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If you haven’t already, get to know the “border adjustment.”
While climate policy has become increasingly partisan, there also exists a strange, improbably robust bipartisan coalition raising support for something like a carbon tax.
There are lots of different bills and approaches floating out there, but the most popular is the “border adjustment” tax, basically an emissions-based tariff, which, as a concept, is uniquely suited to resolve two brewing trade issues. One is the European Union’s Carbon Border Adjustment Mechanism, which will force essentially everybody else to play by its carbon pricing system. Then there’s the fact that China powers its world-beating export machine with coal, plugged into an electrical grid that is far dirtier than America’s.
For Republicans, some kind of tax on imports would be a way of leveling the playing field in the face of what are, to their minds, punitive environmental restrictions on American energy producers and manufacturers. For Democrats, a border adjustment could be appealing both as a way to favor American manufacturing and as a way of encouraging other countries to clean up their grids.
There are currently two carbon border adjustment bills bouncing around the Senate, one introduced by Louisiana Republican Bill Cassidy — whose record on climate is far friendlier than many of his GOP colleagues’ — and the other by Rhode Island Democrat Sheldon Whitehouse, one of the most active and vocal Democratic senators on environmental issues.
In a hearing on the challenge of load growth before the Senate Committee on Energy and Natural Resources, Cassidy raised the issue of China’s energy mix, arguing that coal plants on the country’s Pacific coast mean at more pollutants in the United States.
“To the degree that our energy policy increases the cost of energy, and therefore encourages someone to move to China, we are actually worsening global greenhouse gas emissions because we’re increasing consumption of Chinese coal-fired electricity as opposed to clean-burning U.S. electricity,” Cassidy said during the hearing.
“Right on, brother,” the committee’s chair, Democrat Joe Manchin, responded.
Cassidy and Manchin both represent states that are major fossil fuel producers and are no one’s ideas of climate hawks — although they both support some version of permitting reform and Manchin’s was a crucial vote to pass the Inflation Reduction Act — they nevertheless represent two pillars of the idiosyncratic alliance that could get a border adjustment tax over the line. Add in Democratic climate hawks who are also interested in permitting reform such as Whitehouse and California Representative Scott Peters and Republicans who are, in their own way, open to some kind of climate change policy, including Cassidy and Alaska Senator Lisa Murkowski, and this thing starts to look possible.
The first step would be devising a way to calculate how clean the U.S. electricity system is compared to the rest of the world — and lo, there’s a bill for that too: the PROVE IT Act, which passed out of the Senate’s Energy and Natural Resources Committee in January.
That bill, introduced by Delaware Democrat Chris Coons and North Dakota Republican Kevin Cramer, would mandate the Department of Energy measure and report the emissions intensity for 17 categories of products (including fossil fuels) in the United States and a host of other countries. The intent of the bill is to demonstrate that, in many cases, U.S. manufacturing is cleaner than many other countries’, especially China, at least when it comes to greenhouse gas emissions.
The bill managed to win not just from Senators on both sides of the aisle, but also from industry groups that are often somewhere from skeptical to outright opposed to emissions restrictions. These include the American Petroleum Institute and the U.S. Chamber of Commerce. (The American Petroleum Institute is even gathering up a list of House Republicans who could support a version of the bill in that chamber, reported E&E News.) The bill has also been endorsed by a host of more centrist and right-leaning climate and environmental groups, including the Climate Leadership Council and Third Way, a moderate Democratic group.
Armed with the data from the PROVE IT Act, explained the Bipartisan Policy Center's Xan Fishman, the U.S. would be “able to use that in trade negotiations, or with a new border carbon policy.”
The time for the PROVE IT Act and then a border adjustment bill may be this year, Fishman told me, citing bipartisan support for the idea — or else sometime next year, when many of the Trump tax cuts expire, setting off a scramble for revenue to pay for extending popular tax breaks.
“When you have a big giant tax bill where you’re extending or creating new tax credits and you’re looking for revenue to offset that,” Fishman said, suddenly a border adjustment could look pretty handy.
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“We had enough assurance that the president was going to deal with them.”
A member of the House Freedom Caucus said Wednesday that he voted to advance President Trump’s “big, beautiful bill” after receiving assurances that Trump would “deal” with the Inflation Reduction Act’s clean energy tax credits – raising the specter that Trump could try to go further than the megabill to stop usage of the credits.
Representative Ralph Norman, a Republican of North Carolina, said that while IRA tax credits were once a sticking point for him, after meeting with Trump “we had enough assurance that the president was going to deal with them in his own way,” he told Eric Garcia, the Washington bureau chief of The Independent. Norman specifically cited tax credits for wind and solar energy projects, which the Senate version would phase out more slowly than House Republicans had wanted.
It’s not entirely clear what the president could do to unilaterally “deal with” tax credits already codified into law. Norman declined to answer direct questions from reporters about whether GOP holdouts like himself were seeking an executive order on the matter. But another Republican holdout on the bill, Representative Chip Roy of Texas, told reporters Wednesday that his vote was also conditional on blocking IRA “subsidies.”
“If the subsidies will flow, we’re not gonna be able to get there. If the subsidies are not gonna flow, then there might be a path," he said, according to Jake Sherman of Punchbowl News.
As of publication, Roy has still not voted on the rule that would allow the bill to proceed to the floor — one of only eight Republicans yet to formally weigh in. House Speaker Mike Johnson says he’ll, “keep the vote open for as long as it takes,” as President Trump aims to sign the giant tax package by the July 4th holiday. Norman voted to let the bill proceed to debate, and will reportedly now vote yes on it too.
Earlier Wednesday, Norman said he was “getting a handle on” whether his various misgivings could be handled by Trump via executive orders or through promises of future legislation. According to CNN, the congressman later said, “We got clarification on what’s going to be enforced. We got clarification on how the IRAs were going to be dealt with. We got clarification on the tax cuts — and still we’ll be meeting tomorrow on the specifics of it.”
Neither Norman nor Roy’s press offices responded to a request for comment.
The state’s senior senator, Thom Tillis, has been vocal about the need to maintain clean energy tax credits.
The majority of voters in North Carolina want Congress to leave the Inflation Reduction Act well enough alone, a new poll from Data for Progress finds.
The survey, which asked North Carolina voters specifically about the clean energy and climate provisions in the bill, presented respondents with a choice between two statements: “The IRA should be repealed by Congress” and “The IRA should be kept in place by Congress.” (“Don’t know” was also an option.)
The responses from voters broke down predictably along party lines, with 71% of Democrats preferring to keep the IRA in place compared to just 31% of Republicans, with half of independent voters in favor of keeping the climate law. Overall, half of North Carolina voters surveyed wanted the IRA to stick around, compared to 37% who’d rather see it go — a significant spread for a state that, prior to the passage of the climate law, was home to little in the way of clean energy development.
But North Carolina now has a lot to lose with the potential repeal of the Inflation Reduction Act, as my colleague Emily Pontecorvo has pointed out. The IRA brought more than 17,000 jobs to the state, per Climate Power, along with $20 billion in investment spread out over 34 clean energy projects. Electric vehicle and charging manufacturers in particular have flocked to the state, with Toyota investing $13.9 billion in its Liberty EV battery manufacturing facility, which opened this past April.
North Carolina Senator Thom Tillis was one of the four co-authors of a letter sent to Majority Leader John Thune in April advocating for the preservation of the law. Together, they wrote that gutting the IRA’s tax credits “would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy.” It seems that the majority of North Carolina voters are aligned with their senator — which is lucky for him, as he’s up for reelection in 2026.
SpaceX has also now been dragged into the fight.
The value of Tesla shares went into freefall Thursday as its chief executive Elon Musk traded insults with President Donald Trump. The war of tweets (and Truths) began with Musk’s criticism of the budget reconciliation bill passed by the House of Representatives and has escalated to Musk accusing Trump of being “in the Epstein files,” a reference to the well-connected financier Jeffrey Epstein, who died in federal detention in 2019 while awaiting trial on sex trafficking charges.
The conflict had been escalating steadily in the week since Musk formally departed the Trump administration with what was essentially a goodbye party in the Oval Office, during which Musk was given a “key” to the White House.
Musk has since criticized the reconciliation bill for not cutting spending enough, and for slashing credits for electric vehicles and renewable energy while not touching subsidies for oil and gas. “Keep the EV/solar incentive cuts in the bill, even though no oil & gas subsidies are touched (very unfair!!), but ditch the MOUNTAIN of DISGUSTING PORK in the bill,” Musk wrote on X Thursday afternoon. He later posted a poll asking “Is it time to create a new political party in America that actually represents the 80% in the middle?”
Tesla shares were down around 5% early in the day but recovered somewhat by noon, only to nosedive again when Trump criticized Musk during a media availability. The shares had fallen a total of 14% from the previous day’s close by the end of trading on Thursday, evaporating some $150 billion worth of Tesla’s market capitalization.
As Musk has criticized Trump’s bill, Trump and his allies have accused him of being sore over the removal of tax credits for the purchase of electric vehicles. On Tuesday, Speaker of the House Mike Johnson described Musk’s criticism of the bill as “very disappointing,” and said the electric vehicle policies were “very important to him.”
“I know that has an effect on his business, and I lament that,” Johnson said.
Trump echoed that criticism Thursday afternoon on Truth Social, writing, “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” He added, “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!”
“In light of the President’s statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately,” Musk replied, referring to the vehicles NASA uses to ferry personnel and supplies to and from the International Space Station.