OPINION: At the crossroads of climate and trade, the US must be prepared

The world’s leading economies are taking serious economic action in response to worsening climate change, and the U.S. is being left behind. America’s biggest trading partners are protecting their own industries and jobs from unfair competition from high-polluting countries. We in the U.S. need to keep up with these latest developments. We need to understand how our own workforce and industries will be affected to guide our nation’s response.

What tools are other countries introducing to clamp down on dirty imports? The E.U. is implementing a Border Carbon Adjustment Mechanism (CBAM). A CBAM protects the climate progress countries have made by creating a kind of “climate club” that eases trading with nations that are quickly cutting their carbon emissions. Many other trading allies will soon follow suit. America would do well to know clearly how these CBAMs impact our own economy.

The Providing Reliable, Objective, Verifiable Emissions Intensity & Transparency Act (PROVE IT Act) has the simple purpose of creating an easily understandable carbon emissions balance sheet for American-made products. What gets measured gets managed.

The advent of the European Union CBAM and consideration by Canada necessitates the U.S. gains a clear picture of our own production so we can continue our superior economic position with our largest trade partners and competitors. We thank Sen. Lisa Murkowski for her solution-oriented thinking in cosponsoring this bipartisan bill. She places Alaska at the forefront of global economic development and market response to climate change.

What does the PROVE IT Act do? It authorizes a study to measure the emissions intensity of select U.S. products, including petroleum and renewable energy products, as well as our most carbon-intensive products like concrete, paper, plastics, lithium-ion batteries, and fertilizers, then compares them to those of our economic allies, countries of concern, and free trade agreement countries. An update will be published every five years.

What does emissions intensity mean? It means how much CO2 is released in the manufacturing of one unit of a product. Emissions intensity can be illustrated by the example of aluminum, a high-intensity product: according to the International Aluminium Institute, making one metric ton of new aluminum emits greenhouse gases equivalent to 16.6 metric tons of CO2 through the use of energy and other chemical processes.

The PROVE IT Act lays the groundwork for making informed decisions on the efficacy of CBAMs; good information is a prerequisite for choosing whether to implement similar policies. It’s just good business to know where you stand.

A CBAM charges for the embodied carbon emissions associated with imports into a country, rewarding cleaner domestic production — which is often more expensive — to remain competitive with imports that come from places with less stringent environmental regulations. This is a win for both local economies and global carbon emission reduction. The CBAM enacted by the E.U. requires that importers begin accounting for their products’ associated emissions in October of this year and comply with full tariff implementation in 2026. Canada is now studying the implementation of a CBAM. U.S. import and export values in 2021 totaled $763 billion for the E.U. and $665 billion for Canada (U.S. Department of Commerce data), making them our largest trading partners. CBAMs can create a transparent trade system for cleanly produced commodities that disadvantages those countries that choose high-emissions pathways. Studying this will help American industries hold their competitive edge, particularly against the high-intensity, less-regulated production in China with whom 2021 trade totaled $658 billion.

This bill has bipartisan and independent support in Congress. The bill was introduced by Sens. Chris Coons (D-DE) and Kevin Cramer (R-ND) and is co-sponsored by Sens. Lindsey Graham (R-SC), Lisa Murkowski (R-AK), Sheldon Whitehouse (D-RI), Martin Heinrich (D-NM), Bill Cassidy (R-LA), John Hickenlooper (D-CO), and Angus King (I-ME). This lineup of senators is notable in that half of them represent four of the five highest oil-producing states, accounting for 28.6% of domestic crude oil production in 2021 (U.S. Energy Information Administration, 2022). These leaders understand the need for information on how the backbones of their economies will fare in a shifting global economic picture. According to 2022 surveys by the Pew Research Center, 75% of Americans support “U.S. participation in international efforts to reduce the effects of climate change” and 85% believe the U.S. should be doing as much (54%) or more (31%) than other countries with large economies to mitigate the effects of climate change. Clearly, support for this type of action runs deep. If you agree, make sure your members of Congress know it.

The PROVE IT Act will ground us in the knowledge to better manage our economic relations with our nearest neighbors and closest trade partners, and do so in balance with our changing environment. Global economics and accelerating climate change demand action. Since we “value what we measure,” let’s make sure we aren’t caught flat-footed as we stand at the intersection of trade and effective climate action. It makes good business sense to learn where we stand. Perhaps a carbon border adjustment is an appropriate response – but first we must prove it.

Cameron Kuhle is a lifelong Alaskan, environmental scientist and Citizens’ Climate Lobby volunteer. George Donart is a commercial fisherman, retired teacher and tree planter who volunteers his time with the Anchorage and Alaska chapters of Citizens’ Climate Lobby, a global nonprofit, nonpartisan, grassroots climate advocacy organization.

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