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Democratic Carbon Tariff Plan Splits US Business | Washington Examiner

Democratic Gambit, which charges for imports of carbon-intensive commodities, faces a split reaction between profitable or suffering business profits. A new form of protectionist policy It is related to our efforts to tackle climate change.

Senator Chris Coons of Delaware and Scott Peters of California Legislation, introduction July 19 aims to protect the competitiveness of U.S. industries exposed to domestic climate regulations, which could become even more tense as the Biden administration develops more aggressive policies. ..

Foreign companies that are not subject to strict environmental regulations and want to sell their products to the United States are forced to pay a price for each ton of carbon dioxide emitted when they manufacture their products, otherwise they have a competitive advantage. Sex is lost.

Senator Democrats $ 3.5 trillion in tax and spending infrastructure to catch up with the European Union, which recently proposed its own border carbon adjustments for imports from countries lacking aggressive emission reduction policies I would like to attach a bill to my proposal.

Kevin Dempsey, president and chief executive officer of the American Iron and Steel Institute, welcomed the Democratic Party’s efforts to impose border carbon adjustments, as the policy calls.

He said US border fees would remove the “perverse incentive” for domestic companies to import more dirty steel from places such as China, where environmental regulations are weak.

“It’s easy for BCA to be a good idea for the US steel industry,” Dempsey said. Washington Examiner.. “Steel is a major input to wind turbines, solar panels and electric vehicles and is a large part of the solution for achieving a green economy, so we need to encourage the use of steel, which is the cleanest steel. Made in America “

However, other industries that rely on imports of related products may have higher prices and pass them on to consumers.

The Democratic Party’s proposed import rates are initially targeted at carbon-rich products such as steel, aluminum, cement, natural gas, oil and coal.

American President Tim Phillips for the Prosperity of Americans, a conservative political group affiliated with oil and gas billionaire Charles Koch, said in a statement Thursday that imposing a border carbon tax would “I” It causes “incredible harm to our economy” and leads to higher prices, saying “inviting retaliatory tariffs from other countries.”

For example, the US refining sector, which converts crude oil to fuel, relies on imports of multiple types of oil to which charges may apply. Many US refineries are built to process the types of heavy crude oil produced by Saudi Arabia, and it is not easy to rely on US shale producers who specialize in light and sweet oils.

Gasoline refiners facing the price of imported oil can face two unattractive outlooks. It can pass on new costs to the buyer, lead to higher pump prices, or sacrifice profit margins.

Kevin Book, managing director of the research group ClearView Energy, said: “It will raise end-user prices, and it will destroy demand.”

Brian Flannery, a visiting scholar at the Resources for the Future, raised the possibility that global trade could be disrupted as the United States and Europe raise their outlook for carbon import fees.

“I think there is a potential challenge to trade immediately,” Flannery said. “I’m wondering about the impact on the supply chain. Automobiles are procured in many jurisdictions and parts move back and forth. Taxing at every stage of the process can have a significant impact on commerce. there is.”

However, domestic industrial manufacturers could be big winners of US border carbon adjustments.

According to a survey by the Climate Leadership Council, US heavy industry, including steel, already has an advantage over China, India and even Europe in producing goods and services with lower carbon emissions.

The council reports that commodities produced in the United States are 80% more carbon efficient than the world average.

In other words, if you are subject to U.S. carbon import fees, foreign companies trying to export goods here will pay higher prices than domestic manufacturers with a smaller pollution footprint, which gives U.S. companies a better advantage. Become.

Katrina Roke, Vice President of Policy for the Climate Leadership Council, said:

US steel is manufactured using an electric arc furnace, which uses approximately 70% of domestic steel from completely recycled scrap, and produces much lower carbon dioxide emissions than blast furnaces, so it is a competitor. Especially advantageous compared to.

According to the Steel Research Institute, of the seven major steel producing countries, the United States has the lowest carbon emissions per ton of steel produced.

China emits 2.5 times more carbon per ton of steel.

“A border carbon adjustment passed on steel in the United States could favor US production and exports,” said Julio Friedman, senior researcher at Columbia University’s Center for Global Energy Policy.

However, Friedman and other experts said the fate of US steel and other industries could depend on how the carbon import tariff program was drafted and implemented.

As an example, Flannery stated that well-designed border adjustments would require a combination of import taxes and export rebates, but both US and EU proposals do not.

Similarly, export rebates give manufacturers shipping goods abroad an advantage over foreign competitors who are not subject to strict carbon regulations. This could benefit industries such as US natural gas producers, who have become increasingly dependent on liquefied natural gas exports to Europe and Asia.

“Without export rebates, we are not addressing the entire problem of economic competitiveness,” Flannery said.

Another important challenge facing policy makers is how to balance the goals of reducing global carbon emissions while protecting domestic industry and employment.

The fight against global warming requires international cooperation, but the threat of imposing import tariffs could be hostile to high-carbon-emission Asian countries such as China, which is key to solving climate problems. ..

“Climate change requires global cooperation to solve key challenges, and border carbon adjustments do not support global cooperation,” Friedman said. “It may protect some US businesses, and those protections are needed, but there are many ways to do it other than border carbon adjustments.”

Original location: Democratic carbon tariff plan splits US business

Democratic Carbon Tariff Plan Splits US Business | Washington Examiner

Source link Democratic Carbon Tariff Plan Splits US Business | Washington Examiner

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