Title: Energy Innovation and Carbon Dividend Act of 2018
Policy area: Taxation

Summary:
Energy Innovation and Carbon Dividend Act of 2018
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 in 2019, increases by $10 each year, and is subject to further adjustments based on the progress in meeting specified emissions reduction targets. The bill also imposes a specified fee on fluorinated greenhouse gases.
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.
The Environmental Protection Agency (EPA) must evaluate the effectiveness of the fees at reducing emissions. If the targets specified in this bill have been met or exceeded, the EPA may review certain regulations related to the fuels and fluorinated greenhouse gases on which the fees have been imposed.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3791 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  2d Session
                                S. 3791

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.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 19, 2018

 Mr. Coons (for himself and Mr. Flake) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To create a Carbon Dividend Trust Fund for the American people in order 
to encourage market-driven innovation of clean energy technologies and 
  market efficiencies which will reduce harmful pollution and leave a 
     healthier, more stable, and more prosperous nation for future 
                              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 2018''.

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.

    (a) In General.--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. Fee on fluorinated greenhouse gases.
``Sec. 9905. Decommissioning of carbon fee.
``Sec. 9906. Carbon capture and sequestration.
``Sec. 9907. 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) 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
            ``(2) 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.
    ``(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 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,
            ``(4) in the case of fluorinated gases any entity required 
        to report the emission of a fluorinated gas under part 98 of 
        title 40, Code of Federal Regulations, and
            ``(5) 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, 
        the fluorinated greenhouse gas 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) Fluorinated Greenhouse Gas.--The term `fluorinated greenhouse 
gas' means sulfur hexafluoride (SF<INF>6</INF>), nitrogen trifluoride 
(NF<INF>3</INF>), and any fluorocarbon except for controlled substances 
as defined in subpart A of part 82 of title 40, Code of Federal 
Regulations, and substances with vapor pressures of less than 1 mm of 
Hg absolute at 25 degrees. With these exceptions, `fluorinated 
greenhouse gas' includes but is not limited to any hydrofluorocarbon, 
any perfluorocarbon, any fully fluorinated linear, branched or cyclic 
alkane, ether, tertiary amine or aminoether, any perfluoropolyether, 
and any hydrofluoropolyether.
    ``(k) Fossil Fuel.--The term `fossil fuel' means coal, coal 
products, petroleum, petroleum products, or natural gas.
    ``(l) 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.
    ``(m) 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.
    ``(n) 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), sulfur hexafluoride (SF<INF>6</INF>), 
hydrofluorocarbons (HFCs), perfluorocarbon (PFCs), and other gases as 
defined by rule of the Administrator.
    ``(o) Greenhouse Gas Content.--The term `greenhouse gas content' 
means the amount of greenhouse gases, 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.
    ``(p) 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.
    ``(q) 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.
    ``(r) Petroleum.--The term `petroleum' means oil removed from the 
earth or the oil derived from tar sands or shale.
    ``(s) 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.
    ``(t) 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 2019, $15, and
                    ``(B) except as provided in paragraph (2), in the 
                case of any calendar year thereafter, the carbon fee 
                rate in effect under this subsection for the preceding 
                calendar year, plus $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 9903(b) that the actual emissions of 
                greenhouse gases from covered fuels exceeded the 
                emissions reduction target for the previous year, 
                paragraph (1)(B) shall be applied by substituting `$15' 
                for `$10'.
                    ``(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 2015, paragraph 
                (1)(B) shall be applied by substituting `$0' for `$10'.
    ``(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) Agriculture Exemptions.--
            ``(1) 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, as specified by rule of 
        the Secretary.
            ``(2) 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).
            ``(3) 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.

``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 greenhouse gas emissions from 
        covered fuels during the year 2015 shall be the reference 
        amount of emissions and shall be determined from the `Inventory 
        of U.S. Greenhouse Gas Emissions and Sinks: 1990-2015' 
        published by the Environmental Protection Agency in April of 
        2017.
            ``(2) Emissions reduction target.--The first emission 
        reduction target shall be for the year 2022. 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
----------------------------------------------------------------------------------------------------------------
2015                                                  Reference year
----------------------------------------------------------------------------------------------------------------
2018 to 2021                                          No emissions reduction target
----------------------------------------------------------------------------------------------------------------
2022 to 2030                                          5 percent of 2015 emissions per year
----------------------------------------------------------------------------------------------------------------
2030 to 2040                                          2.5 percent of 2015 emissions per year
----------------------------------------------------------------------------------------------------------------
2040 to 2050                                          1.5 percent of 2015 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 greenhouse gas accounting method as was used to determine the 
greenhouse gas emissions in the `Inventory of U.S. Greenhouse Gas 
Emissions and Sinks: 1990-2015' published by the Environmental 
Protection Agency in April of 2017.

``SEC. 9904. FEE ON FLUORINATED GREENHOUSE GASES.

    ``(a) Fluorinated Gas Fee.--A fee is hereby imposed upon any 
fluorinated greenhouse gas which is required to be reported under part 
98 of title 40, Code of Federal Regulations.
    ``(b) Amount.--The fee to be paid by the covered entity required to 
so report shall be an amount equal to--
            ``(1) the total amount, in metric tons of CO<INF>2</INF>-e, 
        of emitted fluorinated greenhouse gases (or, in the case of a 
        supplier, emissions that would result determined under the 
        rules of such part), multiplied by
            ``(2) an amount equal to 10 percent of the carbon fee rate 
        in effect under section 9902(d)(1) for the calendar year of 
        such emission.

``SEC. 9905. 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 from covered 
        fuels during the year 2015, 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 all bureaus and 
programs associated with 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 
2018, 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 2017' for `calendar year 2016' in subparagraph 
        (A)(ii) thereof.

``SEC. 9906. 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.
    ``(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 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 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(b).
                            ``(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 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 
                remove that qualified 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. 9907. 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 and the fluorinated 
greenhouse gas fee imposed by section 9904.
    ``(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 or 
        fluorinated greenhouse gas for collecting such carbon fee or 
        fluorinated greenhouse gas 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 or 
        fluorinated greenhouse gases have the carbon fee or fluorinated 
        greenhouse gas fee levied upon them,
            ``(2) the identification of covered entities which shall be 
        liable for the payment of the carbon fee or the fluorinated 
        greenhouse gas 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 or fluorinated 
        greenhouse gas has the carbon fee, fluorinated greenhouse gas 
        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 and the fluorinated greenhouse gas 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. 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) 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 excess (if any) of--
            ``(1) an amount equal to--
                    ``(A) the amount of full fuel cycle greenhouse gas 
                emissions of such fuel, multiplied by
                    ``(B) the carbon fee rate in effect for the year in 
                which such fuel is imported, over
            ``(2) the total foreign cost of carbon carried by such 
        fuel.
    ``(d) Imported Carbon-Intensive Products Fee.--In the case of any 
person that imports into the United States any carbon-intensive 
products, there shall be imposed a fee equal to the excess (if any) 
of--
            ``(1) an amount equal to--
                    ``(A) production greenhouse gas emissions of such 
                product, multiplied by
                    ``(B) the carbon fee rate in effect for the year in 
                which the production greenhouse gas emissions of such 
                product were emitted into the atmosphere, over
            ``(2) the total foreign cost of carbon carried by such 
        product.
    ``(e) Refund on Exports From United States.--
            ``(1) 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 excess (if any) of--
                    ``(A) an amount equal to--
                            ``(i) the production greenhouse gas 
                        emissions of the exported carbon-intensive 
                        product, multiplied by
                            ``(ii) the carbon fee rate during the year 
                        in which the carbon fee or fluorinated 
                        greenhouse gas fee was paid upon the production 
                        greenhouse gas emissions of the exported 
                        carbon-intensive product, over
                    ``(B) any total cost of carbon to be levied upon 
                the carbon-intensive product by any jurisdiction to 
                which the carbon-intensive product is to be imported.
        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. The Secretary shall 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.
            ``(2) 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 excess (if any) of--
                    ``(A) an amount equal to--
                            ``(i) the full fuel cycle greenhouse gas 
                        emissions of the covered fuel, multiplied by
                            ``(ii) the carbon fee rate at the time the 
                        carbon fee was paid upon the full fuel cycle 
                        greenhouse gas emissions of the exported 
                        covered fuel, over
                    ``(B) any total cost of carbon to be levied upon 
                the covered fuel by a jurisdiction to which the carbon-
                intensive product is to be imported.
        Any such credit or refund shall be allowed in the same manner 
        as if it were an overpayment of tax imposed by section 9902.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Foreign cost of carbon; foreign carbon costs.--The 
        term `foreign cost of carbon' or `foreign carbon cost' means 
        the cost of any laws of a foreign jurisdiction which impose a 
        system of cap-and-trade with respect to, or a tax or fee on, 
        greenhouse gas. Such cost shall be determined and expressed as 
        a price per ton of CO2-e.
            ``(2) Total cost of carbon carried.--The term `total cost 
        of carbon carried' means an amount equal to--
                    ``(A) the production greenhouse gas emissions of a 
                carbon-intensive product or the full fuel cycle 
                greenhouse gas emissions of a covered fuel, multiplied 
                by
                    ``(B) the cost of carbon with respect to such 
                product or fuel, reduced by any amount refunded with 
                respect to such product or fuel by a foreign 
                jurisdiction.
        The total cost of carbon carried shall be expressed as price in 
        United States dollars.
            ``(3) Total foreign cost of carbon carried.--The term 
        `total foreign cost of carbon carried' means an amount equal 
        to--
                    ``(A) the production greenhouse gas emissions of a 
                carbon-intensive product, or the full fuel cycle 
                greenhouse gas emissions of a covered fuel, multiplied 
                by
                    ``(B) the foreign cost of carbon with respect to 
                such product or fuel, reduced by the amount refunded 
                with respect to such product or fuel by a foreign 
                jurisdiction.
        The total foreign cost of carbon carried shall be expressed as 
        price in United States dollars.

``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 determining the production greenhouse gas 
emissions of an imported carbon-intensive product, the upstream 
greenhouse gas emissions of an imported covered fuel, the full fuel 
cycle greenhouse gas emissions of an imported covered fuel, or the 
foreign cost of carbon, or otherwise administering the carbon border 
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 determining the production greenhouse gas 
emissions of an imported carbon-intensive product, the upstream 
greenhouse gas emissions of an imported covered fuel, the full fuel 
cycle greenhouse gas emissions of an imported covered fuel, or the 
foreign cost of carbon, the Secretary shall use reliable methodologies, 
which--
            ``(1) as may be necessary or convenient--
                    ``(A) distinguish between different types of 
                covered fuels,
                    ``(B) distinguish between a covered fuel's 
                greenhouse gas content and that covered fuel's upstream 
                greenhouse gas emissions,
                    ``(C) distinguish between the different types of 
                greenhouse gas emissions which compose a covered fuel's 
                upstream greenhouse gas emissions or greenhouse gas 
                content, as well as the various processes which 
                produced those emissions, and
                    ``(D) distinguish between the different types of 
                greenhouse gas emissions which compose a carbon-
                intensive product's production greenhouse gas 
                emissions, as well as the various processes which 
                produced those emissions,
            ``(2) ensure that no covered fuel, covered fluorinated 
        greenhouse gas, or carbon-intensive product has the carbon fee, 
        the fluorinated greenhouse gas fee, or the border fee 
        adjustment imposed upon it more than once,
            ``(3) ensure that the implementation of the border carbon 
        adjustment aligns with the carbon fee and the fluorinated gas 
        fee,
            ``(4) in the case of incomplete data, rely upon the best 
        available methodologies for interpolating data gaps, and
            ``(5) are consistent with international treaties and 
        agreements.
    ``(d) Schedule.--The Secretary shall determine--
            ``(1) not later than 3 years after the date of the 
        enactment of this section, the production greenhouse gas 
        emissions of imported carbon-intensive products,
            ``(2) not later than 180 days after the date of the 
        enactment of this section, the full fuel cycle greenhouse gas 
        emissions and the upstream greenhouse gas emissions of every 
        imported covered fuel, and
            ``(3) not later than 3 years after the date of the 
        enactment of this section, the foreign cost of carbon in all 
        jurisdictions.
    ``(e) Procedure.--The Secretary shall 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 the 
production greenhouse gas emissions, full fuel cycle greenhouse gas 
emissions, or upstream greenhouse gas emissions of that importer's 
imported covered fuel or imported carbon-intensive product, or the 
foreign cost of carbon carried by that importer's imported carbon-
intensive product.
    ``(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, Samoa, Puerto Rico, 
and the Northern Mariana Islands shall be eligible for a refund of the 
carbon fee under section 9908(e).
    ``(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, Samoa, Puerto Rico, and the Northern Mariana Islands shall not 
be subject to Section 9908(c) or 9908(d).

``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 2018 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 Department of Treasury, in such amounts as are 
        necessary to allow refunds under section 9908(e) to exporters 
        of carbon-intensive products and exporters of covered fuels.''.
    (b) Coordination With Carbon Oxide Sequestration Credit.--Section 
45Q(f) is amended by adding at the end the following new paragraph:
            ``(8) Coordination with carbon capture and sequestration 
        payments.--No credit shall be allowed under this section to a 
        taxpayer which has received any payment under section 9906.''.
    (c) Treaties and International Negotiations.--
            (1) 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 
        chapter 102 of the Internal Revenue Code of 1986 to violate any 
        treaty to which the United States is a party, the Secretary of 
        the Treasury is authorized to alter any aspect of such carbon 
        border fee adjustment so as to bring the carbon border fee 
        adjustment into conformance with international law.
            (2) 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 10 percent of 2015 levels by 
        2050 and which respect the principle of common but 
        differentiated responsibilities and respective capabilities.
            (3) Suspension of the carbon border fee adjustment.--Any 
        part of the carbon border fee adjustment shall be suspended, in 
        whole or in part--
                    (A) by treaty or other international agreement 
                which includes provisions for the suspension of the 
                carbon border fee adjustment, in whole or in part, with 
                any party signatory to the treaty or other 
                international agreement, or
                    (B) by a finding of the Secretary that a 
                jurisdiction of importation has implemented policies 
                which, in the case of high emitting countries, reduce 
                greenhouse gas emissions at a rate at least equivalent 
                to United States greenhouse gas emission reductions, 
                or, in the case of low emitting countries, prevent the 
                increase in greenhouse gas emissions.
        Any such finding shall be reviewed at least every 3 years and 
        amended or revoked as required.

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 9906 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 more than 270 days after 
                the date of the enactment of the Energy Innovation and 
                Carbon Dividend Act of 2018, 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.''.
    (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 10 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 reduction 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 reduction 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 (42 U.S.C. 7401 et 
        seq.) 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 efficiency and effectiveness of the 
        carbon fee in achieving the goals set forth in this Act.
    (c) Report Made Publicly Available.--Not later than 10 years after 
the date of the enactment of this Act, 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 to conduct a study, 
make recommendations, and submit a report regarding the impact of the 
carbon fee imposed by section 9902 of the Internal Revenue Code of 1986 
on the use of biomass as an energy source and the resulting impacts on 
carbon sinks.
    (b) Study Requirements.--The study conducted under subsection (a) 
by the National Academy of Sciences shall include analysis, 
documentation, and determinations on--
            (1) the impact of the carbon fee on--
                    (A) the use of biomass as an energy source; and
                    (B) 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
            (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 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. ENVIRONMENTAL PROTECTION AGENCY REVIEW.

    (a) In General.--Not earlier than the date that is 6 years after 
the date of enactment of this Act, the Administrator of the 
Environmental Protection Agency (referred to in this section as the 
``Administrator'') shall evaluate the effectiveness of the fees imposed 
by sections 9902, 9904, and 9908 of the Internal Revenue Code of 1986 
at reducing emissions in accordance with the emissions reduction 
schedule set forth in section 9903 of such Code.
    (b) Review of Regulations.--
            (1) In general.--If the Administrator determines that the 
        fees imposed by sections 9902, 9904, and 9908 of the Internal 
        Revenue Code of 1986 are effectively reducing emissions, such 
        that the emissions reduction schedule set forth in section 9903 
        of such Code is met or exceeded, the Administrator may--
                    (A) review any regulations imposed on the 
                combustion of any covered fuel on which a fee is also 
                imposed by section 9902 or 9908 of the Internal Revenue 
                Code of 1986; and
                    (B) review any regulations imposed on any 
                fluorinated greenhouse gas on which a fee is also 
                imposed by section 9904 of the Internal Revenue Code of 
                1986.
            (2) Limitation.--The Administrator shall not review under 
        this subsection any regulation imposed--
                    (A) on a pollutant that is not a greenhouse gas; or
                    (B) that is imposed for the purpose of--
                            (i) protecting public health and welfare;
                            (ii) monitoring, reporting, or 
                        recordkeeping;
                            (iii) conducting or supporting 
                        investigations; or
                            (iv) information collection.

SEC. 9. 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 more than 270 days after the date of the enactment of this 
Act.

SEC. 10. 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. 11. NO PREEMPTION OF STATE LAW.

    Nothing in this legislation shall preempt or supersede, or be 
interpreted to preempt or supersede, any State law or regulation.
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