COP30: Carbon Price Must ‘Build’ Up to Change Behavior, US Senator Says
BELEM, Brazil – Any American carbon border tariff should be based on a carbon price that builds up in order to change corporate behavior, the only federal representative on the ground at COP30 said on Friday.
US Sen. Sheldon Whitehouse (D – RI) said in a press briefing that while he couldn’t comment on specific price points for any U.S. carbon border tariff mechanism as part of ongoing discussions with his Republican counterparts, any carbon price should be strong enough to change behavior for polluting industries.
“One thing we discovered when we were doing our own carbon price [analysis] is that you can actually start the price quite low as long as you’re building towards a future price that is significant because what you’re trying to do is change market behavior and try to change corporate behavior and planning and that takes time to be baked in,” Whitehouse said.
The senator said that his team’s initial analyses and previous proposals had started at a carbon price of $25 per metric ton of carbon, but any price should “ramp up over time so that the market signal that went back to industry would be solid.”
Whitehouse has long proposed a carbon pricing system in the US and previously submitted a bill in 2023 for a carbon border tariff, known as the Clean Competition Act. This would be a system akin to that of the European Union’s climate tariff, also known as the carbon border adjustment mechanism (CBAM).
“American manufacturers doing the right thing on climate are at a disadvantage compared to high-polluting foreign competitors,” Whitehouse said in a statement when he announced the bill. “Our Clean Competition Act would give domestic companies a step up in the global marketplace while lowering carbon emissions at home and abroad, and ultimately, steering the planet toward climate safety.”
Whitehouse has proposed a carbon price as far back as 2015, then called the American Opportunity Carbon Fee Act, that would have imposed a carbon tax of $45 per ton of carbon emitted.
In recent months, however, a carbon border tariff has gained traction even among Republicans. In April, US Senators Bill Cassidy (R – LA) and Lindsey Graham (R – SC) presented the Foreign Pollution Fee Act as an effort to “level the playing field for American manufacturers and workers by holding non-market economies like China accountable for their unfair trade practices.”
The European Commission has touted CBAM as a mechanism to level the playing field for European domestic industry as it would require exporters to the European Union to pay the EU carbon price. The CBAM is scheduled to go live on Jan. 1, 2026, and will cover the aluminum, electricity, iron, steel, cement and fertilizer industries.
European industry has been subject to a carbon price since 2005.
This week, the benchmark EU carbon allowance (EUA) price traded above €80/mt ($92.93) from Tuesday to Thursday, according to OPIS assessments. In order to protect European industry from leaving the EU to establish operations in a country without a carbon price, the EU provides free carbon allowances to hard-to-abate sectors on an annual basis. This, in theory, incentivizes
industries to decarbonize or risk having to purchase EUAs to fulfill compliance obligations.
The CBAM will be phased in gradually and completely by 2034 as free allowances to European domestic industry are phased out simultaneously.
Whitehouse reiterated earlier statements that the CBAM must be preserved, calling it “our last lifeboat” on Friday.
“We’re now down to a pretty narrow path to climate safety and, in fact, there is no other path than to end the ‘free-to-pollute’ business model for the fossil fuel industry,” Whitehouse said Friday. “If you don’t put a price on pollution, you fail. It’s really as simple as that now, there’s no middle ground. So, the CBAM, which is the most significant global price on carbon, is
incredibly important.”
Pennsylvania Withdrawing from RGGI not a ‘Smart Move’
Sub-national carbon markets in the US suffered a loss this week as Pennsylvania democratic lawmakers agreed to stop pursuing joining the Regional Greenhouse Gas Initiative (RGGI), a regional carbon market that is composed of 11 states, including Whitehouse’s home state, in order to pass the state budget.
The vote this week is a result of a four-month impasse between Pennsylvania lawmakers. Democratic Gov. Josh Shapiro signed the bipartisan bill on Wednesday. Previously, former Pennsylvania Gov. Tom Wolf had directed the state’s environmental department in 2019 to join RGGI, but legal challenges prevented the state from joining the country’s oldest cap-and-trade program.
“I don’t think that was a smart move on [Shapiro’s] part,” Whitehouse said. “RGGI is very small just to begin with and our experience in Rhode Island with RGGI is that the money that comes back from it invested in clean energy gives a far greater economic lift than the amount that gets paid into RGGI in the first place.”
Whitehouse said that he hopes Shapiro reconsiders his decision to exit RGGI.
COP30 takes place from Nov. 10 to Nov. 21.
–Reporting by Humberto J. Rocha, hrocha@opisnet.com; Editing by Jeremy Rakes, jrakes@opisnet.com and Mayra Cruz, mcruz@opisnet.com
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