[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3523 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3523
To amend the Internal Revenue Code of 1986 to create a carbon border
adjustment based on carbon intensity, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 17, 2025
Mr. Whitehouse (for himself, Mr. Blumenthal, Mr. Heinrich, Mr. Schatz,
Mr. Welch, and Mr. Van Hollen) introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to create a carbon border
adjustment based on carbon intensity, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clean Competition Act''.
SEC. 2. CARBON INTENSITY CHARGE.
(a) In General.--Chapter 38 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter E--Carbon Intensity Charge
``Sec. 4691. Calculation of carbon intensity.
``Sec. 4692. Imposition of carbon intensity charge.
``Sec. 4693. Rebate.
``Sec. 4694. Carbon clubs.
``Sec. 4695. Definitions.
``SEC. 4691. CALCULATION OF CARBON INTENSITY.
``(a) Domestic Reporting Requirements.--Not later than June 30,
2026, and annually thereafter, any covered entity shall, for each
eligible facility operated by such entity, report to the Secretary, the
Administrator, and the Secretary of Energy with respect to the
following:
``(1) Any information required to be reported to the
Administrator under the Greenhouse Gas Reporting Program (as
would be required to be reported notwithstanding any other
provision of law prohibiting the implementation of or use of
funds for such requirements) for the preceding calendar year.
``(2) The total amount of electricity used at such facility
during the preceding calendar year, including--
``(A) whether such electricity was provided through
the electric grid or a dedicated generation source,
``(B) the terms of any power purchase agreements
with respect to such facility, and
``(C) with respect to any electricity which was not
provided through the electric grid, the greenhouse gas
emissions associated with the production of such
electricity, provided that such emissions are not
reported pursuant to paragraph (1).
``(3) The total relevant quantity of each covered primary
good produced at such facility during the preceding calendar
year.
``(4) Any other information determined necessary by the
Secretary for purposes of the administration of subsection (b).
``(b) Calculation.--
``(1) Carbon intensity.--
``(A) Eligible facility.--For purposes of this
subchapter, for each calendar year, the carbon
intensity with respect to any eligible facility shall
be an amount equal to the quotient of--
``(i) the covered emissions (as determined
under paragraph (2)) with respect to such
facility, divided by
``(ii) the total relevant quantity of
covered primary goods produced at such facility
during the preceding calendar year.
``(B) Covered national industry.--
``(i) In general.--For purposes of this
subchapter, the carbon intensity with respect
to any covered national industry shall be an
amount (as determined by the Secretary) equal
to the quotient of--
``(I) an amount equal to the sum of
the covered emissions (as determined
under paragraph (2)) with respect to
all eligible facilities which produce
covered primary goods which are
included within such covered national
industry for the calendar year, divided
by
``(II) the total relevant quantity
of covered primary goods within such
covered national industry which are
produced at all such eligible
facilities during such year.
``(ii) Covered primary goods
determination.--For purposes of this
subchapter--
``(I) a covered primary good shall
initially be included within the
covered national industry with which it
is associated under the most recent
concordance table published by the
Bureau of the Census comparing
classifications under the Harmonized
Tariff System and the North American
Industry Classification System, and
``(II) the Secretary (in
coordination with the relevant parties)
may subsequently determine which types
of eligible facilities or processes
within facilities (and any related
covered primary goods) are included or
excluded within a covered national
industry, provided that such
determination--
``(aa) facilitates a fair
comparison of carbon
intensities across similar
eligible facilities (based on a
comparison of the energy-
intensive processes and the
material outputs of such
facilities),
``(bb) does not
meaningfully reduce the scope
of greenhouse gas emissions
covered by this subchapter, and
``(cc) ensures that each
covered primary good is only
included within a single
covered national industry.
``(iii) Excluded facilities.--In the case
of any eligible facility which, pursuant to
clause (ii), is excluded from a covered
national industry and is not included in any
other covered national industry, such facility
shall be deemed to not be included in any
covered national industry.
``(C) Petition for specific goods.--
``(i) In general.--In the case of any
covered national industry which produces more
than 1 covered primary good, a covered entity
may file a petition with the Secretary to--
``(I) remove 1 or more covered
primary goods from inclusion under any
covered national industry,
``(II) establish a new covered
national industry for purposes of the
goods described in subclause (I),
``(III) determine the carbon
intensity with respect to the covered
national industry established under
subclause (II), and
``(IV) determine a classification
for defining such covered national
industry for purposes of this
subchapter, such as--
``(aa) the applicable 6-
digit subheading (or
subheadings) of the Harmonized
Tariff Schedule of the United
States of the goods described
in subclause (I),
``(bb) the relevant
production process,
``(cc) a set of material
characteristics, or
``(dd) any combination of
the methods for classification
described in items (aa) through
(cc).
``(ii) Review.--With respect to any covered
primary good which is included in a petition
described in clause (i), the Secretary (in
coordination with the Administrator and the
Secretary of Energy) shall approve such
petition if--
``(I) the chemical, physical, or
mechanical production processes for
such good or goods are substantially
different as compared to other covered
primary goods produced within the same
covered national industry,
``(II) the properties of such good
or goods are distinct such that its
uses cannot be easily replaced by other
covered primary goods produced within
the same covered national industry, and
``(III) the carbon intensity
determined with respect to such good or
goods is at least 25 percent greater
than the carbon intensity determined
for other covered primary goods
produced within the same covered
national industry.
``(iii) Recalculation.--In the case of any
petition described in clause (i) which is
approved by the Secretary pursuant to clause
(ii), the Secretary (in coordination with the
Administrator) shall redetermine the carbon
intensity, as well as the baseline carbon
intensity, with respect to the covered national
industry or industries which previously
included production of the covered primary good
or goods which are the subject of such petition
by excluding any covered emissions associated
with the production of such good or goods for
purposes of the determination made under
subparagraph (B) for such industry.
``(iv) Goods-level data.--In the case of
any petition described in clause (i) which is
approved by the Secretary pursuant to clause
(ii), the Secretary (in coordination with the
Administrator) shall use a methodology for
determining the carbon intensity of the covered
primary good or subset of primary goods (as
determined using the eligible facility
information reported under subsection (a)), and
shall publish the methodology and the results
of such determination, in a manner which--
``(I) is compatible with existing
Federal carbon accounting rules and
standards,
``(II) includes the related
chemical, physical, or mechanical
production processes responsible for
differences in carbon intensity and
covered emissions, and
``(III) prioritizes ease of
administration and compliance.
``(D) Determination.--Any determination of carbon
intensity under this paragraph shall be made by the
Secretary in coordination with the Administrator and
the Secretary of Energy.
``(E) Relevant quantity.--For purposes of this
subchapter, the relevant quantity of a covered primary
good shall be determined based on--
``(i) the weight (expressed in metric tons)
of such good, or
``(ii) if the Secretary, in coordination
with the Administrator and the Secretary of
Energy, determines that using an alternate
physical unit of measurement (such as volume at
a specific pressure or energy content) would
better facilitate a fair comparison of carbon
intensities across the covered primary goods in
the covered national industry, an alternate
physical unit of measurement.
``(2) Covered emissions.--
``(A) In general.--For purposes of this subsection,
for each calendar year, the amount of covered emissions
with respect to any eligible facility shall be an
amount (as determined by the Secretary, in coordination
with the Administrator) equal to the sum of--
``(i) the total greenhouse gas emissions
associated with the production of covered
primary goods at such facility during the
preceding calendar year (as reported pursuant
to subsection (a)), plus
``(ii) the total greenhouse gas emissions
associated with any electricity used at such
facility for the production of such goods
during the preceding calendar year.
``(B) Emissions for electricity used.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the amount of greenhouse
gas emissions associated with electricity
provided through the electric grid shall be
determined based on the average carbon
intensity for the regional grid in which the
eligible facility is located for the preceding
calendar year.
``(ii) Exception.--In the case of an
eligible facility which is subject to a power
purchase agreement (or its foreign equivalent)
which guarantees that any electricity provided
under such agreement is generated within the
same hour as it is used by such facility and
within the same regional transmission zone (or
its foreign equivalent) as such facility--
``(I) clause (i) shall not apply
with respect to the amount of
electricity provided under such
agreement, and
``(II) the amount of greenhouse gas
emissions associated with such
electricity shall be determined based
on the average carbon intensity of the
electricity provided under such
agreement.
``(3) Imported goods.--
``(A) In general.--In the case of any covered
primary good which is imported into the United States,
the carbon intensity with respect to such good shall be
determined as follows:
``(i) Economy-wide default.--Subject to
clauses (ii), (iii), and (iv), the carbon
intensity with respect to the covered primary
good shall be equal to the product of--
``(I) an amount equal to the
quotient of--
``(aa) the carbon intensity
of the general economy of the
country of origin of such good,
divided by
``(bb) the carbon intensity
of the general economy of the
United States, multiplied by
``(II) the carbon intensity of the
covered national industry in the United
States for such good for the preceding
calendar year.
``(ii) Industry data.--If the Secretary (in
coordination with the relevant parties)
determines that transparent, verifiable, and
reliable information is available with respect
to any covered national industry in the country