Clean Competition Act

The Clean Competition Act amends the Internal Revenue Code to create a carbon border adjustment based on carbon intensity, imposing charges on both imported and domestically produced covered primary goods and certain finished goods, with rebates for exports. Sec. 2, Carbon intensity charge: This section establishes a new subchapter E in the tax code. It requires covered entities to report greenhouse gas emissions, electricity use, and production data for eligible facilities annually by June 30, 2026. The carbon intensity for a facility is calculated as covered emissions divided by tons of covered primary goods produced. For imported goods, carbon intensity is based on the country's general economy or, if reliable data exists, the industry's carbon intensity in the country of origin. The Secretary must publish carbon intensities annually. Sec. 4692, Imposition of carbon intensity charge: A charge is imposed on imported covered primary goods starting in 2025, calculated as the excess carbon intensity over a percentage of the relevant industry's carbon intensity, multiplied by weight and a carbon price. For finished goods imported after 2026, the charge applies to component covered primary goods. Domestically, a charge applies to eligible facilities where carbon intensity exceeds the industry's percentage, starting in 2025. The applicable percentage starts at 100% in 2025, decreases by 2.5 percentage points annually from 2026-2029, then by 5 percentage points annually after 2029. The carbon price is $55 in 2025, adjusted annually for inflation plus 5%. Charges are due by September 30 of the following year. Exclusions apply for least developed countries unless they produce at least 3% of global exports. Carbon clubs may waive charges for countries with similar policies. Sec. 4693, Rebate: Exporters of covered primary goods or finished goods that paid the charge can receive a refund equal to the charge that would apply if the carbon intensity were based on all facilities of the covered entity, or the charge on the finished good. Sec. 4694, Definitions: Defines key terms: Administrator means EPA Administrator; CO2-e is based on global warming potential, with methane using a 20-year period; covered entity means any entity producing covered primary goods and required to report under the Greenhouse Gas Reporting Program; covered national industry means any industry with a 6-digit NAICS code, subject to exclusions.