“To amend the Internal Revenue Code of 1986 to establish a methane border adjustment mechanism.”
No CRS summary available for this bill.
This section states congressional findings on methane as a greenhouse gas with 80 times the warming power of carbon dioxide over a 20-year horizon that has contributed at least 25% to global temperature rise since the industrial revolution, a contributor to ground-level ozone and particulate pollution causing cardiovascular and lung diseases, and a threat to human, animal, and plant life and health. The section further finds that a methane border adjustment mechanism (MBAM) conserves exhaustible natural resources by preventing emissions in conjunction with regulations and charges under section 136 of the Clean Air Act (42 U.S.C. 7436); that cost-effective methane reduction methods such as MBAMs are ready for implementation with minimal fossil fuel price impact but significant emissions reductions; and that partnering with major oil- and gas-importing countries and the European Union can strengthen markets for clean U.S. gas exports while encouraging global methane reductions.
This section establishes a methane border adjustment mechanism by adding new IRC §4691, which imposes a tax on methane adjustment substances (i.e., petroleum and natural gas) sold or used by the importer thereof. The tax equals the imported substance's proportionate share (by volume, or by energy content for natural gas) of the foreign country's total methane emissions charge—defined as the amount that would be imposed under CAA §136 (42 U.S.C. 7436) on that country's facilities if they were in the U.S. and without certain reporting thresholds. (Thus, the tax effectively adjusts for foreign methane emissions from oil and gas systems, mirroring the domestic waste emissions charge under CAA §136.) This section further (1) authorizes the Secretary of the Treasury to recommend additional substances (e.g., those using oil/gas as feedstock with high embodied methane) every two years after enactment, following consultations and economic analyses; (2) requires tax estimates using public data and facilitates an international body for emissions tracking standards (updated every two years); (3) provides an alternative supply-chain-based tax for qualifying imports with verified low-emissions data from C-TPAT partner countries; and (4) directs the Secretary to encourage the 10 largest oil/gas-importing countries without such mechanisms to adopt them.