Putting a price on carbon pollution — so fossil fuels and greenhouse gas emissions reflect the true cost of their public health and environmental damage — is an important part of the suite of policies needed to address the climate crisis.
And once the U.S. has a price on carbon, to make sure we're not just importing high-carbon goods, we could then think about instituting a carbon border adjustment mechanism so that imported goods would be subject to the same price on carbon as domestically produced goods.
What you can't do, though, is institute a carbon border adjustment mechanism on imported goods without first putting a domestic price on carbon. You shouldn't because you'd be allowing US companies to pollute without paying. You can't because you'd be forcing foreign-made goods to essentially pay a carbon tax, so it would be immediately run afoul of the World Trade Organization, to which the U.S. is a signatory.
This basic reality of international law makes the most recent example of media credulously helping Republicans greenwash their climate denial so stark. Yesterday, Sara Schonhardt at E&E News/PoliticoPRO wrote Senator Kevin Cramer, "a rare Republican proponent of climate-focused trade policy," wants to adopt a carbon border adjustment, because in part, it would allow the U.S. entry into a European "climate club" with favorable trade conditions.
Germany is using its G7 presidency to push for what Schonhardt describes as "a coalition centered on trade policy and other efforts to make industry less carbon-intensive," which would include a carbon border mechanism- once EU's carbon price gets off the floor.
In the U.S. though, there isn't a carbon price at all. But "Cramer does not believe a carbon price should be required for the U.S. to pursue a carbon border adjustment mechanism and doesn’t see it as a hindrance to talks," Schonhardt reports as though it were a reasonable thing for an elected legislator to propose, and not an admission that Cramer is entirely uninterested in actually reducing emissions.
And he even basically admitted that his aim isn't to speed up climate policy, but instead slow it down: “Every time a European leader comes in, I do sort of plead with them, ‘Help us catch up. Let’s reconcile something together before you move forward too quickly.'"
Schonhardt concludes the story with Cramer's acknowledgment that Sen. Joe Manchin has also raised the idea in the bipartisan negotiations and that "if there is going to be an agreement, in all likelihood it will be some form of carbon border adjustment."
But an actual price on carbon would remain "problematic for most Republicans" who aren't exactly known for their willingness to "move forward too quickly" on climate policy.
So Cramer's apparently open to step two of a carbon tax, applying it to goods produced elsewhere, while skipping step one of a U.S. application. Which would violate WTO rules and presumably a host of other U.S. trade agreements.
Last September, WTO Deputy Director-General Jean-Marie Paugam made it clear that the WTO's rules don't preclude environmental policies like the potential EU CABM, "provided that it is not discriminatory or does not disguise primarily competitive or protectionist motives."
Putting a carbon tax on imports, but not domestic goods, is basically WTO's definition of discrimination. Giving Cramer climate cred for proposing this would be like giving Republicans credit for compromising on gun control because they propose putting a 100% tax on guns made in other countries. Of course, that would be a blatant subsidy for U.S. gun manufacturers — it also wouldn't be the worst gun violence response the GOP has had this week.
