Is the Foreign Pollution Fee Act a Carbon Price?

A national-level carbon price—a tax or cap-and-trade scheme placed on CO2 or other greenhouse gases—may seem distant in the U.S., especially since the Inflation Reduction Act, which included major climate policy, omitted one. However, policymakers on both sides of the aisle have been nibbling around the edges of carbon taxes.

Most recently, Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC) have proposed a fee on some emissions-intensive imports in the Foreign Pollution Fee Act of 2023 (FPFA). While The Wall Street Journal editorial board critiqued the proposal in an editorial titled “Republicans for a Carbon Tax,” and carbon tax advocates have been friendly to the bill, it is not a carbon tax—or even a carbon tariff.

What’s in the Bill?