The FAIR Transition and Competition Act would also cover coal, oil and gas, which are much less common features of these border carbon adjustment proposals; Tucker and Beachy were both surprised to see them included. Charges on imports of these fuels would include the cost of complying with methane regulations and even the additional costs incurred by drillers for a clean energy standard, if that were to pass as part of a reconciliation package. Drilling costs and greenhouse gas intensity vary greatly depending on where and how the coal, oil and gas are mined. Hydraulic fracturing oil drilling in the Permian Basin, for example, is much more greenhouse gas intensive than drilling in the Gulf of Mexico, where there is a longstanding infrastructure for offshore production. These factors could all present challenges in calculating import charges, especially since fuel imports may in some cases result in lower upstream emissions costs than those produced domestically. This could end up giving domestic drillers a boost.
“I have a lot of questions about the inclusion of fossil fuels,” Beachy said. “I did not include fossil fuels in the proposal I put forward, so I have a lot of curiosity as to how that would work. He added that the Sierra Club does not yet have a position on the FAIR Transition and Competition Act and is still evaluating it.
A spokesperson for the American Petroleum Institute said it is still reviewing the bill, but sent a statement regarding its position on carbon border adjustments. “Economy-wide carbon pricing is the most effective and transparent government policy to drive innovation and tackle climate change, and adjusting carbon borders is an essential element of solid carbon pricing policy, ”said Stephen Comstock, API vice president of corporate policy, via email. “We welcome increased engagement on these issues with decision makers. In the recent briefing by the journalistic arm of Greenpeace Unearthed, Coons was among the lawmakers named by Exxon lobbyist Keith McCoy as a prime target for his company. At the time of McCoy’s call with the undercover Unearthed reporter, he was scheduled to meet with Exxon CEO Darren Woods in May.
Then there is the issue of fairness posed by a border tax. While the world’s least developed countries are exempt from the border carbon tax under the Coons and Peters proposal, it could still hurt other developing and middle-income countries. “If a country is mired in a carbon-intensive economy and is punished by these programs, it will be harder, not easier, for it to decarbonise in the future,” said Tobita Chow, director of Justice Is Global, a project of the People’s Action community organization network. “The reason developing economies have high carbon emissions isn’t because they don’t want to tackle the problem, but the capital and technology they need to do so has never been. available.”