Energy Innovation and Carbon Dividend Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2307 To create a Carbon Dividend Trust Fund for the American people in order to encourage market-driven innovation of clean energy technologies and market efficiencies which will reduce harmful pollution and leave a healthier, more stable, and more prosperous Nation for future genera- tions. IN THE HOUSE OF REPRESENTATIVES APRIL 1, 2021 Mr. DEUTCH (for himself, Mr. MALINOWSKI, Ms. ESHOO, Ms. SCHAKOWSKY, Mr. CRIST, Mr. KILMER, Mr. PETERS, Ms. CHU, Mr. CONNOLLY, Ms. CRAIG, Mr. MORELLE, Mr. CARBAJAL, Mr. RASKIN, Mr. SIRES, Mr. SHERMAN, Mr. CROW, Mr. CORREA, Ms. SCANLON, Mr. JOHNSON of Georgia, Ms. PINGREE, Mr. MOULTON, Ms. ROYBAL-ALLARD, Mr. GARAMENDI, Mr. EVANS, Mr. PHILLIPS, Ms. MENG, Mr. CA´RDENAS, Ms. LEE of California, and Mr. CARTWRIGHT) introduced the following bill; which was referred to the Committee on Ways and Means, and in addi- tion to the Committees on Energy and Commerce, and Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To create a Carbon Dividend Trust Fund for the American people in order to encourage market-driven innovation of clean energy technologies and market efficiencies which will reduce harmful pollution and leave a healthier, more stable, and more prosperous Nation for future gen- erations. VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 2307 IH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Energy Innovation and 4 Carbon Dividend Act of 2021’’. 5 SEC. 2. FINDINGS. 6 The Congress finds that— 7 (1) efficient markets strengthen our economy 8 and benefit our Nation by encouraging competition, 9 innovation, and technological progress; 10 (2) efficient markets should reflect all costs of 11 goods to ensure that they advance America’s pros- 12 perity and national interests; 13 (3) emissions of carbon pollution and other 14 harmful pollutants into our Nation’s air impose sub- 15 stantial costs on all Americans and on future gen- 16 erations; and 17 (4) creation of a Carbon Dividend Trust Fund, 18 to be distributed to the American people, will make 19 markets more efficient, create jobs, and stimulate 20 competition, innovation, and technological progress 21 that benefit all Americans and future generations. 22 SEC. 3. CARBON DIVIDENDS AND CARBON FEE. 23 The Internal Revenue Code of 1986 is amended by 24 adding at the end the following new subtitle: 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 2307 IH ‘‘Subtitle L—CARBON DIVIDENDS 1 AND CARBON FEE 2 ‘‘CHAPTER 101. CARBON FEES. ‘‘CHAPTER 102. CARBON BORDER FEE ADJUSTMENT. ‘‘CHAPTER 101—CARBON FEES 3 ‘‘Sec. 9901. Definitions. ‘‘Sec. 9902. Carbon fee. ‘‘Sec. 9903. Emissions reduction schedule. ‘‘Sec. 9904. Decommissioning of carbon fee. ‘‘Sec. 9905. Carbon Capture and Sequestration. ‘‘Sec. 9906. Administrative authority. ‘‘SEC. 9901. DEFINITIONS. 4 ‘‘For purposes of this subtitle: 5 ‘‘(a) ADMINISTRATOR.—The term ‘Administrator’ 6 means the Administrator of the Environmental Protection 7 Agency. 8 ‘‘(b) CARBON DIOXIDE EQUIVALENT OR CO2-e.—The 9 term ‘carbon dioxide equivalent’ or ‘CO2-e’ means the 10 number of metric tons of carbon dioxide emissions with 11 the same global warming potential as one metric ton of 12 another greenhouse gas. 13 ‘‘(c) CARBON-INTENSIVE PRODUCT.—The term ‘car- 14 bon-intensive product’ means, as identified by the Sec- 15 retary by rule— 16 ‘‘(1) for purposes of this chapter— 17 ‘‘(A) any manufactured or agricultural 18 product which the Secretary in consultation 19 with the Administrator determines is emissions- 20 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 2307 IH intensive and trade-exposed, except that no cov- 1 ered fuel is a carbon-intensive product, and 2 ‘‘(B) until such time that the Secretary 3 promulgates rules identifying carbon-intensive 4 products, the following shall be considered car- 5 bon-intensive products: iron, steel, steel mill 6 products (including pipe and tube), aluminum, 7 cement, glass (including flat, container, and 8 specialty glass and fiberglass), pulp, paper, 9 chemicals, or industrial ceramics, and 10 ‘‘(2) for purposes of chapter 102, any economic 11 sector, or product from that sector, which the Sec- 12 retary in consultation with the Administrator deter- 13 mines is prone to carbon leakage because it is emis- 14 sions-intensive and trade-exposed, along with other 15 pertinent criteria, except that no covered fuel is a 16 carbon-intensive product. 17 ‘‘(d) CARBON LEAKAGE.—The term ‘carbon leakage’ 18 means an increase of global greenhouse gas emissions 19 which are substantially due to the relocation of greenhouse 20 gas sources from the United States to jurisdictions which 21 lack comparable controls upon greenhouse gas emissions. 22 ‘‘(e) COST OF CARBON OR CARBON COSTS.—The 23 term ‘cost of carbon’ or ‘carbon costs’ means a national 24 or sub-national government policy which explicitly places 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 2307 IH a price on greenhouse gas pollution and shall be limited 1 to either a tax on greenhouse gases or a system of cap- 2 and-trade. The cost of carbon is expressed as the price 3 per metric ton of CO2-e. 4 ‘‘(f) COVERED ENTITY.—The term ‘covered entity’ 5 means— 6 ‘‘(1) in the case of crude oil— 7 ‘‘(A) a refinery operating in the United 8 States, and 9 ‘‘(B) any importer of any petroleum or pe- 10 troleum product into the United States, 11 ‘‘(2) in the case of coal— 12 ‘‘(A) any coal mining operation in the 13 United States, and 14 ‘‘(B) any importer of coal into the United 15 States, 16 ‘‘(3) in the case of natural gas— 17 ‘‘(A) any entity entering pipeline quality 18 natural gas into the natural gas transmission 19 system, and 20 ‘‘(B) any importer of natural gas into the 21 United States, and 22 ‘‘(4) any entity or class of entities which, as de- 23 termined by the Secretary, is transporting, selling, 24 or otherwise using a covered fuel in a manner which 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 2307 IH emits a greenhouse gas to the atmosphere and which 1 has not been covered by the carbon fee or the carbon 2 border fee adjustment. 3 ‘‘(g) COVERED FUEL.—The term ‘covered fuel’ 4 means crude oil, natural gas, coal, or any other product 5 derived from crude oil, natural gas, or coal which shall 6 be used so as to emit greenhouse gases to the atmosphere. 7 ‘‘(h) CRUDE OIL.—The term ‘crude oil’ means 8 unrefined petroleum. 9 ‘‘(i) EXPORT.—The term ‘export’ means to transport 10 a product from within the jurisdiction of the United States 11 to persons outside the United States. 12 ‘‘(j) FOSSIL FUEL.—The term ‘fossil fuel’ means 13 coal, coal products, petroleum, petroleum products, or nat- 14 ural gas. 15 ‘‘(k) FULL FUEL CYCLE GREENHOUSE GAS EMIS- 16 SIONS.—The term ‘full fuel cycle greenhouse gas emis- 17 sions’ means the greenhouse gas content of a covered fuel 18 plus that covered fuel’s upstream greenhouse gas emis- 19 sions. 20 ‘‘(l) GLOBAL WARMING POTENTIAL.—The term 21 ‘global warming potential’ means the ratio of the time- 22 integrated radiative forcing from the instantaneous release 23 of one kilogram of a trace substance relative to that of 24 one kilogram of carbon dioxide. 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 2307 IH ‘‘(m) GREENHOUSE GAS.—The term ‘greenhouse 1 gas’ means carbon dioxide (CO2), methane (CH4), nitrous 2 oxide (N2O), and other gases as defined by rule of the 3 Administrator. 4 ‘‘(n) GREENHOUSE GAS CONTENT.—The term 5 ‘greenhouse gas content’ means the amount of greenhouse 6 gases of a product or a fuel, expressed in metric tons of 7 CO2-e, which would be emitted to the atmosphere by the 8 use of a covered fuel and shall include, nonexclusively, 9 emissions of carbon dioxide (CO2), nitrous oxide (N2O), 10 methane (CH4), and other greenhouse gases as identified 11 by rule of the Administrator. 12 ‘‘(o) GREENHOUSE GAS EFFECT.—The term ‘green- 13 house gas effect’ means the adverse effects of greenhouse 14 gases on health or welfare caused by the greenhouse gas’s 15 heat-trapping potential or its effect on ocean acidification. 16 ‘‘(p) IMPORT.—Irrespective of any other definition in 17 law or treaty, the term ‘import’ means to land on, bring 18 into, or introduce into any place subject to the jurisdiction 19 of the United States. 20 ‘‘(q) PETROLEUM.—The term ‘petroleum’ means oil 21 removed from the earth or the oil derived from tar sands 22 or shale. 23 ‘‘(r) PRODUCTION GREENHOUSE GAS EMISSIONS.— 24 The term ‘production greenhouse gas emissions’ means 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 2307 IH the quantity of greenhouse gases, expressed in metric tons 1 of CO2-e, emitted to the atmosphere resulting from, non- 2 exclusively, the production, manufacture, assembly, trans- 3 portation, or financing of a product. 4 ‘‘(s) UPSTREAM GREENHOUSE GAS EMISSIONS.— 5 The term ‘upstream greenhouse gas emissions’ means the 6 quantity of greenhouse gases, expressed in metric tons of 7 CO2-e, emitted to the atmosphere resulting from, non- 8 exclusively, the extraction, processing, transportation, fi- 9 nancing, or other preparation of a covered fuel for use. 10 ‘‘SEC. 9902. CARBON FEE. 11 ‘‘(a) CARBON FEE.—There is hereby imposed a car- 12 bon fee on any covered entity’s emitting use, or sale or 13 transfer for an emitting use, of any covered fuel. 14 ‘‘(b) AMOUNT OF THE CARBON FEE.—The carbon 15 fee imposed by this section is an amount equal to— 16 ‘‘(1) the greenhouse gas content of the covered 17 fuel, multiplied by 18 ‘‘(2) the carbon fee rate. 19 ‘‘(c) CARBON FEE RATE.—For purposes of this sec- 20 tion— 21 ‘‘(1) IN GENERAL.—The carbon fee rate, with 22 respect to any use, sale, or transfer during a cal- 23 endar year, shall be— 24 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 2307 IH ‘‘(A) in the case of calendar year 2021, 1 $15 per metric ton of CO2-e, and 2 ‘‘(B) except as provided in paragraph (2), 3 in the case of any calendar year thereafter— 4 ‘‘(i) the carbon fee rate in effect 5 under this subsection for the preceding cal- 6 endar year, plus 7 ‘‘(ii) $10. 8 ‘‘(2) EXCEPTIONS.— 9 ‘‘(A) INCREASED CARBON FEE RATE 10 AFTER MISSED ANNUAL EMISSIONS REDUCTION 11 TARGET.—In the case of any year immediately 12 following a year for which the Secretary deter- 13 mines under section 9903(b) that the actual 14 emissions of greenhouse gases from covered 15 fuels exceeded the emissions reduction target 16 for the previous year, paragraph (1)(B)(ii) shall 17 be applied by substituting ‘$15’ for the dollar 18 amount otherwise in effect for the calendar year 19 under such paragraph. 20 ‘‘(B) CESSATION OF CARBON FEE RATE IN- 21 CREASE AFTER CERTAIN EMISSION REDUCTIONS 22 ACHIEVED.—In the case of any year imme- 23 diately following a year for which the Secretary 24 determines under 9903(b) that actual emissions 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 2307 IH of greenhouse gases from covered fuels is not 1 more than 10 percent of the greenhouse gas 2 emissions from covered fuels during the year 3 2010, paragraph (1)(B)(ii) shall be applied by 4 substituting ‘$0’ for the dollar amount other- 5 wise in effect for the calendar year under such 6 paragraph. 7 ‘‘(3) INFLATION ADJUSTMENT.—In the case of 8 any calendar year after 2021, each of the dollar 9 amounts in paragraphs (1)(B) and (2)(A) shall be 10 increased by an amount equal to— 11 ‘‘(A) such dollar amount, multiplied by 12 ‘‘(B) the cost-of-living adjustment deter- 13 mined under section 1(f)(3) for the calendar 14 year, determined by substituting ‘calendar year 15 2010’ for ‘calendar year 2016’ in subparagraph 16 (A)(ii) thereof. 17 ‘‘(d) EXEMPTION AND REFUND.—The Secretary 18 shall prescribe such rules as are necessary to ensure the 19 fee imposed by this section is not imposed with respect 20 to any nonemitting use, or any sale or transfer for a non- 21 emitting use, including rules providing for the refund of 22 any carbon fee paid under this section with respect to any 23 such use, sale, or transfer. 24 ‘‘(e) EXEMPTIONS.— 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 2307 IH ‘‘(1) AGRICULTURE.— 1 ‘‘(A) FUEL.—If any covered fuel or its de- 2 rivative is used on a farm for a farming pur- 3 pose, the Secretary shall pay (without interest) 4 to the ultimate purchaser of such covered fuel 5 or its derivative, the total amount of carbon 6 fees previously paid upon that covered fuel or 7 its derivative, as specified by rule of the Sec- 8 retary. 9 ‘‘(B) FARM, FARMING USE, AND FARMING 10 PURPOSE.—The terms ‘farm’, ‘farming use’, 11 and ‘farming purpose’ shall have the respective 12 meanings given such terms under section 13 6420(c). 14 ‘‘(C) OTHER GREENHOUSE GASES EMIS- 15 SIONS FROM AGRICULTURE.—The carbon fee 16 shall not be levied upon non-fossil fuel green- 17 house gas emissions which occur on a farm. 18 ‘‘(2) ARMED FORCES OF THE UNITED 19 STATES.—If any covered fuel or its derivative is 20 used by the Armed Forces of the United States as 21 supplies for vessels of war, vehicles, or electrical 22 power generation equipment, the Secretary shall pay 23 (without interest) to the ultimate purchaser of such 24 covered fuel or its derivative, the total amount of 25 VerDate Sep 11 2014 17:46 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2307.IH H2307 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 2307 IH carbon fees previously paid upon that covered fuel or 1 its derivative, as spec [Text truncated for display. 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