which operates an eligible facility or will operate a proposed eligible facility4 7,d7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury 7or the ,secretary's delegate74 7d7 ,economic ,support ,fund of ,department of ,state 7#a7 ,in general ,for fiscal year #bjbe and each subsequent fiscal year1 in addition to amounts otherwise available1 there are appropriated1 out of any funds in the ,treasury not otherwise appropriated1 to the ,department of ,state an amount equal to applicable amount for the preceding fiscal year1 with such amount to be made available for multilateral assistance to support climate and clean energy programs4 7#b7 ,applicable amount ,for purposes of this subsection1 the term applicable amount means1 with respect to any fiscal year1 an amount equal to #be percent of the increase in revenues to the ,treasury during such fiscal year by reason of the application of subchapter ,e of chapter #ch of the ,internal ,revenue ,code of #aihf 7as added by subsection 7a774