Podesta floats idea of carbon pricing on imports

The Biden administration is considering levying a tax on imports based on their carbon emissions, according to senior climate envoy John Podesta — a notable shift in policy as the White House looks to be hawkish on China while lowering emissions.

Podesta said in an interview with the Financial Times that the United States is focused on fighting “freeriding” of carbon-intensive imports from foreign nations.

“The global trading system doesn’t properly take into account the embodied carbon in tradable goods,” he said. “So we’re undertaking a review of that, trying to deepen the data that we are going to need to implement a policy framework for that.”

In April, Podesta announced the Biden administration would create a climate and trade task force focusing on addressing carbon leakage, dumping, and embodied carbon — or emissions released from the production of a material. The task force would also collect data to implement suggested policies.

The Biden administration has not made it clear whether it would consider a federal carbon system, a mechanism that has been implemented in other developed nations and China. But Podesta’s latest comments detail that the White House is indeed focusing on carbon pricing in the global markets.

There is bipartisan support to compete with China in international trade while lowering emissions. Last year, Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) introduced a bill that would enact a “foreign pollution fee” to target carbon-intensive goods from other countries, namely China. However, the bill received pushback from conservative groups, so much so that Rep. Roger Wicker (R-MS), one of the original sponsors, pulled his support for the bill.

The bill, however, does not implement domestic carbon pricing.

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The European Union has launched its own carbon border adjustment mechanism. Beginning in 2026, the bloc will enact a tax on a number of goods related to their “embodied” carbon emissions. This creates an incentive for other countries to introduce their own methods of carbon pricing. China also has its own system for pricing carbon.

While some states, such as California, have introduced their own individual carbon trading schemes, Podesta did not say whether the U.S. would enact federal carbon pricing and instead focused on the need for carbon pricing in the global markets.