II 

118TH CONGRESS 

1ST SESSION S. 3422 

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 6, 2023 

Mr. WHITEHOUSE (for himself, Mr. SCHATZ, and Mr. HEINRICH) 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Clean Competition 

5 Act’’. 

6 SEC. 2. CARBON INTENSITY CHARGE. 

7 (a) IN GENERAL.—Chapter 38 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subchapter: 


SSpencer on DSK126QN23PROD with BILLS
2 

•S 3422 IS

1 ‘‘Subchapter E—Carbon Intensity Charge 

‘‘Sec. 4691. Calculation of carbon intensity. 

‘‘Sec. 4692. Imposition of carbon intensity charge. 

‘‘Sec. 4693. Rebate. 

‘‘Sec. 4694. Definitions. 

2 ‘‘SEC. 4691. CALCULATION OF CARBON INTENSITY. 

3 ‘‘(a) REPORTING REQUIREMENTS.—Not later than 

4 June 30, 2026, and annually thereafter, any covered enti5 ty shall, for each eligible facility operated by such entity, 

6 report to the Secretary (and, for purposes of the informa7 tion described in paragraphs (2) and (3), the Adminis8 trator) with respect to the following: 

9 ‘‘(1) Any information required to be reported to 

10 the Administrator under the Greenhouse Gas Re11 porting Program (or which would be required to be 

12 reported notwithstanding any other provision of law 

13 prohibiting the implementation of or use of funds for 

14 such requirements) for the preceding calendar year. 

15 ‘‘(2) The total amount of electricity used at 

16 such facility during the preceding calendar year, in17 cluding— 

18 ‘‘(A) whether such electricity was provided 

19 through the electric grid or a dedicated genera20 tion source, 

21 ‘‘(B) the terms of any power purchase 

22 agreements with respect to such facility, and 


SSpencer on DSK126QN23PROD with BILLS
3 

•S 3422 IS

1 ‘‘(C) with respect to any electricity which 

2 was not provided through the electric grid, the 

3 greenhouse gas emissions associated with the 

4 production of such electricity, provided that 

5 such emissions are not reported pursuant to 

6 paragraph (1). 

7 ‘‘(3) The total weight (expressed in tons) of 

8 each covered primary good produced at such facility 

9 during the preceding calendar year. 

10 ‘‘(b) CALCULATION.— 

11 ‘‘(1) CARBON INTENSITY.— 

12 ‘‘(A) ELIGIBLE FACILITY.—For purposes 

13 of this subchapter, for each calendar year, the 

14 carbon intensity with respect to any eligible fa15 cility shall be an amount equal to the quotient 

16 of— 

17 ‘‘(i) the covered emissions (as deter18 mined under paragraph (2)) with respect 

19 to such facility, divided by 

20 ‘‘(ii) the total weight (expressed in 

21 tons) of covered primary goods produced at 

22 such facility during the preceding calendar 

23 year. 

24 ‘‘(B) COVERED NATIONAL INDUSTRY.— 


SSpencer on DSK126QN23PROD with BILLS
4 

•S 3422 IS

1 ‘‘(i) IN GENERAL.—For purposes of 

2 this subchapter, the carbon intensity with 

3 respect to any covered national industry 

4 shall be an amount (as determined by the 

5 Secretary) equal to the quotient of— 

6 ‘‘(I) an amount equal to the sum 

7 of the covered emissions (as deter8 mined under paragraph (2)) with re9 spect to all eligible facilities which 

10 produce covered primary goods which 

11 are included within such industry for 

12 calendar year 2025, divided by 

13 ‘‘(II) the total weight (expressed 

14 in tons) of covered primary goods 

15 within such industry which are pro16 duced at all such eligible facilities dur17 ing such year. 

18 ‘‘(ii) DETERMINATION.—For purposes 

19 of this subchapter, the Secretary (in co20 ordination with the relevant parties) may 

21 determine which types of eligible facilities 

22 (and any related covered primary goods) 

23 are included or excluded within a covered 

24 national industry, provided that such de25 termination— 


SSpencer on DSK126QN23PROD with BILLS
5 

•S 3422 IS

1 ‘‘(I) facilitates a fair comparison 

2 of carbon intensities across similar eli3 gible facilities (based on a comparison 

4 of the material inputs and outputs of 

5 such facilities), and 

6 ‘‘(II) does not meaningfully re7 duce the scope of greenhouse gas 

8 emissions covered by this subchapter. 

9 ‘‘(iii) EXCLUDED FACILITIES.—In the 

10 case of any eligible facility which, pursuant 

11 to clause (ii), is excluded from a covered 

12 national industry and is not included in 

13 any other covered national industry, such 

14 facility shall be deemed to not be included 

15 in any covered national industry. 

16 ‘‘(C) PETITION FOR SPECIFIC GOODS.— 

17 ‘‘(i) IN GENERAL.—In the case of any 

18 covered national industry which produces 

19 more than 1 covered primary good, a cov20 ered entity may file a petition with the 

21 Secretary to— 

22 ‘‘(I) determine the carbon inten23 sity with respect to a specific covered 

24 primary good, and 


SSpencer on DSK126QN23PROD with BILLS
6 

•S 3422 IS

1 ‘‘(II) determine a classification 

2 for defining such covered primary 

3 good for purposes of this subchapter, 

4 such as— 

5 ‘‘(aa) the applicable 6-digit 

6 subheading of the Harmonized 

7 Tariff Schedule of the United 

8 States, 

9 ‘‘(bb) the relevant produc10 tion process, 

11 ‘‘(cc) a set of material char12 acteristics, or 

13 ‘‘(dd) any combination of 

14 the methods for classification de15 scribed in items (aa) through 

16 (cc). 

17 ‘‘(ii) REVIEW.—With respect to any 

18 covered primary good which is included in 

19 a petition described in clause (i), the Sec20 retary (in coordination with the Adminis21 trator and the Secretary of Energy) shall 

22 approve such petition if— 

23 ‘‘(I) the chemical, physical, or 

24 mechanical production processes for 

25 such good are substantially different 


SSpencer on DSK126QN23PROD with BILLS
7 

•S 3422 IS

1 as compared to other covered primary 

2 goods produced within the same cov3 ered national industry, 

4 ‘‘(II) the properties of such good 

5 are distinct such that its uses cannot 

6 be easily replaced by other covered 

7 primary goods produced within the 

8 same covered national industry, and 

9 ‘‘(III) the carbon intensity deter10 mined with respect to such good is at 

11 least 25 percent greater than the car12 bon intensity determined for other 

13 covered primary goods produced with14 in the same covered national industry. 

15 ‘‘(iii) RECALCULATION.—In the case 

16 of any petition described in clause (i) 

17 which is approved by the Secretary pursu18 ant to clause (ii), the Secretary (in coordi19 nation with the Administrator) shall rede20 termine the carbon intensity with respect 

21 to the covered national industry which in22 cludes production of the covered primary 

23 good which is the subject of such petition 

24 by excluding any covered emissions associ25 ated with the production of such good for 


SSpencer on DSK126QN23PROD with BILLS
8 

•S 3422 IS

1 purposes of the determination made under 

2 subparagraph (B) for such industry. 

3 ‘‘(iv) GOODS-LEVEL DATA.—In the 

4 case of any petition described in clause (i) 

5 which is approved by the Secretary pursu6 ant to clause (ii), the Secretary (in coordi7 nation with the Administrator) shall use a 

8 methodology for determining the carbon in9 tensity of the covered primary good (as de10 termined using the eligible facility informa11 tion reported under subsection (a)), and 

12 shall publish the methodology and the re13 sults of such determination, in a manner 

14 which— 

15 ‘‘(I) is compatible with existing 

16 Federal carbon accounting rules and 

17 standards, 

18 ‘‘(II) includes the related chem19 ical, physical, or mechanical produc20 tion processes responsible for dif21 ferences in carbon intensity and cov22 ered emissions, and 

23 ‘‘(III) prioritizes ease of adminis24 tration and compliance. 


SSpencer on DSK126QN23PROD with BILLS
9 

•S 3422 IS

1 ‘‘(D) DETERMINATION.—Any determina2 tion of carbon intensity under this paragraph 

3 shall be made by the Secretary in coordination 

4 with the Administrator and the Secretary of 

5 Energy. 

6 ‘‘(2) COVERED EMISSIONS.— 

7 ‘‘(A) IN GENERAL.—For purposes of this 

8 subsection, for each calendar year, the amount 

9 of covered emissions with respect to any eligible 

10 facility shall be an amount (as determined by 

11 the Secretary, in coordination with the Admin12 istrator) equal to— 

13 ‘‘(i) the amount equal to the sum of— 

14 ‘‘(I) the total greenhouse gas 

15 emissions associated with the produc16 tion of covered primary goods at such 

17 facility during the preceding calendar 

18 year (as reported pursuant to sub19 section (a)), plus 

20 ‘‘(II) the total greenhouse gas 

21 emissions associated with any elec22 tricity used at such facility for the 

23 production of such goods during the 

24 preceding calendar year, minus 


SSpencer on DSK126QN23PROD with BILLS
10 

•S 3422 IS

1 ‘‘(ii) the total greenhouse gas emis2 sions which are captured and disposed of 

3 in secure geological storage (in compliance 

4 with the regulations established under sec5 tion 45Q(f)(2)) during the preceding cal6 endar year. 

7 ‘‘(B) DIRECT AIR CAPTURE.—For pur8 poses of subparagraph (A)(ii), in the case of 

9 any greenhouse gas emissions which are cap10 tured directly from the ambient air, the oper11 ator of the facility which captured such emis12 sions may apportion such emissions amongst 

13 any eligible facilities which are under common 

14 control of such operator. 

15 ‘‘(C) EMISSIONS FOR ELECTRICITY

16 USED.— 

17 ‘‘(i) IN GENERAL.—For purposes of 

18 subparagraph (A)(i)(II), the amount of 

19 greenhouse gas emissions associated with 

20 electricity provided through the electric 

21 grid shall be determined based on the aver22 age carbon intensity for the regional grid 

23 in which the eligible facility is located for 

24 the preceding calendar year. 


SSpencer on DSK126QN23PROD with BILLS
11 

•S 3422 IS

1 ‘‘(ii) EXCEPTION.—In the case of an 

2 eligible facility which is subject to a power 

3 purchase agreement (or its foreign equiva4 lent) which guarantees that any electricity 

5 provided under such agreement is gen6 erated not less than 15 minutes prior to 

7 use by such facility and within the same 

8 regional transmission zone (or its foreign 

9 equivalent) as such facility— 

10 ‘‘(I) clause (i) shall not apply, 

11 and 

12 ‘‘(II) the amount of greenhouse 

13 gas emissions associated with such 

14 electricity shall be determined based 

15 on the average carbon intensity of the 

16 electricity provided under such agree17 ment. 

18 ‘‘(3) IMPORTED GOODS.— 

19 ‘‘(A) IN GENERAL.—In the case of any 

20 covered primary good which is imported into 

21 the United States, the carbon intensity with re22 spect to such good shall be determined by the 

23 Secretary (in coordination with the relevant 

24 parties) based on— 


SSpencer on DSK126QN23PROD with BILLS
12 

•S 3422 IS

1 ‘‘(i) the carbon intensity of the gen2 eral economy of the country of origin of 

3 such good, or 

4 ‘‘(ii) if the Secretary (in coordination 

5 with the relevant parties) determines that 

6 transparent, verifiable, and reliable infor7 mation is available with respect to any cov8 ered national industry in the country of or9 igin of such good and that such country of 

10 origin is a transparent market economy in 

11 which inter-firm resource shuffling is un12 likely to occur, the carbon intensity of the 

13 covered national industry in such country 

14 which includes production of such good. 

15 ‘‘(B) PETITION.— 

16 ‘‘(i) IN GENERAL.—In the case of any 

17 entity which imports a covered primary 

18 good for which the carbon intensity can be 

19 determined under subparagraph (A)(ii), 

20 such entity may file a petition with the 

21 Secretary to determine the charge under 

22 section 4692, if any, based on the average 

23 carbon intensity with respect to the pro24 duction of such good by the manufacturer 

25 within the country of origin. 


SSpencer on DSK126QN23PROD with BILLS
13 

•S 3422 IS

1 ‘‘(ii) AGGREGATION RULE.—For pur2 poses of this subparagraph, the average 

3 carbon intensity with respect to the pro4 duction of a covered primary good shall be 

5 determined based upon greenhouse gas 

6 emission and production data from all fa7 cilities which produce such good which are 

8 under common control of the manufacturer 

9 of such good, including any subsidiary, 

10 parent company, or joint venture of such 

11 manufacturer within the country of origin. 

12 ‘‘(iii) DATA PROVISION.—In the case 

13 of an entity which files a petition described 

14 in clause (i), such entity shall provide the 

15 Secretary with an environmental product 

16 declaration containing— 

17 ‘‘(I) any information which would 

18 otherwise be required to be reported 

19 under subsection (a) if the facilities 

20 which produced the covered primary 

21 good to which the petition applies 

22 were subject to the reporting require23 ments under the Greenhouse Gas Re24 porting Program, and 


SSpencer on DSK126QN23PROD with BILLS
14 

•S 3422 IS

1 ‘‘(II) any other information 

2 which is necessary (as determined by 

3 the Secretary, in coordination with the 

4 relevant parties) to calculate the car5 bon intensity of the covered primary 

6 good in accordance with any relevant 

7 methodologies for allocating the car8 bon intensity of the covered primary 

9 good under paragraph (1)(C)(iv). 

10 ‘‘(C) INPUTS.—With respect to any cov11 ered primary good which is imported into the 

12 United States and for which other covered pri13 mary goods (other than petroleum, natural gas, 

14 or coal) were used as inputs by the manufac15 turer in the production of the imported covered 

16 primary good, any greenhouse gas emissions as17 sociated with the production of the covered pri18 mary goods used as inputs shall be included in 

19 the determination of the greenhouse gas emis20 sions associated with production of the im21 ported covered primary good. 

22 ‘‘(D) CARBON INTENSITY OF THE GEN23 ERAL ECONOMY.—For purposes of this para24 graph, with respect to any country, the carbon 

25 intensity of the general economy of such counVerDate Sep 11 2014 02:17 Dec 19, 2023 Jkt 049200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S3422.IS S3422

SSpencer on DSK126QN23PROD with BILLS
15 

•S 3422 IS

1 try shall be an amount equal to the quotient 

2 of— 

3 ‘‘(i) the greenhouse gas emissions of 

4 such country for the most recent year for 

5 which the Secretary determines there is re6 liable information, divided by 

7 ‘‘(ii) the gross domestic product of 

8 such country for the year described in 

9 clause (i). 

10 ‘‘(E) EXCLUSION.— 

11 ‘‘(i) IN GENERAL.—Subject to clause 

12 (ii), in the case of any covered primary 

13 good (including any covered primary good 

14 which is a component part of a finished 

15 good) which is imported into the United 

16 States and was produced in a relatively 

17 least developed country (as described in 

18 section 124 of the Foreign Assistance Act 

19 of 1961 (22 U.S.C. 2151v)), this para20 graph shall not apply. 

21 ‘‘(ii) EXCEPTION.—Clause (i) shall 

22 not apply if the country described in such 

23 clause produces at least 3 percent of total 

24 global exports by value of the covered pri25 mary good. 


SSpencer on DSK126QN23PROD with BILLS
16 

•S 3422 IS

1 ‘‘(F) INTER-FIRM RESOURCE SHUF2 FLING.—For purposes of this paragraph, the 

3 term ‘inter-firm resource shuffling’ means any 

4 buying, selling, trading, exchanging, or other 

5 transfer of control of production facilities be6 tween entities based on the carbon intensity of 

7 such facilities for the purpose of creating enti8 ties with relatively lower carbon intensity and 

9 entities with relatively higher carbon intensity. 

10 ‘‘(c) PUBLICATION.—The Secretary (in coordination 

11 with the relevant parties) shall— 

12 ‘‘(1) annually publish any carbon intensity 

13 which has been determined under subsection (b) 

14 with respect to any eligible facility, covered national 

15 industry, covered primary good, foreign manufac16 turer, or country of origin, and 

17 ‘‘(2) publish (and update, as appropriate) a list 

18 of— 

19 ‘‘(A) each covered primary good, as cat20 egorized by the covered national industry in 

21 which such good is included, and 

22 ‘‘(B) any covered primary good for which 

23 a petition described in clause (i) of subsection 

24 (b)(1)(C) has been approved by the Secretary 

25 pursuant to clause (ii) of such subsection. 


SSpencer on DSK126QN23PROD with BILLS
17 

•S 3422 IS

1 ‘‘SEC. 4692. IMPOSITION OF CARBON INTENSITY CHARGE. 

2 ‘‘(a) IN GENERAL.— 

3 ‘‘(1) IMPORTATION OF GOODS.— 

4 ‘‘(A) IN GENERAL.— 

5 ‘‘(i) COVERED PRIMARY GOODS.—In 

6 the case of any covered primary good im7 ported into the United States during any 

8 calendar year beginning after December 

9 31, 2024, there is hereby imposed a charge 

10 in an amount (rounded to the nearest dol11 lar) equal to the product of— 

12 ‘‘(I)(aa) in the case of a good for 

13 which the carbon intensity is deter14 mined under section 4691(b)(3)(A)(i), 

15 the amount (if any) by which the 

16 amount determined under clause (iii) 

17 with respect to such good exceeds an 

18 amount equal to the applicable per19 centage of the relevant carbon inten20 sity for such good, or 

21 ‘‘(bb) in the case of a good for 

22 which the carbon intensity is deter23 mined under subparagraph (A)(ii) or 

24 (B) of section 4691(b)(3), the amount 

25 (if any) by which the carbon intensity 

26 determined under such subparagraph 


SSpencer on DSK126QN23PROD with BILLS
18 

•S 3422 IS

1 with respect to such good exceeds an 

2 amount equal to the applicable per3 centage of the relevant carbon inten4 sity for such good, multiplied by 

5 ‘‘(II) the total weight (expressed 

6 in tons) of the good imported into the 

7 United States, multiplied by 

8 ‘‘(III) the carbon price. 

9 ‘‘(ii) FINISHED GOODS.— 

10 ‘‘(I) IN GENERAL.—In the case 

11 of any finished good which is im12 ported into the United States during 

13 any calendar year beginning after De14 cember 31, 2026, there is hereby im15 posed a charge in an amount equal to 

16 the sum of the amounts determined 

17 under subclause (II) with respect to 

18 each covered primary good which is a 

19 component part of such finished good. 

20 ‘‘(II) COMPONENTS.—The 

21 amount determined under this sub22 clause with respect to any covered pri23 mary good which is a component part 

24 of a finished good is an amount equal 

25 to the product of— 


SSpencer on DSK126QN23PROD with BILLS
19 

•S 3422 IS

1 ‘‘(aa) the amount (if any) 

2 determined under clause (i)(I) if 

3 such clause were applied with re4 spect to such good, multiplied by 

5 ‘‘(bb) the total weight (ex6 pressed in tons) of the covered 

7 primary good, multiplied by 

8 ‘‘(cc) the carbon price. 

9 ‘‘(iii) CALCULATION FOR CERTAIN

10 FOREIGN GOODS.—For purposes of clause 

11 (i)(I)(aa), the amount determined under 

12 this clause with respect to any covered pri13 mary good shall be equal to the product 

14 of— 

15 ‘‘(I) an amount equal to the 

16 quotient of— 

17 ‘‘(aa) the carbon intensity of 

18 the general economy (as deter19 mined under section 

20 4691(b)(3)(D)) of the country of 

21 origin of such good, divided by 

22 ‘‘(bb) the carbon intensity of 

23 the general economy (as so deter24 mined) of the United States, 

25 multiplied by 


SSpencer on DSK126QN23PROD with BILLS
20 

•S 3422 IS

1 ‘‘(II) an amount equal to the ap2 plicable percentage of the relevant 

3 carbon intensity for such good. 

4 ‘‘(B) CHARGE DUE.—The charge imposed 

5 under this paragraph with respect to any goods 

6 imported during any calendar year shall be paid 

7 by the entity which imported such goods not 

8 later than September 30 of the calendar year 

9 subsequent to such year. 

10 ‘‘(C) EXCLUSION.— 

11 ‘‘(i) IN GENERAL.—Subject to clause 

12 (ii), in the case of any covered primary 

13 good (including any covered primary good 

14 which is a component part of a finished 

15 good) which is imported into the United 

16 States and was produced in a relatively 

17 least developed country (as described in 

18 section 124 of the Foreign Assistance Act 

19 of 1961 (22 U.S.C. 2151v)), this para20 graph shall not apply. 

21 ‘‘(ii) EXCEPTION.—Clause (i) shall 

22 not apply if the country described in such 

23 clause produces at least 3 percent of total 

24 global exports by value of the covered pri25 mary good. 


SSpencer on DSK126QN23PROD with BILLS
21 

•S 3422 IS

1 ‘‘(D) CARBON CLUBS.—If the Secretary 

2 (in coordination with the relevant parties) de3 termines that a foreign country has imple4 mented policies which impose explicit costs on 

5 the emission of greenhouse gases which are ma6 terially similar to the charges imposed pursuant 

7 to the provisions of this subchapter, the charge 

8 (or a percentage of the charge which is equiva9 lent to the costs imposed by the foreign coun10 try) which would otherwise be imposed under 

11 this section with respect to covered primary 

12 goods produced in such foreign country may be 

13 waived. 

14 ‘‘(E) RELEVANT CARBON INTENSITY.—In 

15 this paragraph, the term ‘relevant carbon inten16 sity’ means, with respect to any covered pri17 mary good— 

18 ‘‘(i) except as provided in clause (ii), 

19 the carbon intensity (as determined under 

20 section 4691(b)(1)(B)) for the covered na21 tional industry which includes such good, 

22 or 

23 ‘‘(ii) in the case of any covered pri24 mary good which is included in a petition 

25 described in clause (i) of section 


SSpencer on DSK126QN23PROD with BILLS
22 

•S 3422 IS

1 4691(b)(1)(C) which is approved by the 

2 Secretary pursuant to clause (ii) of such 

3 section, the carbon intensity of such good 

4 as determined under such section. 

5 ‘‘(2) DOMESTIC PRODUCTION OF COVERED PRI6 MARY GOODS.— 

7 ‘‘(A) IN GENERAL.—In the case of any eli8 gible facility, for each calendar year beginning 

9 after December 31, 2024, there is hereby im10 posed a charge in an amount (rounded to the 

11 nearest dollar) equal to the product of— 

12 ‘‘(i) the amount (if any) by which the 

13 carbon intensity of such facility (as deter14 mined under subparagraph (A) of section 

15 4691(b)(1)) exceeds— 

16 ‘‘(I) an amount equal to the ap17 plicable percentage of the carbon in18 tensity for the covered national indus19 try (as determined under subpara20 graph (B) of section 4691(b)(1)) 

21 which includes any covered primary 

22 good produced by such facility, or 

23 ‘‘(II) in the case of a covered pri24 mary good produced by such facility 

25 which is subject to an approved petiVerDate Sep 11 2014 02:17 Dec 19, 2023 Jkt 049200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S3422.IS S3422

SSpencer on DSK126QN23PROD with BILLS
23 

•S 3422 IS

1 tion under subparagraph (C) of such 

2 section, an amount equal to the appli3 cable percentage of the carbon inten4 sity determined with respect to such 

5 good, multiplied by 

6 ‘‘(ii) the total weight (expressed in 

7 tons) of any covered primary goods pro8 duced by such facility during such calendar 

9 year, multiplied by 

10 ‘‘(iii) the carbon price. 

11 ‘‘(B) CHARGE DUE.—The charge imposed 

12 under this paragraph with respect to any cal13 endar year shall be paid by the covered entity 

14 not later than September 30 of the calendar 

15 year subsequent to such year. 

16 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

17 paragraphs (1)(A) and (2)(A) of subsection (a), the appli18 cable percentage shall be— 

19 ‘‘(1) for calendar year 2025, 100 percent, 

20 ‘‘(2) for calendar years 2026 through 2029, the 

21 applicable percentage for the preceding calendar 

22 year, reduced by 2.5 percentage points, and 

23 ‘‘(3) for any calendar year subsequent to cal24 endar year 2029, the applicable percentage for the 


SSpencer on DSK126QN23PROD with BILLS
24 

•S 3422 IS

1 preceding calendar year, reduced by 5 percentage 

2 points (but not less than zero). 

3 ‘‘(c) CARBON PRICE.— 

4 ‘‘(1) IN GENERAL.—For purposes of para5 graphs (1)(A) and (2)(A) of subsection (a), the car6 bon price shall be— 

7 ‘‘(A) for 2025, $55, and 

8 ‘‘(B) for each calendar year subsequent to 

9 the calendar year described in subparagraph 

10 (A), an amount equal to the sum of— 

11 ‘‘(i) the carbon price for the preceding 

12 year, plus 

13 ‘‘(ii) an amount equal to— 

14 ‘‘(I) the amount described in 

15 clause (i), multiplied by 

16 ‘‘(II) the percentage by which the 

17 CPI for the preceding calendar year 

18 exceeds the CPI for the second pre19 ceding calendar year, increased by 5 

20 percentage points. 

21 ‘‘(2) CPI.—Rules similar to the rules of para22 graphs (4) and (5) of section 1(f) shall apply for 

23 purposes of this subsection. 


SSpencer on DSK126QN23PROD with BILLS
25 

•S 3422 IS

1 ‘‘(3) ROUNDING.—Any applicable amount de2 termined under this subsection which is not a mul3 tiple of $1 shall be rounded to the nearest dollar. 

4 ‘‘SEC. 4693. REBATE. 

5 ‘‘(a) EXPORTATION OF COVERED PRIMARY GOOD.— 

6 In the case of a person who exports any covered primary 

7 good from the United States which was produced in an 

8 eligible facility for which a charge has been imposed under 

9 section 4692, a refund shall be allowed to such person in 

10 the same manner as if it were an overpayment of the 

11 charge imposed by such section in an amount equal to the 

12 charge that would be imposed under subsection 

13 (a)(1)(A)(i) of such section with respect to such good if 

14 the carbon intensity with respect to such eligible facility 

15 were determined under section 4691(b)(1)(A) by sub16 stituting ‘all eligible facilities by the covered entity which 

17 produced the covered primary good described in section 

18 4693(a)(1)’ for ‘such facility’ each place it appears in such 

19 section. 

20 ‘‘(b) EXPORTATION OF FINISHED GOOD.—In the 

21 case of a person who exports any finished good from the 

22 United States for which a charge has been imposed under 

23 section 4692 on such finished good or any of its compo24 nents, a refund shall be allowed to such person in the same 

25 manner as if it were an overpayment of the charge imVerDate Sep 11 2014 02:17 Dec 19, 2023 Jkt 049200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S3422.IS S3422

SSpencer on DSK126QN23PROD with BILLS
26 

•S 3422 IS

1 posed by such section in an amount equal to the charge 

2 that would otherwise be imposed under such section with 

3 respect to such finished good (as determined pursuant to 

4 subsection (a)(1)(A)(ii) of such section). 

5 ‘‘SEC. 4694. DEFINITIONS. 

6 ‘‘For purposes of this subchapter— 

7 ‘‘(1) ADMINISTRATOR.—The term ‘Adminis8 trator’ means the Administrator of the Environ9 mental Protection Agency. 

10 ‘‘(2) C02-e.— 

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), the term ‘CO2-e’ means, with re13 spect to a greenhouse gas, the quantity of such 

14 gas that has a global warming potential equiva15 lent to 1 metric ton of carbon dioxide, as deter16 mined pursuant to table A–1 of subpart A of 

17 part 98 of title 40, Code of Federal Regula18 tions, as in effect on the date of the enactment 

19 of this subchapter. 

20 ‘‘(B) METHANE.—In the case of methane, 

21 the term ‘CO2-e’ means the quantity of meth22 ane that has the same global warming potential 

23 over a 20-year period as 1 metric ton of carbon 

24 dioxide, as determined by the Administrator. 


SSpencer on DSK126QN23PROD with BILLS
27 

•S 3422 IS

1 ‘‘(3) COVERED ENTITY.—The term ‘covered en2 tity’ means any entity which— 

3 ‘‘(A) produces any covered primary good, 

4 and 

5 ‘‘(B) is required to report emissions of 

6 greenhouse gases under the Greenhouse Gas 

7 Reporting Program (or would be required to re8 port such emissions notwithstanding any other 

9 provision of law prohibiting the implementation 

10 of or use of funds for such requirements). 

11 ‘‘(4) COVERED NATIONAL INDUSTRY.— 

12 ‘‘(A) IN GENERAL.—Except as provided 

13 under section 4691(b)(1)(B)(ii), the term ‘cov14 ered national industry’ means any industry 

15 which is assigned a 6-digit NAICS code which 

16 is included in any of the following clauses: 

17 ‘‘(i) 211120 (petroleum extraction). 

18 ‘‘(ii) 211130 (natural gas extraction). 

19 ‘‘(iii) 212114 (surface coal mining). 

20 ‘‘(iv) 212115 (underground coal min21 ing). 

22 ‘‘(v) 322110 (pulp mills). 

23 ‘‘(vi) 322120 (paper mills). 

24 ‘‘(vii) 322130 (paperboard mills). 

25 ‘‘(viii) 324110 (petroleum refineries). 


SSpencer on DSK126QN23PROD with BILLS
28 

•S 3422 IS

1 ‘‘(ix) 324121 (asphalt paving mixture 

2 and block manufacturing). 

3 ‘‘(x) 324122 (asphalt shingle and 

4 coating materials manufacturing). 

5 ‘‘(xi) 324199 (all other petroleum and 

6 coal products manufacturing). 

7 ‘‘(xii) 325110 (petrochemical manu8 facturing). 

9 ‘‘(xiii) 325120 (industrial gas manu10 facturing). 

11 ‘‘(xiv) 325193 (ethyl alcohol manufac12 turing). 

13 ‘‘(xv) 325199 (other basic organic 

14 chemical manufacturing). 

15 ‘‘(xvi) 325311 (nitrogenous fertilizer 

16 manufacturing). 

17 ‘‘(xvii) 327211, 327212, 327213, or 

18 327215 (glass). 

19 ‘‘(xviii) 327310 (cement). 

20 ‘‘(xix) 327410 or 327420 (lime and 

21 gypsum product manufacturing). 

22 ‘‘(xx) 331110 (iron and steel). 

23 ‘‘(xxi) 331313 or 331314 (aluminum). 

24 ‘‘(B) EXCEPTIONS.— 


SSpencer on DSK126QN23PROD with BILLS
29 

•S 3422 IS

1 ‘‘(i) INDUSTRIAL GAS MANUFAC2 TURING.—Subparagraph (A)(xiii) shall 

3 apply only with respect to the production 

4 of hydrogen. 

5 ‘‘(ii) OTHER BASIC ORGANIC CHEM6 ICAL MANUFACTURING.—Subparagraph 

7 (A)(xv) shall apply only with respect to the 

8 production of adipic acid. 

9 ‘‘(5) COVERED PRIMARY GOOD.—The term ‘cov10 ered primary good’ means any good which is pro11 duced as part of a trade or business operating with12 in a covered national industry, and includes (except 

13 as otherwise provided under section 4691(b)(1)(C)) 

14 any good classifiable under the same 6-digit sub15 heading of the Harmonized Tariff Schedule of the 

16 United States. 

17 ‘‘(6) ELIGIBLE FACILITY.—The term ‘eligible 

18 facility’ means any facility (as such term is defined 

19 for purposes of the Greenhouse Gas Reporting Pro20 gram) which is— 

21 ‘‘(A) operated by a covered entity for the 

22 production of any covered primary good, and 

23 ‘‘(B) located within the United States. 

24 ‘‘(7) FINISHED GOOD.— 


SSpencer on DSK126QN23PROD with BILLS
30 

•S 3422 IS

1 ‘‘(A) IN GENERAL.—The term ‘finished 

2 good’ means any good which— 

3 ‘‘(i) for calendar years 2027 and 

4 2028— 

5 ‘‘(I) contains greater than 500 

6 pounds of any combination of any cov7 ered primary goods, or 

8 ‘‘(II) was produced from inputs 

9 of any combination of covered primary 

10 goods, the value of which comprise 

11 more than 90 percent of the total 

12 value of the material inputs involved 

13 in the production of such good, 

14 ‘‘(ii) for calendar years 2029 and 

15 2030— 

16 ‘‘(I) contains greater than 100 

17 pounds of any combination of any cov18 ered primary goods, or 

19 ‘‘(II) was produced from inputs 

20 of any combination of covered primary 

21 goods, the value of which comprise 

22 more than 75 percent of the total 

23 value of the material inputs involved 

24 in the production of such good, and 


SSpencer on DSK126QN23PROD with BILLS
31 

•S 3422 IS

1 ‘‘(iii) for any calendar year after cal2 endar year 2030— 

3 ‘‘(I) contains greater than such 

4 amount as is determined by the Sec5 retary (as determined in coordination 

6 with the relevant parties, and which 

7 shall not be greater than 100 pounds) 

8 of any combination of any covered pri9 mary goods, or 

10 ‘‘(II) was produced from inputs 

11 of any combination of covered primary 

12 goods, the value of which comprise 

13 more than such percentage as is de14 termined by the Secretary (as deter15 mined in coordination with the rel16 evant parties, and which shall not be 

17 greater than 75 percent) of the total 

18 value of the material inputs involved 

19 in the production of such good. 

20 ‘‘(B) EXCEPTION.—The term ‘finished 

21 good’ shall not include any waste or scrap prod22 uct which is imported or exported. 

23 ‘‘(8) GREENHOUSE GAS.—The term ‘greenhouse 

24 gas’ has the meaning given such term under section 


SSpencer on DSK126QN23PROD with BILLS
32 

•S 3422 IS

1 211(o)(1)(G) of the Clean Air Act, as in effect on 

2 the date of the enactment of this subchapter. 

3 ‘‘(9) GREENHOUSE GAS EMISSIONS.—The term 

4 ‘greenhouse gas emissions’ means the amount of 

5 greenhouse gases, expressed in metric tons of CO2- 

6 e, which were emitted to the atmosphere. 

7 ‘‘(10) GREENHOUSE GAS REPORTING PRO8 GRAM.—The term ‘Greenhouse Gas Reporting Pro9 gram’ means the Greenhouse Gas Reporting Pro10 gram established under part 98 of title 40, Code of 

11 Federal Regulations. 

12 ‘‘(11) NAICS.—The term ‘NAICS’ means the 

13 North American Industrial Classification System. 

14 ‘‘(12) REGIONAL GRID.—The term ‘regional 

15 grid’ means the smallest defined region of inter16 connected power grid (including power generation 

17 assets) from which a facility draws power that ac18 counts for the total power supplied to the facility by 

19 the grid and for which there is reliable data. 

20 ‘‘(13) RELEVANT PARTIES.—The term ‘relevant 

21 parties’ means— 

22 ‘‘(A) the Administrator, 

23 ‘‘(B) the Secretary of Energy, 

24 ‘‘(C) the Secretary of Commerce, 


SSpencer on DSK126QN23PROD with BILLS
33 

•S 3422 IS

1 ‘‘(D) the United States Trade Representa2 tive, and 

3 ‘‘(E) the Chair and Vice Chair of the 

4 United States International Trade Commis5 sion.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sub7 chapters for chapter 38 of the Internal Revenue Code of 

8 1986 is amended by adding at the end thereof the fol9 lowing new item: 

‘‘SUBCHAPTER E—CARBON INTENSITY CHARGE’’. 

10 (c) GRANT PROGRAM.— 

11 (1) IN GENERAL.—For fiscal year 2026 and 

12 each subsequent fiscal year, there are appropriated, 

13 out of any funds in the Treasury not otherwise ap14 propriated, to the Department of the Treasury 

15 amounts equal to applicable amount for the pre16 ceding fiscal year, with such amounts to be used by 

17 the Secretary, in conjunction with the Secretary of 

18 Energy and the Administrator of the Environmental 

19 Protection Agency, to establish a competitive grant 

20 program to award grants to eligible entities for in21 vestments in new technology— 

22 (A) in the case of an existing eligible facil23 ity, to reduce their carbon intensity, and 

24 (B) in the case of a proposed eligible facil25 ity, to ensure best-in-class carbon intensity. 


SSpencer on DSK126QN23PROD with BILLS
34 

•S 3422 IS

1 (2) MODELED ON DIESEL EMISSIONS REDUC2 TION ACT.—For purposes of the program described 

3 in paragraph (1), such program shall be adminis4 tered in a manner similar to the national grant pro5 gram of the Environmental Protection Agency under 

6 subtitle G of title VII of the Energy Policy Act of 

7 2005 (42 U.S.C. 16131 et seq.). 

8 (3) AWARDING OF GRANT AMOUNTS.—For pur9 poses of awarding grants under the program de10 scribed in paragraph (1), the Secretary (in conjunc11 tion with the Administrator and the Secretary of 

12 Energy) shall— 

13 (A) give preference to proposed invest14 ments— 

15 (i) that would result in the greatest 

16 decrease in carbon intensity, 

17 (ii) for facilities located in economi18 cally distressed communities that have ex19 perienced a loss of manufacturing jobs, 

20 (iii) that would maximize improve21 ment in local air quality, or 

22 (iv) for facilities located in commu23 nities with high cumulative pollution bur24 dens (as determined by the Administrator), 

25 and 


SSpencer on DSK126QN23PROD with BILLS
35 

•S 3422 IS

1 (B) allocate grant funds to eligible facili2 ties and proposed eligible facilities which 

3 produce covered primary goods that are in4 cluded within a covered national industry in ap5 proximate proportion to the share of total 

6 greenhouse gas emissions for which such indus7 try is responsible for emitting. 

8 (4) RECAPTURE.—In the case of any eligible 

9 entity which has been awarded a grant under the 

10 program described in paragraph (1) with respect to 

11 any eligible facility or proposed eligible facility, if 

12 such entity fails to— 

13 (A) within 3 years of the awarding of such 

14 grant, complete the proposed investments in 

15 new technology at such facility, or 

16 (B) during the 10-year period after such 

17 investments are placed in service— 

18 (i) in the case of an existing eligible 

19 facility, achieve and maintain the reduction 

20 in carbon intensity proposed in the applica21 tion for such grant, or 

22 (ii) in the case of a proposed eligible 

23 facility, achieve and maintain the best-in24 class carbon intensity proposed in the ap25 plication for such grant, 


SSpencer on DSK126QN23PROD with BILLS
36 

•S 3422 IS

1 the Secretary shall recapture, pursuant to such reg2 ulations or other guidance issued by the Secretary, 

3 the amount of the grant awarded with respect to 

4 such facility. 

5 (5) APPLICABLE AMOUNT.—For purposes of 

6 this subsection, the term ‘‘applicable amount’’ 

7 means, with respect to any fiscal year, an amount 

8 equal to 75 percent of the increase in revenues to 

9 the Treasury during such fiscal year by reason of 

10 the application of subchapter E of chapter 38 of the 

11 Internal Revenue Code of 1986 (as added by sub12 section (a)). 

13 (6) DEFINITIONS.—For purposes of this sub14 section— 

15 (A) IN GENERAL.—The terms ‘‘covered na16 tional industry’’, ‘‘eligible facility’’, and ‘‘cov17 ered primary good’’ shall have the same mean18 ing given such terms under section 4694 of the 

19 Internal Revenue Code of 1986 (as added by 

20 subsection (a)). 

21 (B) BEST-IN-CLASS CARBON INTENSITY.— 

22 The term ‘‘best-in-class carbon intensity’’ 

23 means, with respect to any proposed eligible fa24 cility, that the carbon intensity of such facility 

25 would be not greater than the carbon intensity 


SSpencer on DSK126QN23PROD with BILLS
37 

•S 3422 IS

1 of the existing facility with the lowest carbon 

2 intensity within the relevant covered national 

3 industry (as determined of the date of the ap4 plication for a grant under the program de5 scribed in paragraph (1)). 

6 (C) ELIGIBLE ENTITY.—The term ‘‘eligible 

7 entity’’ means any person which operates an eli8 gible facility or will operate a proposed eligible 

9 facility. 

10 (D) SECRETARY.—The term ‘‘Secretary’’ 

11 means the Secretary of the Treasury (or the 

12 Secretary’s delegate). 

13 (d) ECONOMIC SUPPORT FUND OF DEPARTMENT OF

14 STATE.— 

15 (1) IN GENERAL.—For fiscal year 2026 and 

16 each subsequent fiscal year, in addition to amounts 

17 otherwise available, there are appropriated, out of 

18 any funds in the Treasury not otherwise appro19 priated, to the Department of State an amount 

20 equal to the applicable amount for the preceding fis21 cal year, with such amount to be made available for 

22 bilateral and multilateral assistance to support cli23 mate and clean energy programs. 

24 (2) APPLICABLE AMOUNT.—For purposes of 

25 this subsection, the term ‘‘applicable amount’’ 


SSpencer on DSK126QN23PROD with BILLS
38 

•S 3422 IS

1 means, with respect to any fiscal year, an amount 

2 equal to 25 percent of the increase in revenues to 

3 the Treasury during such fiscal year by reason of 

4 the application of subchapter E of chapter 38 of the 

5 Internal Revenue Code of 1986 (as added by sub6 section (a)). 

Æ 


SSpencer on DSK126QN23PROD with BILLS