“A bill to amend the Internal Revenue Code of 1986 to establish a carbon fee to reduce greenhouse gas emissions, and for other purposes.”
No CRS summary available for this bill.
This section establishes an independent agency in the executive branch, the Climate Change Finance Corporation (C2FC), to finance clean energy and climate change resiliency activities. The C2FC's mission is to combat climate change by reducing U.S. reliance on fossil fuels, cutting greenhouse gas emissions, and building resilience to climate impacts, with activities including financing low- and zero-emissions energy technologies, climate-resilient infrastructure, research and commercialization of climate-smart technologies for industrial decarbonization, high-risk clean energy projects, and initiatives to attract private capital and create jobs in clean transportation, energy, and resiliency. In prioritizing projects, the C2FC must focus on communities disproportionately affected by climate change, overburdened by industrial pollution, or historically dependent on carbon-intensive industries, and must pursue goals of net greenhouse gas reductions of 45% by 2030 and 100% by 2050 (from 2018 levels). This section vests C2FC management in a seven-member Board of Directors appointed by the President with Senate confirmation, including a Chairperson and Vice Chairperson serving three-year terms; board members, representing diverse interests, serve staggered initial terms of two, four, or six years and one reappointment. (Thus, the board must hold an initial meeting within 30 days of all appointments.) This section requires the board to create and oversee three working groups—an environmental justice working group, a worker and community transition assistance working group, and a research and innovation working group—each chaired by a board member and comprising 10 to 20 diverse experts, community members, and stakeholders who meet at least twice yearly and engage in public outreach to inform C2FC investment decisions.
This section amends chapter 38 of subtitle D of the Internal Revenue Code of 1986 to add a new subchapter E establishing a carbon fee regime that includes (1) definitions of key terms such as covered fuel (i.e., crude oil, natural gas, coal, or derivatives used to emit greenhouse gases), covered entity (i.e., U.S. producers, refiners, and importers of such fuels, plus certain large emitters and others), greenhouse gas content (i.e., metric tons of CO2-e), and noncovered fuel emission (i.e., certain CO2 or methane emissions outside covered fuel combustion); (2) a carbon fee, imposed on covered entities for any use, sale, or transfer of covered fuel during calendar years beginning after December 31, 2026, equal to the fuel's greenhouse gas content multiplied by a rate of $75 per metric ton of CO2-e in 2027, increasing by $10 annually thereafter (e.g., $85 in 2028), subject to inflation adjustment; (3) a fee on noncovered fuel emissions; (4) refunds related to carbon capture, sequestration, and utilization of qualified carbon oxide (as defined in IRC §45Q(c)); and (5) border adjustments applicable to carbon-intensive products (e.g., iron, steel, aluminum, cement).
This section establishes the America’s Clean Future Fund as a trust fund in the Treasury of the United States and appropriates to it amounts equal to fees received under IRC §§ 4692, 4693, and 4695 (less refunds or payments under §§ 4692(d), 4694, and 4695(b) and, for the first 14 fiscal years beginning after September 30, 2027, $100 billion divided by 14 annually). The section directs apportionment of fund amounts each fiscal year as follows: (1) to carbon fee rebates under §5 of the America’s Clean Future Fund Act (and related administrative expenses)—for the first 10 fiscal years beginning after September 30, 2027, 75 percent of fund amounts minus the agricultural amount under (1)(B), and thereafter an applicable percentage starting at 76 percent for the next fiscal year, increasing by 1 percentage point annually for three years, and then 80 percent; and to agricultural decarbonization transition payments under §6 of the Act—for such first 10 fiscal years, 7 percent of the 75-percent amount; (2) to the Climate Change Finance Corporation under §2 of the Act (and related administrative expenses)—for the first 10 fiscal years beginning after the period specified in §2(e), 15 percent, increasing by 1 percentage point annually for four years thereafter to 20 percent; and (3) to transition assistance for impacted communities under §7 of the Act (and related administrative expenses)—10 percent for the first 10 fiscal years beginning after September 30, 2027, decreasing by 2 percentage points annually for the next four years to 0 percent.
This section establishes quarterly carbon fee rebate payments, known as America’s Clean Future Fund Stimulus payments, to eligible individuals (i.e., natural persons age 18 or older with a valid Social Security number or taxpayer identification number whose principal place of abode is in the U.S. for more than half of the most recent taxable year for which a return has been filed) from amounts in the America’s Clean Future Fund beginning after September 30, 2027. The payments equal each eligible individual’s pro-rata share of 25% of amounts apportioned to the fund for the fiscal year, with initial payments for FY2026 and FY2027 funded by appropriation and made during the third quarter of each year; payments phase out (but not below zero) for taxpayers whose modified adjusted gross income exceeds $150,000 ($75,000 for non-joint filers) by 5% of the payment amount for each $1,000 (or fraction thereof) over the threshold. The section further provides that payments are excluded from gross income and disregarded as income or resources for federal, state, or local benefit programs; authorizes Treasury to disclose return information for administration and verify eligibility; directs regulations for distribution (including to non-filers via electronic benefit transfer); and requires a public awareness campaign in coordination with specified agencies and Indian Tribes.
This section establishes an agricultural decarbonization transition payments program under the Secretary of Agriculture to provide payments to eligible producers (i.e., owners, operators, or tenants of eligible land able to adopt qualifying practices) for climate-smart actions that reduce greenhouse gas emissions and facilitate entry into greenhouse gas credit markets. Eligible land includes U.S. land (including territories) and Indian land (as defined in 25 U.S.C. 3501) with a cropping or livestock history in each of the three years preceding payment; qualifying actions are measurable, reportable, and verifiable practices (e.g., those determined by land-grant institutions or involving climate-smart energy); payment rates and durations consider factors such as additionality, early adoption, traditionally underserved status (e.g., socially disadvantaged, veterans new to farming, limited-resource operations), and integration with other programs; and persons violating water or air quality regulations are ineligible. The program is effective for the first 10 fiscal years beginning after September 30, 2026 (i.e., FY2027 through FY2036). This section further directs the Secretary to (1) use an outcomes-based measurement system for greenhouse gas emissions; (2) conduct a nationwide soil health and agricultural greenhouse gas inventory by production type and region, with baselines for carbon drawdown and emissions reductions; and (3) establish and biennially update an accessible database and payment criteria to inform policy and markets.
This section establishes a grant program, administered by the Secretary of Commerce (through the Assistant Secretary of Commerce for Economic Development) in coordination with the Secretary of Labor, to assist eligible entities in communities impacted by economic changes in carbon-intensive industries (including energy communities as defined in IRC §45(b)(11)), climate-related extreme weather events or natural disasters, or harmful residuals from fossil fuel or carbon-intensive industries in transitioning to a low- or zero-greenhouse gas emitting economy. Eligible entities include labor organizations, institutions of higher education, units of state or local government, Indian Tribes, economic development organizations, nonprofits, community-based organizations or intermediaries, and state or local workforce boards serving or located in such communities. Grant funds may be used for (1) economic and workforce development activities (e.g., job creation, reemployment and transition assistance with priority for impacted workers, individuals with barriers to employment, and programs leading to recognized postsecondary credentials; local investment and export promotion; early retirement subsidies); (2) climate change resiliency measures (e.g., flood-proofing infrastructure, stormwater improvements, agricultural and coastal resilience); (3) environmental remediation of abandoned fossil fuel facilities and carbon-intensive residuals (e.g., coal ash cleanup, mine reclamation, well plugging, waterway restoration); or (4) other appropriate activities. Grant recipients must comply with Workforce Innovation and Opportunity Act nondiscrimination and labor standards (29 U.S.C. §§3241, 3248) and pay Davis-Bacon prevailing wages to laborers and mechanics.
This section directs the EPA Administrator to enter into an agreement with the National Academy of Sciences by January 1, 2029, under which the academy conducts a study at least once every five years evaluating the effectiveness of the fees established under IRC §§4692 and 4693 in achieving a 45% net reduction in U.S. greenhouse gas (GHG) emissions by 2030 and a 100% net reduction by 2050 (from 2018 levels). The study must (1) evaluate total annual U.S. GHG emissions (including those not subject to the fees), historic trends in such emissions, and the fees' impacts on fossil fuel-related localized air pollutants in environmental justice communities; (2) analyze GHG emissions reductions from current and potential future policies, including projections from stricter EPA regulations (particularly on emissions not subject to the fees), the fees' current effects and effects of annual increases at or above the current price path, state/local/Tribal/private sector policies, and decarbonization in other major economies; and (3) submit a report to the EPA Administrator, Congress, and the Climate Change Finance Corporation Board of Directors.
This section directs the Chair of the Council on Environmental Quality, in consultation with the Secretaries of Agriculture, Commerce, and the Interior, the Chief of Engineers, and the EPA Administrator, to (1) establish a target for carbon sequestration achievable by enhancing public and private land and water as natural carbon sinks; (2) develop strategies to meet that target; and (3) develop strategies to expand protections for carbon-sequestering ecosystems that provide resiliency benefits (e.g., flood protection, erosion reduction, biodiversity). The Chair must submit a report to Congress as soon as practicable after enactment describing these items and any additional statutory authorities or funding levels needed for implementation.