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 providing rebates for exports. Sec. 2, Carbon intensity charge: This section establishes a new subchapter in the tax code. It requires covered entities to report greenhouse gas emissions, electricity use, and production data for eligible facilities annually. The carbon intensity of a facility is calculated by dividing its covered emissions by the weight of covered primary goods produced. For imported goods, carbon intensity is based on the country's general economy or, if reliable data exists, the specific industry's intensity. The Secretary must publish these carbon intensities. Sec. 4692, Imposition of carbon intensity charge: A charge is imposed on imported covered primary goods starting in 2025 and on finished goods with such components starting in 2027, calculated as the excess of the good's carbon intensity over a percentage of the relevant industry intensity, multiplied by weight and a carbon price. A similar charge applies to domestic production at eligible facilities starting in 2025. The applicable percentage starts at 100% in 2025, decreases by 2.5 percentage points annually from 2026-2029, and then by 5 percentage points annually thereafter. The carbon price is $55 in 2025 and increases annually by the prior year's price plus inflation plus 5 percentage points. Charges on imports from countries with similar carbon pricing policies may be waived. Sec. 4693, Rebate: A refund is allowed for exported covered primary goods or finished goods, equal to the charge that would have been imposed on the good if the carbon intensity were based on the average of all the exporter's eligible facilities. Sec. 4694, Definitions: Defines key terms including Administrator (EPA Administrator), CO2-e (global warming potential equivalent to 1 metric ton of CO2, with a 20-year period for methane), covered entity (any entity producing a covered primary good and required to report under the Greenhouse Gas Reporting Program), and covered national industry (an industry with a 6-digit NAICS code, subject to certain exclusions).