Energy Innovation and Carbon Dividend Act of 2021
Bill: H.R.2307 | Sponsor: Rep. Deutch, Theodore E. (D-FL)
Policy area: Taxation

Summary:
Energy Innovation and Carbon Dividend Act of 2021
This bill imposes a fee on the carbon content of fuels, including crude oil, natural gas, coal, or any other product derived from those fuels that will be used so as to emit greenhouse gases into the atmosphere.
The fee is imposed on the producers or importers of the fuels and is equal to the greenhouse gas content of the fuel multiplied by the carbon fee rate. The rate begins at $15 per metric ton of CO2-e in 2021, increases by $10 each year, and is subject to further adjustments based on the progress in meeting specified emissions reduction targets.
The bill includes
The fees must be deposited into a Carbon Dividend Trust Fund and used for administrative expenses and dividend payments to U.S. citizens or lawful residents. The fees must be decommissioned when emissions levels and monthly dividend payments fall below specified levels.

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 
                              generations.

    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 ``Energy Innovation and Carbon 
Dividend Act of 2021''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) efficient markets strengthen our economy and benefit 
        our Nation by encouraging competition, innovation, and 
        technological progress;
            (2) efficient markets should reflect all costs of goods to 
        ensure that they advance America's prosperity and national 
        interests;
            (3) emissions of carbon pollution and other harmful 
        pollutants into our Nation's air impose substantial costs on 
        all Americans and on future generations; and
            (4) creation of a Carbon Dividend Trust Fund, to be 
        distributed to the American people, will make markets more 
        efficient, create jobs, and stimulate competition, innovation, 
        and technological progress that benefit all Americans and 
        future generations.

SEC. 3. CARBON DIVIDENDS AND CARBON FEE.

    The Internal Revenue Code of 1986 is amended by adding at the end 
the following new subtitle:

             ``Subtitle L--CARBON DIVIDENDS AND CARBON FEE

                      ``Chapter 101. Carbon Fees.

              ``Chapter 102. Carbon Border Fee Adjustment.

                       ``CHAPTER 101--CARBON FEES

``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.

    ``For purposes of this subtitle:
    ``(a) Administrator.--The term `Administrator' means the 
Administrator of the Environmental Protection Agency.
    ``(b) Carbon Dioxide Equivalent or CO<INF>2</INF>-e.--The term 
`carbon dioxide equivalent' or `CO<INF>2</INF>-e' means the number of 
metric tons of carbon dioxide emissions with the same global warming 
potential as one metric ton of another greenhouse gas.
    ``(c) Carbon-Intensive Product.--The term `carbon-intensive 
product' means, as identified by the Secretary by rule--
            ``(1) for purposes of this chapter--
                    ``(A) any manufactured or agricultural product 
                which the Secretary in consultation with the 
                Administrator determines is emissions-intensive and 
                trade-exposed, except that no covered fuel is a carbon-
                intensive product, and
                    ``(B) until such time that the Secretary 
                promulgates rules identifying carbon-intensive 
                products, the following shall be considered carbon-
                intensive products: iron, steel, steel mill products 
                (including pipe and tube), aluminum, cement, glass 
                (including flat, container, and specialty glass and 
                fiberglass), pulp, paper, chemicals, or industrial 
                ceramics, and
            ``(2) for purposes of chapter 102, any economic sector, or 
        product from that sector, which the Secretary in consultation 
        with the Administrator determines is prone to carbon leakage 
        because it is emissions-intensive and trade-exposed, along with 
        other pertinent criteria, except that no covered fuel is a 
        carbon-intensive product.
    ``(d) Carbon Leakage.--The term `carbon leakage' means an increase 
of global greenhouse gas emissions which are substantially due to the 
relocation of greenhouse gas sources from the United States to 
jurisdictions which lack comparable controls upon greenhouse gas 
emissions.
    ``(e) Cost of Carbon or Carbon Costs.--The term `cost of carbon' or 
`carbon costs' means a national or sub-national government policy which 
explicitly places a price on greenhouse gas pollution and shall be 
limited to either a tax on greenhouse gases or a system of cap-and-
trade. The cost of carbon is expressed as the price per metric ton of 
CO<INF>2</INF>-e.
    ``(f) Covered Entity.--The term `covered entity' means--
            ``(1) in the case of crude oil--
                    ``(A) a refinery operating in the United States, 
                and
                    ``(B) any importer of any petroleum or petroleum 
                product into the United States,
            ``(2) in the case of coal--
                    ``(A) any coal mining operation in the United 
                States, and
                    ``(B) any importer of coal into the United States,
            ``(3) in the case of natural gas--
                    ``(A) any entity entering pipeline quality natural 
                gas into the natural gas transmission system, and
                    ``(B) any importer of natural gas into the United 
                States, and
            ``(4) any entity or class of entities which, as determined 
        by the Secretary, is transporting, selling, or otherwise using 
        a covered fuel in a manner which emits a greenhouse gas to the 
        atmosphere and which has not been covered by the carbon fee or 
        the carbon border fee adjustment.
    ``(g) Covered Fuel.--The term `covered fuel' means crude oil, 
natural gas, coal, or any other product derived from crude oil, natural 
gas, or coal which shall be used so as to emit greenhouse gases to the 
atmosphere.
    ``(h) Crude Oil.--The term `crude oil' means unrefined petroleum.
    ``(i) Export.--The term `export' means to transport a product from 
within the jurisdiction of the United States to persons outside the 
United States.
    ``(j) Fossil Fuel.--The term `fossil fuel' means coal, coal 
products, petroleum, petroleum products, or natural gas.
    ``(k) Full Fuel Cycle Greenhouse Gas Emissions.--The term `full 
fuel cycle greenhouse gas emissions' means the greenhouse gas content 
of a covered fuel plus that covered fuel's upstream greenhouse gas 
emissions.
    ``(l) Global Warming Potential.--The term `global warming 
potential' means the ratio of the time-integrated radiative forcing 
from the instantaneous release of one kilogram of a trace substance 
relative to that of one kilogram of carbon dioxide.
    ``(m) Greenhouse Gas.--The term `greenhouse gas' means carbon 
dioxide (CO<INF>2</INF>), methane (CH<INF>4</INF>), nitrous oxide 
(N<INF>2</INF>O), and other gases as defined by rule of the 
Administrator.
    ``(n) Greenhouse Gas Content.--The term `greenhouse gas content' 
means the amount of greenhouse gases of a product or a fuel, expressed 
in metric tons of CO<INF>2</INF>-e, which would be emitted to the 
atmosphere by the use of a covered fuel and shall include, 
nonexclusively, emissions of carbon dioxide (CO<INF>2</INF>), nitrous 
oxide (N<INF>2</INF>O), methane (CH<INF>4</INF>), and other greenhouse 
gases as identified by rule of the Administrator.
    ``(o) Greenhouse Gas Effect.--The term `greenhouse gas effect' 
means the adverse effects of greenhouse gases on health or welfare 
caused by the greenhouse gas's heat-trapping potential or its effect on 
ocean acidification.
    ``(p) Import.--Irrespective of any other definition in law or 
treaty, the term `import' means to land on, bring into, or introduce 
into any place subject to the jurisdiction of the United States.
    ``(q) Petroleum.--The term `petroleum' means oil removed from the 
earth or the oil derived from tar sands or shale.
    ``(r) Production Greenhouse Gas Emissions.--The term `production 
greenhouse gas emissions' means the quantity of greenhouse gases, 
expressed in metric tons of CO<INF>2</INF>-e, emitted to the atmosphere 
resulting from, nonexclusively, the production, manufacture, assembly, 
transportation, or financing of a product.
    ``(s) Upstream Greenhouse Gas Emissions.--The term `upstream 
greenhouse gas emissions' means the quantity of greenhouse gases, 
expressed in metric tons of CO<INF>2</INF>-e, emitted to the atmosphere 
resulting from, nonexclusively, the extraction, processing, 
transportation, financing, or other preparation of a covered fuel for 
use.

``SEC. 9902. CARBON FEE.

    ``(a) Carbon Fee.--There is hereby imposed a carbon fee on any 
covered entity's emitting use, or sale or transfer for an emitting use, 
of any covered fuel.
    ``(b) Amount of the Carbon Fee.--The carbon fee imposed by this 
section is an amount equal to--
            ``(1) the greenhouse gas content of the covered fuel, 
        multiplied by
            ``(2) the carbon fee rate.
    ``(c) Carbon Fee Rate.--For purposes of this section--
            ``(1) In general.--The carbon fee rate, with respect to any 
        use, sale, or transfer during a calendar year, shall be--
                    ``(A) in the case of calendar year 2021, $15 per 
                metric ton of CO<INF>2</INF>-e, and
                    ``(B) except as provided in paragraph (2), in the 
                case of any calendar year thereafter--
                            ``(i) the carbon fee rate in effect under 
                        this subsection for the preceding calendar 
                        year, plus
                            ``(ii) $10.
            ``(2) Exceptions.--
                    ``(A) Increased carbon fee rate after missed annual 
                emissions reduction target.--In the case of any year 
                immediately following a year for which the Secretary 
                determines under section 9903(b) that the actual 
                emissions of greenhouse gases from covered fuels 
                exceeded the emissions reduction target for the 
                previous year, paragraph (1)(B)(ii) shall be applied by 
                substituting `$15' for the dollar amount otherwise in 
                effect for the calendar year under such paragraph.
                    ``(B) Cessation of carbon fee rate increase after 
                certain emission reductions achieved.--In the case of 
                any year immediately following a year for which the 
                Secretary determines under 9903(b) that actual 
                emissions of greenhouse gases from covered fuels is not 
                more than 10 percent of the greenhouse gas emissions 
                from covered fuels during the year 2010, paragraph 
                (1)(B)(ii) shall be applied by substituting `$0' for 
                the dollar amount otherwise in effect for the calendar 
                year under such paragraph.
            ``(3) Inflation adjustment.--In the case of any calendar 
        year after 2021, each of the dollar amounts in paragraphs 
        (1)(B) and (2)(A) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2010' for `calendar year 
                2016' in subparagraph (A)(ii) thereof.
    ``(d) Exemption and Refund.--The Secretary shall prescribe such 
rules as are necessary to ensure the fee imposed by this section is not 
imposed with respect to any nonemitting use, or any sale or transfer 
for a nonemitting use, including rules providing for the refund of any 
carbon fee paid under this section with respect to any such use, sale, 
or transfer.
    ``(e) Exemptions.--
            ``(1) Agriculture.--
                    ``(A) Fuel.--If any covered fuel or its derivative 
                is used on a farm for a farming purpose, the Secretary 
                shall pay (without interest) to the ultimate purchaser 
                of such covered fuel or its derivative, the total 
                amount of carbon fees previously paid upon that covered 
                fuel or its derivative, as specified by rule of the 
                Secretary.
                    ``(B) Farm, farming use, and farming purpose.--The 
                terms `farm', `farming use', and `farming purpose' 
                shall have the respective meanings given such terms 
                under section 6420(c).
                    ``(C) Other greenhouse gases emissions from 
                agriculture.--The carbon fee shall not be levied upon 
                non-fossil fuel greenhouse gas emissions which occur on 
                a farm.
            ``(2) Armed forces of the united states.--If any covered 
        fuel or its derivative is used by the Armed Forces of the 
        United States as supplies for vessels of war, vehicles, or 
        electrical power generation equipment, the Secretary shall pay 
        (without interest) to the ultimate purchaser of such covered 
        fuel or its derivative, the total amount of carbon fees 
        previously paid upon that covered fuel or its derivative, as 
        specified by rule of the Secretary.

``SEC. 9903. EMISSIONS REDUCTION SCHEDULE.

    ``(a) In General.--An emissions reduction schedule for greenhouse 
gas emissions from covered fuels is hereby established, as follows:
            ``(1) Reference year.--The net greenhouse gas emissions 
        during the year 2010 shall be the reference amount of emissions 
        and shall be determined from the `Inventory of U.S. Greenhouse 
        Gas Emissions and Sinks: 1990-2010' published by the 
        Environmental Protection Agency in April of 2012.
            ``(2) Emissions reduction target.--The first emission 
        reduction target shall be for the year 2023. The emission 
        target for each year thereafter shall be the previous year's 
        target emissions minus a percentage of emissions during the 
        reference year determined in accordance with the following 
        table:


----------------------------------------------------------------------------------------------------------------
                       ``Year                                         Emissions Reduction Target
----------------------------------------------------------------------------------------------------------------
2010                                                  Reference year
----------------------------------------------------------------------------------------------------------------
2021 to 2022                                          No emissions reduction target
----------------------------------------------------------------------------------------------------------------
2023 to 2030                                          5 percent of 2010 emissions per year
----------------------------------------------------------------------------------------------------------------
2031 to 2050                                          3 percent of 2010 emissions per year
----------------------------------------------------------------------------------------------------------------

    ``(b) Administrative Determination.--Not later than 60 days after 
the beginning of each calendar year beginning after the enactment of 
this section, the Secretary, in consultation with the Administrator, 
shall determine whether actual emissions of greenhouse gases from 
covered fuels exceeded the emissions reduction target for the preceding 
calendar year. The Secretary shall make such determination using the 
same, or appropriately updated, greenhouse gas accounting method as was 
used to determine the net greenhouse gas emissions in the `Inventory of 
U.S. Greenhouse Gas Emissions and Sinks: 1990-2010' published by the 
Environmental Protection Agency in April of 2012.

``SEC. 9904. DECOMMISSIONING OF CARBON FEE.

    ``(a) In General.--At such time that--
            ``(1) the Secretary determines under 9903(b) that actual 
        emissions of greenhouse gases from covered fuels is not more 
        than 10 percent of the greenhouse gas emissions during the year 
        2010, and
            ``(2) the monthly carbon dividend payable to an adult 
        eligible individual has been less than $20 for 3 consecutive 
        years,
the Secretary shall decommission in an orderly manner programs 
administering the carbon fee, the carbon border fee adjustment, and the 
Carbon Dividend Trust Fund.
    ``(b) Inflation Adjustment.--In the case of any calendar year after 
2021, the $20 amount under subsection (a)(2) shall be increased by an 
amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) cost-of-living adjustment determined under section 
        1(f)(3) for the calendar year, determined by substituting 
        `calendar year 2020' for `calendar year 2010' in subparagraph 
        (A)(ii) thereof.

``SEC. 9905. CARBON CAPTURE AND SEQUESTRATION.

    ``(a) In General.--The Secretary, in consultation with the 
Administrator and the Secretary of Energy, shall prescribe regulations 
for making payments as provided in subsection (b) to qualified 
facilities which capture and sequester qualified carbon dioxide or 
sequester qualified carbon dioxide obtained from one or more qualified 
facilities.
    ``(b) Payment Amounts.--
            ``(1) In general.--The Secretary shall make payments to a 
        qualified facility in the same manner as if such payment was a 
        refund of an overpayment of the carbon fee imposed by section 
        9902, in cases in which such qualified facility--
                    ``(A) uses any covered fuel--
                            ``(i) with respect to which the carbon fee 
                        has been paid, and
                            ``(ii) which results in the emission of 
                        qualified carbon dioxide,
                    ``(B) captures such emitted, or an equivalent 
                amount of, qualified carbon dioxide, and
                    ``(C)(i) sequesters such qualified carbon dioxide 
                in a manner which is safe, permanent, and in compliance 
                with any applicable local, State, and Federal laws, or
                    ``(ii) utilizes such qualified carbon dioxide or an 
                equivalent amount of carbon dioxide in a manner 
                provided in paragraph (3)(C).
            ``(2) Amount of refund.--The payment determined under this 
        section shall be an amount equal to the lesser of--
                    ``(A)(i) the adjusted metric tons of qualified 
                carbon dioxide captured and sequestered or utilized, 
                multiplied by
                    ``(ii) the carbon fee rate during the year in which 
                the carbon fee was imposed by section 9902 upon the 
                covered fuel to which such carbon dioxide relates, or
                    ``(B) the amount of the carbon fee imposed by 
                section 9902 with respect to such covered fuel.
            ``(3) Definitions and special rules.--For purposes of this 
        section--
                    ``(A) Qualified carbon dioxide; qualified 
                facility.--
                            ``(i) Qualified carbon dioxide.--The term 
                        `qualified carbon dioxide' has the same meaning 
                        given such term under section 45Q(c).
                            ``(ii) Qualified facility.--The term 
                        `qualified facility' means any industrial 
                        facility at which carbon capture equipment is 
                        placed in service.
                    ``(B) Adjusted total metric tons.--The adjusted 
                total metric tons of qualified carbon dioxide captured 
                and sequestered or utilized shall be the total metric 
                tons of qualified carbon dioxide captured and 
                sequestered or utilized, reduced by the amount of any 
                carbon dioxide likely to escape and be emitted into the 
                atmosphere due to imperfect storage technology or 
                otherwise, as determined by the Secretary in 
                consultation with the Administrator.
                    ``(C) Utilization.--The Secretary, in consultation 
                with the Administrator, shall establish regulations 
                providing for the methods and processes by which 
                qualified carbon dioxide may be utilized so as to 
                exclude that qualified carbon dioxide safely and 
                permanently from the atmosphere. Utilization may 
                include the production of substances such as but not 
                limited to plastics and chemicals. Such regulations 
                shall minimize the escape or further emission of the 
                qualified carbon dioxide into the atmosphere.
                    ``(D) Sequestration.--Not later than 540 days after 
                the date of the enactment of this section, the 
                Secretary, in consultation with the Administrator, 
                shall prescribe regulations identifying the conditions 
                under which carbon dioxide may be safely and 
                permanently sequestered.
            ``(4) Coordination with credit for carbon dioxide 
        sequestration.--At such time that the Secretary prescribes 
        regulations implementing this section, no payment under this 
        section shall be allowed to a taxpayer to whom a credit has 
        been allowed for any taxable year under section 45Q.

``SEC. 9906. ADMINISTRATIVE AUTHORITY.

    ``(a) In General.--The Secretary in consultation with the 
Administrator shall prescribe such regulations, and other guidance, as 
may be necessary to carry out the purposes of this subtitle and assess 
and collect the carbon fee imposed by section 9902.
    ``(b) Specifically.--Such regulations and guidance shall include--
            ``(1) the identification of an effective point in the 
        production, distribution, or use of a covered fuel for 
        collecting such carbon fee, in such a manner so as to minimize 
        administrative burden and maximize the extent to which full 
        fuel cycle greenhouse gas emissions from covered fuels have the 
        carbon fee levied upon them,
            ``(2) the identification of covered entities which shall be 
        liable for the payment of the carbon fee,
            ``(3) requirements for the monthly payment of such fees,
            ``(4) as may be necessary or convenient, rules for 
        distinguishing between different types of covered fuels,
            ``(5) as may be necessary or convenient, rules for 
        distinguishing between a covered fuel's greenhouse gas content 
        and its upstream greenhouse gas emissions,
            ``(6) rules to ensure that no covered fuel has the carbon 
        fee or carbon border fee adjustment imposed upon it more than 
        once, and
            ``(7) rules to ensure that the domestic implementation of 
        the carbon fee coordinate with the implementation of the carbon 
        border fee adjustment of chapter 102.

              ``CHAPTER 102--CARBON BORDER FEE ADJUSTMENT

``Sec. 9908. Carbon border fee adjustment.
``Sec. 9909. Administration of the carbon border fee adjustment.
``Sec. 9910. Allocation of carbon border fee adjustment revenues.
``Sec. 9911. Treaties and international negotiations.

``SEC. 9908. CARBON BORDER FEE ADJUSTMENT.

    ``(a) In General.--The fees imposed by, and refunds allowed under, 
this section shall be referred to as the `carbon border fee 
adjustment'.
    ``(b) Purpose.--The purpose of the carbon border fee adjustment is 
to protect animal, plant, and human life and health, to conserve 
exhaustible natural resources by preventing carbon leakage, and to 
facilitate the creation of international agreements.
    ``(c) Imports to the United States.--
            ``(1) Imported covered fuels fee.--In the case of any 
        person that imports into the United States any covered fuel, 
        there shall be imposed a fee equal to the total carbon fee that 
        would be imposed on the fuel's greenhouse gas content under the 
        domestic carbon fee, including processing emissions.
            ``(2) Imported carbon-intensive products fee.--In the case 
        of any person that imports into the United States any carbon-
        intensive product, there shall be imposed a fee equal to the 
        total carbon fee which would have accumulated upon the 
        greenhouse gas content of the imported carbon-intensive product 
        had the imported carbon-intensive product been produced 
        domestically and subject to the domestic carbon fee.
            ``(3) Modifications.--The Secretary shall make an 
        administrative determination of whether any class of imported 
        covered fuels or class of imported carbon-intensive product is 
        carrying any total foreign carbon cost. The Secretary shall 
        make a determination of whether international law or the 
        enhancement of global greenhouse gas mitigation efforts require 
        that those foreign cost of carbon be deducted from the border 
        carbon fee adjustment determined in subsection (c)(1) or 
        subsection (d)(1).
            ``(4) Foreign cost of carbon; foreign carbon costs.--For 
        purposes of this subsection, the term `foreign cost of carbon' 
        or `foreign carbon cost' means the explicit price a foreign 
        jurisdiction places upon the emission of greenhouse gas 
        pollution to the atmosphere through law or regulation. Such 
        price shall be expressed as the price per metric ton of 
        CO<INF>2</INF>-e.
    ``(d) Refund on Exports From United States.--
            ``(1) Covered fuels.--Under regulations prescribed by the 
        Secretary, in the case of a covered fuel produced in the United 
        States with respect to which the fee under section 9902 was 
        paid, there shall be allowed as a credit or refund (without 
        interest) to any exporter of such covered fuels an amount equal 
        to the total carbon fee levied upon the exported covered fuel 
        up to the time of its exportation, including processing 
        emissions. Any such credit or refund shall be allowed in the 
        same manner as if it were an overpayment of tax imposed by 
        section 9902.
            ``(2) Carbon-intensive products.--Under regulations 
        prescribed by the Secretary, there shall be allowed a credit or 
        refund (without interest) to exporters of carbon-intensive 
        products manufactured or produced in the United States an 
        amount equal to the total carbon fees accumulated upon the 
        greenhouse gas content of the exported carbon-intensive product 
        up to the time of exportation. Any such credit or refund shall 
        be allowed in the same manner as if it were an overpayment of 
        the fee imposed by section 9902 or 9904.

``SEC. 9909. ADMINISTRATION OF THE CARBON BORDER FEE ADJUSTMENT.

    ``(a) Generally.--The Secretary in consultation with the 
Administrator shall prescribe regulations and guidance which implement 
the carbon border fee adjustment under section 9908.
    ``(b) Collaboration.--In administering any aspect of the border 
carbon fee adjustment it is the sense of Congress that the Secretary 
should collaborate with authorized officers of any jurisdiction, 
including sub-national governments, affected by the carbon border fee 
adjustment.
    ``(c) Methodology.--In administering the border carbon fee 
adjustment, the Secretary shall use methodologies, procedures, and data 
which as may be necessary or convenient--
            ``(1) disaggregate a product's greenhouse gas content;
            ``(2) are consistent with international law and facilitate 
        international cooperation;
            ``(3) in the case of incomplete data, use customary methods 
        of interpolation that favor enhanced mitigation and facilitate 
        international cooperation;
            ``(4) avoid the double pricing of greenhouse gas emissions; 
        and
            ``(5) harmonize the border carbon fee adjustment with the 
        domestic carbon fee so as to ensure all covered fuels used in 
        the United States are subject to the carbon fee.
    ``(d) Schedule.--The Secretary shall--
            ``(1) begin implementation the border carbon fee adjustment 
        for covered fuels at the same time as the implementation of the 
        carbon fee; and
            ``(2) begin implementation of the border carbon fee 
        adjustment for carbon-intensive products within two years of 
        the date of the enactment of the Energy Innovation and Carbon 
        Dividend Act of 2021.
    ``(e) Procedure.--The Secretary shall--
            ``(1) establish fair, timely, impartial, and as necessary 
        confidential procedures by which the importer of any carbon-
        intensive product or any covered fuel may petition the 
        Secretary to revise the Secretary's determination of its border 
        carbon fee adjustment liability calculated under section 
        9908(c)(1);
            ``(2) establish fair, timely, impartial, and as necessary 
        confidential procedures by which any exporter of any product 
        from the United States may petition the Secretary to include 
        that exported product on the list of carbon-intensive products; 
        and
            ``(3) establish fair, timely, impartial, and as necessary 
        confidential procedures by which the exporter of any carbon-
        intensive product or any covered fuel may petition the 
        Secretary to revise the Secretary's determination of its border 
        carbon fee adjustment refund calculated under section 9908(d).
    ``(f) Shipments From the United States to the Territories of the 
United States.--Notwithstanding any other treaty, law, or policy, 
shipments of covered fuels or carbon-intensive products from the United 
States to Guam, the United States Virgin Islands, American Samoa, 
Puerto Rico, and the Northern Mariana Islands shall be eligible for a 
refund of the carbon fee under section 9908(d).
    ``(g) Imports to the Territories of the United States.--
Notwithstanding any other treaty, law, or policy, imports of covered 
fuels or carbon-intensive products to Guam, the United States Virgin 
Islands, American Samoa, Puerto Rico, and the Northern Mariana Islands 
shall not be subject to section 9908(c).

``SEC. 9910. ALLOCATION OF CARBON BORDER FEE ADJUSTMENT REVENUES.

    ``The revenues collected under this chapter may be used to 
supplement appropriations made available in fiscal years 2022 and 
thereafter--
            ``(1) to U.S. Customs and Border Protection, in such 
        amounts as are necessary to administer the carbon border fee 
        adjustment, then
            ``(2) to the Green Climate Fund, created by decision 3/
        CP.17 adopted at the 17th Conference of the Parties to the 
        United Nation Framework Convention on Climate Change held in 
        Durban, November 28 to December 11, 2011.

``SEC. 9911. TREATIES AND INTERNATIONAL NEGOTIATIONS.

    ``(a) Conformance With International Treaties.--In the case that 
the Appellate Body of the World Trade Organization, or any other 
authoritative international treaty interpreter, shall find any portion 
of the carbon border fee adjustment under this chapter to violate any 
treaty to which the United States is a party, the Secretary of State is 
authorized to alter that aspect of such carbon border fee adjustment 
found to violate a treaty obligation so as to bring the carbon border 
fee adjustment into conformance with international law.
    ``(b) International Negotiations.--The Congress finds the 
international mitigation of greenhouse gas emissions to be of national 
importance. Therefore, the Congress encourages the Secretary of State, 
or the Secretary's designee, to commence and complete negotiations with 
other nations with the goal of forming treaties, environmental 
agreements, accords, partnerships or any other instrument that 
effectively reduces global greenhouse gas emissions to zero percent of 
2010 levels by 2050 and which respect the principle of common but 
differentiated responsibilities and respective capabilities.
    ``(c) Suspension of the Carbon Border Fee Adjustment.--The 
Secretary may suspend the border carbon fee adjustment, in whole or in 
part--
            ``(1) when, in the determination of the Secretary, a 
        country has implemented greenhouse gas mitigation policies 
        sufficient to contribute to a global net reduction of 
        greenhouse gas emissions to zero by 2050. In making such 
        determination, the Secretary may partially suspend particular 
        provisions of the carbon border fee adjustment. In making the 
        determination, the Secretary shall consult with the importing 
        country. In making the determination, the Secretary shall 
        follow all existing treaty obligations. The Secretary shall 
        review any carbon border fee adjustment suspension at least 
        every 5 years, or
            ``(2) by treaty or other international agreement that meets 
        the criteria of section 9911(c)(1) and includes provisions for 
        the suspension of the border carbon fee adjustment.''.

SEC. 4. ESTABLISHMENT OF THE CARBON DIVIDEND TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following:

``SEC. 9512. CARBON DIVIDEND TRUST FUND.

    ``(a) Establishment and Funding.--There is hereby established in 
the Treasury of the United States a trust fund to be known as the 
`Carbon Dividend Trust Fund', consisting of such amounts as may be 
appropriated to such trust fund as provided for in this section.
    ``(b) Transfers to the Carbon Dividend Trust Fund.--There is hereby 
appropriated to the Carbon Dividend Trust Fund amounts equal to the 
fees received into the Treasury less any amounts refunded or paid under 
section 9902(d) or 9905 of chapter 101 for each month.
    ``(c) Expenditures.--Amounts in the trust fund shall be available 
for the following purposes:
            ``(1) Administrative expenses.--So much of the expenses 
        necessary to administer the Carbon Dividend Trust Fund for each 
        year, as does not exceed--
                    ``(A) in the case of the first 5 calendar years 
                ending after the date of the enactment of this section, 
                the administrative expenses for any year may not exceed 
                8 percent of amounts appropriated to the Carbon 
                Dividend Trust Fund during such year, and
                    ``(B) in the case of any calendar year thereafter, 
                2 percent of the 5-year rolling average of the amounts 
                appropriated to the Carbon Dividend Trust Fund.
            ``(2) Other administrative expenses.--So much of the 
        expenses as are necessary to administer chapter 101 for any 
        year as does not to exceed 0.60 percent of the amounts 
        appropriated to the Carbon Dividend Trust Fund for the previous 
        year, and further limited as follows:
                    ``(A) The Department of the Treasury.
                    ``(B) The Social Security Administration.
                    ``(C) The Environmental Protection Agency.
                    ``(D) Department of State.
            ``(3) Carbon dividend payments.--
                    ``(A) In general.--From the amounts in the Carbon 
                Dividend Trust Fund made available under paragraphs (1) 
                and (2) of this subsection for any year, the Secretary 
                shall for each month beginning no more than 270 days 
                after the date of the enactment of the Energy 
                Innovation and Carbon Dividend Act of 2021, make carbon 
                dividend payments to each eligible individual.
                    ``(B) Pro-rata share.--A carbon dividend payment is 
                one pro-rata share for each adult, and half a pro-rata 
                share for each child under 19 years old, of amounts 
                available for the month in the Carbon Dividend Trust 
                Fund.
                    ``(C) Eligible individual.--The term `eligible 
                individual' means, with respect to any month, any 
                natural living person who has a valid Social Security 
                number or taxpayer identification number and is a 
                citizen or lawful resident of the United States (other 
                than any individual who is a citizen of any possession 
                of the United States and whose bona fide residence is 
                outside of the United States). The Secretary is 
                authorized to verify an individual's eligibility to 
                receive a carbon dividend payment.
                    ``(D) Fee treatment of payments.--Amounts paid 
                under this subsection shall be includible in gross 
                income.
                    ``(E) Federal programs and federal assisted 
                programs.--The carbon dividend amount received by any 
                individual shall not be taken into account as income 
                and shall not be taken into account as resources for 
                purposes of determining the eligibility of such 
                individual or any other individual for benefits or 
                assistance, or the amount or extent of benefits or 
                assistance, under any Federal program or under any 
                State or local program financed in whole or in part 
                with Federal funds.
                    ``(F) Advance payment.--The Secretary shall 
                transfer to the Carbon Dividend Trust Fund such amounts 
                as are necessary for the disbursement of an advanced 
                carbon dividend to all eligible individuals as follows:
                            ``(i) An advanced carbon dividend shall be 
                        the same as the anticipated first carbon 
                        dividend required to be distributed under 
                        subparagraph (A) and shall be distributed the 
                        month prior to the first collection of the 
                        carbon fee.
                            ``(ii) Total amounts disbursed as advanced 
                        carbon dividends shall be deducted from the 
                        carbon dividends on a pro-rata basis over the 
                        first 3 years after the disbursement of the 
                        first carbon dividends.
    ``(d) Administrative Authority.--The Secretary shall promulgate 
rules, guidance, and regulations useful and necessary to implement the 
Carbon Dividend Trust Fund.
    ``(e) Assignment of Benefits.--The right of any person to any 
future payment under this chapter shall not be transferable or 
assignable, at law or in equity, and none of the moneys paid or payable 
or rights existing under subsection (c)(3) shall be subject to 
execution, levy, attachment, garnishment, or other legal process, or to 
the operation of any bankruptcy or insolvency law.''.
    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 98 of such Code is amended by adding at the end the following 
new item:

``Sec. 9512. Carbon Dividend Trust Fund.''.

SEC. 5. LIMITED DISCLOSURE OF INFORMATION.

    Section 6103(l) of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new paragraphs:
            ``(23) Limited disclosure of identity information relating 
        to carbon dividend payments.--
                    ``(A) Department of treasury.--Individual identity 
                information shall, without written request, be open to 
                inspection by or disclosure to officers and employees 
                of the Department of the Treasury whose official duties 
                require such inspection or disclosure for purposes of 
                administering section 9512 (relating the Carbon 
                Dividend Trust Fund).
                    ``(B) Commissioner of social security.--The 
                Commissioner of Social Security shall, on written 
                request, disclose to officers and employees of the 
                Department of the Treasury individual identity 
                information which has been disclosed to the Social 
                Security Administration as is necessary to administer 
                section 9512.
                    ``(C) Restriction on disclosure.--Information 
                disclosed under this paragraph shall be disclosed only 
                for purposes of, and to the extent necessary in, 
                carrying out section 9512.''.

SEC. 6. NATIONAL ACADEMY OF SCIENCES REVIEW OF CARBON FEE AND EMISSIONS 
              REDUCTION SCHEDULE.

    (a) In General.--Not later than 5 years after the date of the 
enactment of this Act, the Secretary of Energy shall enter into an 
agreement with the National Academy of Sciences to prepare a report 
relating to the carbon fee imposed by section 9902 of the Internal 
Revenue Code of 1986 and the emissions reductions schedule established 
under section 9903 of such Code.
    (b) Report Requirements.--Such report shall--
            (1) assess the efficiency and effectiveness of the carbon 
        fee in achieving the emissions reduction targets set forth in 
        section 9903 of such Code;
            (2) describe and make recommendations on whether the carbon 
        fee rate and annual increases prescribed by section 9902(c) of 
        such Code should be adjusted in order to optimize the 
        efficiency and effectiveness of this Act in achieving the 
        emissions reduction targets set forth in section 9903 of such 
        Code;
            (3) describe the potential of the carbon fee to achieve 
        future emissions targets set forth in section 9903(a) of such 
        Code through the year 2050;
            (4) describe and evaluate the effectiveness of the carbon 
        fee in reducing emissions from key sectors of the economy, 
        including sectors of the economy that have decreased their 
        carbon emissions, sectors of the economy that have increased 
        their carbon emissions, and sectors of the economy in which 
        carbon emissions have not changed;
            (5) make findings and recommendations to Federal 
        departments and agencies and to Congress on actions that could 
        be taken to reduce carbon emissions in the sectors of the 
        economy in which carbon emissions have not decreased;
            (6) make findings and recommendations on adjusting 
        regulations enacted under the Clean Air Act and other Federal 
        laws that affect economic sectors achieving the emissions 
        reduction targets set forth in section 9903 of such Code; and
            (7) provide an assessment of any other factors determined 
        to be material to the program's efficiency and effectiveness in 
        achieving the goals set forth in this Act.
    (c) Report Made Publicly Available.--Not later than one year after 
the review in subsection (a) has commenced, the Secretary of Energy 
shall submit to Congress the report required under subsection (a). Such 
report shall be made electronically available to the public and open to 
public comment for at least 60 days before the final submission to 
Congress.

SEC. 7. IMPACT OF CARBON FEE ON BIOMASS USE AND CARBON SINKS.

    (a) Study of Biomass.--The Secretary of Energy shall enter into an 
agreement with the National Academy of Sciences and the Administrator 
of the Environmental Protection Agency to conduct a study, make 
recommendations, and submit a report regarding the impact of the carbon 
fee on the use of biomass as an energy source and the resulting impacts 
on carbon sinks and biodiversity.
    (b) Study Requirements.--The study conducted under subsection (a) 
by the National Academy of Sciences shall include analysis, 
documentation, and determinations on--
            (1) the carbon fee and its impact on the use of biomass as 
        an energy source and greenhouse gas emissions from the use of 
        biomass as an energy source;
            (2) the impacts of the use of biomass as an energy source 
        on carbon sinks and biodiversity; and
            (3) the various types of biomass that are being used as an 
        energy source.
    (c) Recommendations.--Based on the findings and conclusions of the 
study, the National Academy of Sciences shall make recommendations to 
Federal departments and agencies and to Congress. The recommendations 
shall include any actions that should be taken to mitigate impacts of 
the carbon fee on--
            (1) increasing greenhouse gas emissions from the use of 
        biomass as an energy source; and
            (2) degradation of carbon sinks and biodiversity relating 
        to the use of biomass as an energy source.
    (d) Report.--The National Academy of Sciences shall prepare a 
report that includes any findings and recommendations made pursuant to 
this section and, not later than 18 months after the date of the 
enactment of this Act, make such report electronically available to the 
public.

SEC. 8. EFFECTIVE DATE.

    The amendments made by this Act shall take effect on the date of 
the enactment of this Act, except the carbon fee under section 9902 of 
the Internal Revenue Code of 1986 shall apply to uses, sales, or 
transfers no more than 270 days after the date of the enactment of this 
Act.

SEC. 9. PRINCIPLE OF INTERPRETATION.

    In the case of ambiguity, the texts of this statute and its 
amending texts shall be interpreted so as to allow for the most 
effective abatement of greenhouse gas emissions.

SEC. 10. NO PREEMPTION OF STATE LAW.

    (a) In General.--Nothing in this Act shall preempt or supersede, or 
be interpreted to preempt or supersede, any State law or regulation.
    (b) No Preemption of State Common Law or Statutory Causes of 
Action.--Noting in this Act, nor any standard, rule, requirement, risk 
evaluation, or assessment created or implemented pursuant to this Act, 
shall be construed to preempt any State common law or State statutory 
law creating a remedy for civil relief.
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