This piece originally appeared at Green Tape.
Every couple of years, an oddball coalition of climate wonks and China hawks gets very excited about the idea of a carbon border adjustment mechanism (CBAM).
The idea is simple: the United States would impose fees on imported goods based on their carbon content, with a particular eye toward carbon-intensive manufacturing from countries like China. This would both advance climate goals and address concerns about industrial competition with nations that have weaker environmental standards.
We've seen a number of recent efforts at implementing CBAMs—the Clean Competition Act, the PROVE It Act, the Foreign Pollution Fee Act, and others. Both Democratic Senator Sheldon Whitehouse and President Trump’s former US Trade Representative Bob Lighthizer have endorsed the idea.
But the CBAM has always suffered from two political economy challenges. First, tying a border adjustment mechanism to carbon or greenhouse gas emissions is a nonstarter for many Republicans. Second, many free trade centrists balk at the idea of levying a CBAM without a domestic tax on carbon, fearing that such a configuration would run afoul of World Trade Organization (WTO) compliance.
For these reasons, with an incoming GOP trifecta, the CBAM will have to take a backseat for the next couple of years. But I want to introduce an idea that is tailor-made for the politics of a Republican-led government, yet also has plenty to offer climate hawks: the Pollution Border Adjustment Mechanism (PBAM).
