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Sen. Whitehouse, Rep. DelBene, & co-sponsors just introduced a revamped Clean Competition Act (CCA). CCA is the most ambitious & meticulously crafted climate policy from this Congress. It lays a marker for what US policy looks like in this era of geopolitical competition. 1/ #climatesky #energysky

Manufacturing is where climate policy meets global competition. In some sectors, US is among cleanest (eg metals). In others US is falling behind (eg EVs, renewables). CCA aims for US industries to be globally competitive while achieving GHG cuts at home and abroad through 3 pillars. 2/

Pillar #1: Domestic performance fee CCA applies a performance fee of $60/ton CO2e to U.S. firms that are dirtier than U.S. average. Firms that are cleaner than average face no fee. This creates an incentive for dirtier firms to clean up, and for cleaner firms to stay ahead. 3/

Pillar #2: Carbon import tariff with climate club provisions US decarbonization is of little use if the rest of the world doesn’t also act. To level playing field, CCA imposes a carbon tariff on imports from countries that are dirtier on average than the U.S., at the same $60/ton CO2e rate. 4/

Importantly, CCA waives the US carbon tariff if a trade partner adopts comparable domestic climate policy. This is crucial, as it lays the groundwork for a US-led global climate club: a trade agreement that rewards domestic climate action with market access. 5/

Pillar #3: Domestic decarbonization investments CCA returns revenue from the domestic performance fee & carbon import tariffs through grants, loans, & rebates to accelerate US industrial decarbonization. In this era of budget deficits, CCA provides climate spending in a budget-neutral package. 6/

Together, these three pillars provide a comprehensive system of carrots and sticks for both domestic and foreign producers. CCA recognizes the challenges of domestic industrial decarbonization and the geopolitical opportunities of trade agreements. 7/

My team at @emlab.ucsb.edu has been building a state-of-the-art global computable general equilibrium (CGE) trade model to evaluate the economic and climate implications—both for the U.S. and globally—of paired domestic and trade climate policies like CCA. 8/