Louisiana Republican Sen. Bill Cassidy is making his hardest sell yet on conservative legislation linking climate action with trade policy.
In a bid to build support for his proposal even before the start of the next Congress, the Cassidy on Wednesday unveiled a slimmed-down, 20-page “discussion draft” version of his year-old, 100-page “Foreign Pollution Fee Act.”
The incoming GOP governing trifecta will be working fast to put together the contours of two budget reconciliation packages, and Cassidy believes his bill could be a prime candidate for inclusion.
“It’s consistent with what the Trump administration wants to do,” Cassidy told reporters on Wednesday. “It could actually raise revenue for a reconciliation bill, and so therefore we want to get it more into the discussion now.”
At its core, the purpose of the retooled “Foreign Pollution Fee Act” remains the same as the original: Leverage data showing that the United States produces certain materials “cleaner” than foreign adversaries — namely China — and impose a fee on certain imports.
The fee would still only affect foreign products, continuing to ignore the argument from many Democrats and advocates that a domestic price on carbon is necessary for any new trade policy to meet compliance with the World Trade Organization.
One major change includes a more streamlined system for imposing the new fees — a structure that is still being finalized by Cassidy’s office.
The new language would significantly narrow down the list of foreign-made products that would be subject to an import fee. The original bill included energy imports like oil, natural gas, hydrogen, minerals, solar panels and wind turbines. So-called “covered products” in the new bill would include only aluminum, cement, glass, iron, fertilizer and steel.
The decision to omit fossil fuels strikes some experts as counterproductive if one of the bill’s goals is to, according to a press release, “reward investments in decarbonization.”
“It should cover as many products as possible … if the genuine goal is to address climate change,” said Shuting Pomerleau, director of Energy and Environmental Policy at the center-right group American Action Forum, who speculated a reason oil and gas were removed from the list was the fact that Cassidy’s home state is “a big fossil fuel-producing state.”
George David Banks, a former Trump administration official who is now a conservative climate adviser, said the reason for the winnowed-down list was obvious.
“It’s really hard to cover products that don’t want to be covered, or covered products that want to be covered but aren’t willing to endorse the bill,” he explained.
“When you’re pulling together some sort of policy like this, you need to be really careful about how you spend your political capital, and if you include an industry that does not want to be covered — wow.”
One such industry is the domestic oil refiners, who could see their supply of crude oil and petroleum affected if imported oil and petroleum are levied with a fee under Cassidy’s bill.
Refiners were among those who lobbied hard earlier this year against separate bipartisan, bicameral legislation — the “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act” — which would call for a study of the carbon intensity of nearly three dozen industrial products made the U.S. in anticipation for being slapped with carbon tariffs in the coming months by the European Union and the United Kingdom.
A spokesperson for the American Fuel and Petrochemical Association would not specifically say whether it lobbied to be exempted from the “Foreign Pollution Fee Act,” too.
But they said in a statement the group was gratified: “We agree with … [the] decision to remove energy products from the bill. Including them would harm U.S. manufacturers, consumers and North American energy security.
“The United States does not import crude oil or refined products from China, and our domestic refining kit is already the competitive envy of the world.”
‘Democrats have their own bill’
Cassidy was more circumspect about why the list of covered products was scaled back, but mentioned refiners specifically as a consideration.
“There’s a lot of complexity there,” he said. “For example, we have refineries in South Louisiana totally oriented towards taking hard-to-refine fuel and make it the most environmentally friendly way. Do they get penalized for doing so? So then the fuel goes someplace else and gets [refined] in a less environmentally friendly way? It’s difficult to resolve that. So we thought it was just best to leave it off the table.”
A spokesperson for Cassidy said the senator and his team suggested the final list of products was the result of a yearlong listening tour with different industries “to better understand their trade profile and their challenges in countering unfair competition from China.”
Cassidy also hosted a daylong “Energy Security Summit” in Baton Rouge in October to gather representatives of industry, former Trump administration officials and academics.
At one point, Senate Democrats like Sheldon Whitehouse of Rhode Island and Chris Coons of Delaware, who have been working on separate carbon tariff legislation, saw the “Foreign Pollution Fee Act” as an opportunity to try and strike a bipartisan compromise.
But if they or other environmental advocates are ultimately disappointed that fossil fuel products are to be exempted from the “Foreign Pollution Fee Act,” it may not matter too much for the bill’s Republican supporters. The current goal is to include the proposal in a reconciliation package, which has the advantage of being able to bypass the Senate filibuster.
“Democrats have their own bill and they have a domestic carbon tax that I thoroughly reject,” said Cassidy. “I think it’s a bad policy and I can’t believe anybody with a lick of sense would even talk about it.”
Cassidy’s bill currently has only one other GOP co-sponsor: Sen. Lindsey Graham of South Carolina.
Some green-oriented outside groups are somewhat clear-eyed about what Cassidy is hoping to accomplish, with Zach Friedman, senior director for federal policy at Ceres, saying the bill was always going to be a “trade and competition bill with environmental benefits” rather than strictly a climate measure.
Harry Manin, deputy legislative director for industrial policy and trade at the Sierra Club, said that while “this bill may not directly lead to marked global climate pollution reductions by itself, in concert with additional investments in industrial innovation, it may have the potential to protect and incubate breakthrough steel, aluminum, and cement demonstrations in the U.S.”
‘No one commits’
Still, Manin noted that while the original version of the “Foreign Pollution Fee Act” required certain foreign companies to comply with American environmental standards to avoid fees, the new version did not.
This could result, he said, in a possible scenario where “climate pollution reductions” achieved elsewhere “may come at the expense of other environmental harms and may not fully internalize the clean competitive advantage of American industrial innovators.”
At the same time, Pomerleau, of the American Action Forum, said she noticed a major bright spot in a portion of the two-page summary sheet Cassidy’s office released on Wednesday: that the “polluters’ fee” would be designed to “correlate to the environmental performance of U.S. production and U.S. imports to qualify for the WTO’s environmental policy exceptions.”
“It shows me they are trying to make this a climate bill,” she said. “They are trying to find WTO compliance without a domestic carbon price.”
Banks sees it differently, saying the summary sheet language was included to “assuage free trade Republicans who are concerned about trade wars and WTO noncompliance” — underscoring the extent to which Cassidy is now trying to build Republican support for the legislation rather than grow a bipartisan coalition.
He has his work cut out for him on the GOP side of the aisle, anyway. There was at one point a third co-sponsor, Sen. Roger Wicker (R-Miss.), but he quickly dropped his endorsement out of fear he would be branded as a climate radical.
Cassidy’s office is collecting feedback through mid-January and in the meantime he’s talking to everyone who might be interested in lending support, including Trump Cabinet nominees and members of Senate Republican leadership.
Those whose ear he has bent on the subject include Jamieson Greer, President-elect Donald Trump’s pick to be U.S. trade representative. Greer was the chief of staff to Trump’s former trade representative, Robert Lighthizer, who has endorsed carbon tariffs.
“No one commits,” Cassidy conceded, “but I’m obviously I’m talking about it to a lot of people.”
