Four senators — two Democratic, two Republican — plan to unveil proposals in coming weeks that would slap a tariff on carbon-intensive goods coming into the United States from abroad.
Each bill will look very different in the approaches they take to establishing trade policy designed to leverage U.S. competitiveness while also addressing the climate crisis, but they’ll all have something in common: significant buy-in from the Climate Leadership Council.
“It’s fair to say that any office that is working on a border carbon adjustment legislation or something related, we will have worked with them on it,” Greg Bertelsen, the council’s CEO, told E&E News in a recent interview.
Since its launch nearly six years ago, CLC has become an important resource on Capitol Hill for lawmakers looking to formulate legislation around the increasingly popular concept of a carbon boarder adjustment mechanism (CBAM) that could mirror what the European Union is moving towards and serve as a counterweight to foreign adversaries like China.
Armed with data, experts and insights, Bertelsen and his CLC colleagues have made themselves available to any member of Congress who wants to engage on this issue.
The result of such participation is that CLC is now empowering multiple senators — Democrats Sheldon Whitehouse of Rhode Island and Chris Coons of Delaware and Republicans Bill Cassidy of Louisiana and Kevin Cramer of North Dakota — to work on completely separate CBAM tracks.
Whitehouse noted that the group has “provided good intermediating with Republicans and Democrats,” while Coons observed that CLC “has been helpful with analysis, introductions and insights into how we may actually implement this idea.”
Cassidy described the CLC as “one of those sounding boards where you say, ‘Can it work?’ and they say, ‘No, it can’t.’ ‘OK, why not?’ ‘OK, well, it can, but you’d have to change it.’ ‘OK, yeah, but what about this guy’s perspective?’”
At some point, if they’re serious about the end product, the lawmakers will need to turn their various intellectual exercises into a single bill everyone can rally around. It will require CLC to play favorites among the different tracks and speak up for which proposal it thinks would work the best.
But in today’s hyperpartisan environment, CLC is a striking example of an advocacy group willing to stay neutral and navigate an increasingly messy political morass toward achieving a singular goal.
“Our belief is we need to solve climate change; that requires lowering global greenhouse gas emissions, and the most underutilized tools right now, globally, are policies that leverage market forces,” Bertelsen explained. “And so what we ultimately will be most interested in and most supportive of are policies that do just that.”
He added, “We’ll evaluate bills on a case-by-case basis, but at this stage of the process, what we’re most interested in is getting thoughtful members of Congress to engage.”
GOP founders, bipartisan focus
The Climate Leadership Council was born in 2017, following the publication of a report from two former Republican secretaries of State, James Baker and George Shultz, the latter of whom died in 2021.
Their eight-page manifesto, “The Conservative Case for Carbon Dividends,” endorsed four pillars around climate action: instituting a carbon fee; returning money from that fee back to taxpayers in the form of a dividend; regulatory streamlining; and a border carbon adjustment.
While climate advocate Ted Halstead, who died in a hiking accident in 2020, was the formal founder of CLC, Republicans were among the original leaders of the organization, and it quickly became branded as a center-right think tank.
ConocoPhillips, BP PLC abd Shell PLC — entities that typically align with the GOP — were among its founding members, alongside the energy company Exelon Corp., First Solar Inc. and Conservation International.
Though CLC is not required to disclose donors as a 501(c)(3), founding members typically donate within the first year of operation of an organization.
It might be true that its GOP roots made the CLC a comfortable landing spot for Republicans looking to get involved in the climate movement long dominated by Democrats, Bertelsen was quick to clarify that “we are a nonprofit group who believes that to achieve a big climate policy in the United States, we are going to need bipartisanship.”
The group has since, he said, become known for being a “convener of companies from a broad swath of industries, environmental interest groups and labor interests,” where likeminded people can learn about “the best and most optimal policies to promote and to achieve climate progress while boosting our economic interests.”
Congressional outreach has always been a part of the equation, too, as has its research arm. One report, released in the fall of 2020, Bertelsen regards as the “single most important thing that has gotten members on both sides of the aisle interested in this suite of policies.”
Contained in the report, titled “America’s Carbon Advantage” is a chart showing how the United States is widely outperforming trading partners in terms of its ability to make a vast array of products across nearly two dozen industries with lower carbon emissions.
The data plays to desires of fairness, with the takeaway on Capitol Hill that the United States should be rewarded for environmental stewardship while other countries that aren’t meeting such high standards ought to pay.
In addition, among the countries underperforming in carbon efficiency is China, which the United States is increasingly regarding as a fierce competitor.
“I’ve been in meetings with more than one member of Congress in which we’re talking about climate policy, very broadly … and then we bring up this carbon advantage data,” Bertelsen said. “I’ve been in the room with a senator who has held that [chart] up and said, ‘This is what we need to do.’”
Bertelsen has since been to the Hill to collectively brief Whitehouse, Coons, Cassidy, Cramer and their staffs — and Sen. Lindsey Graham (R-S.C.) — on the carbon advantage data and how it can inform their work in this space.
“This one dynamic,” he said, “speaks to members across the aisle more than any other climate dynamic that I have ever seen.”
Rise of a green player
Other factors have also contributed to CLC’s rise in relevance as a player in helping develop carbon tariff legislation.
Bertelsen cited an op-ed from Cramer and former Trump National Security Advisor H.R. McMaster published in Foreign Policy in Jan. 2022 that made the connection between climate policy and national security as a watershed moment similar to the Baker-Shultz report.
A month later, CLC for the first time since its founding, decided it would endorse a border carbon adjustment as a stand-alone policy, untethered from the four pillars the organization had until that point seen as inextricably linked.
It also launched in Feb. 2022 the Center for Climate and Trade, housed within the broader CLC, to specifically advocate for enactment of a CBAM, which has led CLC to increase its engagement with the bipartisan group of senators working on their various proposals.
Paul Bledsoe — strategic adviser at the Progressive Policy Institute and veteran climate policy expert who worked in the Clinton White House and on Capitol Hill — credited CLC with recognizing the political potency of the CBAM concept without the political baggage of the other original climate action pillars.
“For years, the CLC put almost all their eggs in the carbon pricing basket, even when people believed they were politically unfeasible due to Republican opposition,” Bledsoe said. “There were people who kind of wrote them off because of that as not being terribly relevant.”
CLC also suffered a minor public relations crisis in 2021, when the group suspended Exxon Mobil Corp., a founding member, after secret recordings surfaced from an Exxon Mobil lobbyist suggesting the oil company was only supporting a carbon tax because there was no risk it would ever have the votes to become law.
Bertelsen said he wasn’t worried Republican senators were engaged in similar greenwashing efforts: “Members of Congress have better things to do than devote their time and the times of their staff to something that they don’t truly believe in.”
Of course, there is a risk in pushing for a CBAM without an accompanied domestic price on carbon, which some advocates say is not only necessary for meaningfully addressing the climate crisis but is in fact required for ensuring a CBAM’s enforceability by the World Trade Organization.
While Whitehouse’s proposals have in the past called for imposing a fee on U.S. industrial facilities for emissions that exceed the average of their industry, Coons would not address that in his forthcoming bill, saying, “there is no pathway” for that provision.
Cassidy is also uninterested in exploring the domestic carbon-pricing dynamic. His bill, poised to be the first Republican-led CBAM proposal ever, will be called the “Foreign Pollution Act” and would seek to punish bad international actors on the environment — like China.
Cramer, who is ignoring the domestic carbon price component, too, is calling his a “trade deal” that could be reconciled with what European countries are already doing.
Bertelsen emphasized that CLC’s position is that all four components of the group’s original platform remain the best comprehensive combination of policies to combat climate change and promote the U.S. economy but that the organization saw no disadvantage in seizing the political moment and pursing a CBAM independently.
He also cast doubt on whether it was truly a doomed policy in the context of the WTO.
“The truth is, it’s all untested, we don’t know,” he said. “I do believe this type of policy, which really at the end of the day is an environmental policy designed to benefit the globe — that those objectives are consistent with the WTO and also the WTO is an evolving body.”
On those concerns, this is what he tells lawmakers entering the carbon border adjustment space: “First, we want to design policies that are consistent with our international obligation very clearly, but at this stage of the game, we shouldn’t let WTO concerns in and of themselves be impediments to advancing the discussion.”
Cramer said CLC’s approach — which involves giving senators the space to put their own proposals forward — “says that they’re serious about the issue, and serious about the solutions and serious about the process of legislating and political capital and increments and all of the things that more extreme organizations or more unilateral or singularly focused organization probably wouldn’t do.”
“We welcome all the various efforts,” Whitehouse agreed. “I think everything at this point that is additive is productive, and then we’ll have to work together to figure out where we’re unified.”
That work probably needs to happen sooner than later, however, if CBAM advocates stand a chance of moving legislation before the end of the 118th Congress.
In divided government and heading towards a presidential election cycle, there are few legislative vehicles on which to attach CBAM language.
Senators see an opportunity to include such language in a follow-up bill to the CHIPS and Science Act of 2022 that Democratic leaders want to craft with the help of Republicans. It would require two layers of negotiations and a timing alignment, though, which could prove challenging.
“I think we will ultimately end up, I hope, with a consensus bill,” said Coons, “but there are very different approaches from the senators — very different. We are all trying to find a path forward on a border carbon adjustment, and hopefully, we will harmonize our approaches, because while an initial discussion and different priorities and values makes sense, at the end of the day, we need to get something that can be passed.”
Bertelsen refused to commit to a timetable for CLC to choose a CBAM proposal to be the leading legislation around which all others should coalesce.
“There is space between the Democrats working on this and the Republicans working on this,” he said.
“There’s not complete overlap at this point in their policies. But what I do see is a lot of overlap on what the ultimate objectives are, which his lowering global greenhouse gas emissions, boosting U.S. competitiveness,” said Bertelsen.
“There’s a big interest in countering or outcompeting China. … I do have a lot of optimism about ultimately getting a policy breakthrough.”