H.R. 6787

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6787 Introduced in House (IH)]

<DOC>

119th CONGRESS
1st Session
H. R. 6787

To amend the Internal Revenue Code of 1986 to create a carbon border 
adjustment based on carbon intensity, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

December 17, 2025

Ms. DelBene (for herself, Mr. Beyer, Ms. Castor of Florida, Mr. Bera, 
Ms. Chu, and Mr. Panetta) introduced the following bill; which was 
referred to the Committee on Ways and Means, and in addition to the 
Committees on Energy and Commerce, and Foreign Affairs, for a period to 
be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
committee concerned

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to create a carbon border 
adjustment based on carbon intensity, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Clean Competition Act''.

SEC. 2. CARBON INTENSITY CHARGE.

(a) In General.--Chapter 38 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

``Subchapter E--Carbon Intensity Charge

``Sec. 4691. Calculation of carbon intensity.
``Sec. 4692. Imposition of carbon intensity charge.
``Sec. 4693. Rebate.
``Sec. 4694. Carbon clubs.
``Sec. 4695. Definitions.

``SEC. 4691. CALCULATION OF CARBON INTENSITY.

``(a) Domestic Reporting Requirements.--Not later than June 30, 
2026, and annually thereafter, any covered entity shall, for each 
eligible facility operated by such entity, report to the Secretary, the 
Administrator, and the Secretary of Energy with respect to the 
following:
``(1) Any information required to be reported to the 
Administrator under the Greenhouse Gas Reporting Program (as 
would be required to be reported notwithstanding any other 
provision of law prohibiting the implementation of or use of 
funds for such requirements) for the preceding calendar year.
``(2) The total amount of electricity used at such facility 
during the preceding calendar year, including--
``(A) whether such electricity was provided through 
the electric grid or a dedicated generation source,
``(B) the terms of any power purchase agreements 
with respect to such facility, and
``(C) with respect to any electricity which was not 
provided through the electric grid, the greenhouse gas 
emissions associated with the production of such 
electricity, provided that such emissions are not 
reported pursuant to paragraph (1).
``(3) The total relevant quantity of each covered primary 
good produced at such facility during the preceding calendar 
year.
``(4) Any other information determined necessary by the 
Secretary for purposes of the administration of subsection (b).
``(b) Calculation.--
``(1) Carbon intensity.--
``(A) Eligible facility.--For purposes of this 
subchapter, for each calendar year, the carbon 
intensity with respect to any eligible facility shall 
be an amount equal to the quotient of--
``(i) the covered emissions (as determined 
under paragraph (2)) with respect to such 
facility, divided by
``(ii) the total relevant quantity of 
covered primary goods produced at such facility 
during the preceding calendar year.
``(B) Covered national industry.--
``(i) In general.--For purposes of this 
subchapter, the carbon intensity with respect 
to any covered national industry shall be an 
amount (as determined by the Secretary) equal 
to the quotient of--
``(I) an amount equal to the sum of 
the covered emissions (as determined 
under paragraph (2)) with respect to 
all eligible facilities which produce 
covered primary goods which are 
included within such covered national 
industry for the calendar year, divided 
by
``(II) the total relevant quantity 
of covered primary goods within such 
covered national industry which are 
produced at all such eligible 
facilities during such year.
``(ii) Covered primary goods 
determination.--For purposes of this 
subchapter--
``(I) a covered primary good shall 
initially be included within the 
covered national industry with which it 
is associated under the most recent 
concordance table published by the 
Bureau of the Census comparing 
classifications under the Harmonized 
Tariff System and the North American 
Industry Classification System, and
``(II) the Secretary (in 
coordination with the relevant parties) 
may subsequently determine which types 
of eligible facilities or processes 
within facilities (and any related 
covered primary goods) are included or 
excluded within a covered national 
industry, provided that such 
determination--
``(aa) facilitates a fair 
comparison of carbon 
intensities across similar 
eligible facilities (based on a 
comparison of the energy-
intensive processes and the 
material outputs of such 
facilities),
``(bb) does not 
meaningfully reduce the scope 
of greenhouse gas emissions 
covered by this subchapter, and
``(cc) ensures that each 
covered primary good is only 
included within a single 
covered national industry.
``(iii) Excluded facilities.--In the case 
of any eligible facility which, pursuant to 
clause (ii), is excluded from a covered 
national industry and is not included in any 
other covered national industry, such facility 
shall be deemed to not be included in any 
covered national industry.
``(C) Petition for specific goods.--
``(i) In general.--In the case of any 
covered national industry which produces more 
than 1 covered primary good, a covered entity 
may file a petition with the Secretary to--
``(I) remove 1 or more covered 
primary goods from inclusion under any 
covered national industry,
``(II) establish a new covered 
national industry for purposes of the 
goods described in subclause (I),
``(III) determine the carbon 
intensity with respect to the covered 
national industry established under 
subclause (II), and
``(IV) determine a classification 
for defining such covered national 
industry for purposes of this 
subchapter, such as--
``(aa) the applicable 6-
digit subheading (or 
subheadings) of the Harmonized 
Tariff Schedule of the United 
States of the goods described 
in subclause (I),
``(bb) the relevant 
production process,
``(cc) a set of material 
characteristics, or
``(dd) any combination of 
the methods for classification 
described in items (aa) through 
(cc).
``(ii) Review.--With respect to any covered 
primary good which is included in a petition 
described in clause (i), the Secretary (in 
coordination with the Administrator and the 
Secretary of Energy) shall approve such 
petition if--
``(I) the chemical, physical, or 
mechanical production processes for 
such good or goods are substantially 
different as compared to other covered 
primary goods produced within the same 
covered national industry,
``(II) the properties of such good 
or goods are distinct such that its 
uses cannot be easily replaced by other 
covered primary goods produced within 
the same covered national industry, and
``(III) the carbon intensity 
determined with respect to such good or 
goods is at least 25 percent greater 
than the carbon intensity determined 
for other covered primary goods 
produced within the same covered 
national industry.
``(iii) Recalculation.--In the case of any 
petition described in clause (i) which is 
approved by the Secretary pursuant to clause 
(ii), the Secretary (in coordination with the 
Administrator) shall redetermine the carbon 
intensity, as well as the baseline carbon 
intensity, with respect to the covered national 
industry or industries which previously 
included production of the covered primary good 
or goods which are the subject of such petition 
by excluding any covered emissions associated 
with the production of such good or goods for 
purposes of the determination made under 
subparagraph (B) for such industry.
``(iv) Goods-level data.--In the case of 
any petition described in clause (i) which is 
approved by the Secretary pursuant to clause 
(ii), the Secretary (in coordination with the 
Administrator) shall use a methodology for 
determining the carbon intensity of the covered 
primary good or subset of primary goods (as 
determined using the eligible facility 
information reported under subsection (a)), and 
shall publish the methodology and the results 
of such determination, in a manner which--
``(I) is compatible with existing 
Federal carbon accounting rules and 
standards,
``(II) includes the related 
chemical, physical, or mechanical 
production processes responsible for 
differences in carbon intensity and 
covered emissions, and
``(III) prioritizes ease of 
administration and compliance.
``(D) Determination.--Any determination of carbon 
intensity under this paragraph shall be made by the 
Secretary in coordination with the Administrator and 
the Secretary of Energy.
``(E) Relevant quantity.--For purposes of this 
subchapter, the relevant quantity of a covered primary 
good shall be determined based on--
``(i) the weight (expressed in metric tons) 
of such good, or
``(ii) if the Secretary, in coordination 
with the Administrator and the Secretary of 
Energy, determines that using an alternate 
physical unit of measurement (such as volume at 
a specific pressure or energy content) would 
better facilitate a fair comparison of carbon 
intensities across the covered primary goods in 
the covered national industry, an alternate 
physical unit of measurement.
``(2) Covered emissions.--
``(A) In general.--For purposes of this subsection, 
for each calendar year, the amount of covered emissions 
with respect to any eligible facility shall be an 
amount (as determined by the Secretary, in coordination 
with the Administrator) equal to the sum of--
``(i) the total greenhouse gas emissions 
associated with the production of covered 
primary goods at such facility during the 
preceding calendar year (as reported pursuant 
to subsection (a)), plus
``(ii) the total greenhouse gas emissions 
associated with any electricity used at such 
facility for the production of such goods 
during the preceding calendar year.
``(B) Emissions for electricity used.--
``(i) In general.--For purposes of 
subparagraph (A)(ii), the amount of greenhouse 
gas emissions associated with electricity 
provided through the electric grid shall be 
determined based on the average carbon 
intensity for the regional grid in which the 
eligible facility is located for the preceding 
calendar year.
``(ii) Exception.--In the case of an 
eligible facility which is subject to a power 
purchase agreement (or its foreign equivalent) 
which guarantees that any electricity provided 
under such agreement is generated within the 
same hour as it is used by such facility and 
within the same regional transmission zone (or 
its foreign equivalent) as such facility--
``(I) clause (i) shall not apply 
with respect to the amount of 
electricity provided under such 
agreement, and
``(II) the amount of greenhouse gas 
emissions associated with such 
electricity shall be determined based 
on the average carbon intensity of the 
electricity provided under such 
agreement.
``(3) Imported goods.--
``(A) In general.--In the case of any covered 
primary good which is imported into the United States, 
the carbon intensity with respect to such good shall be 
determined as follows:
``(i) Economy-wide default.--Subject to 
clauses (ii), (iii), and (iv), the carbon 
intensity with respect to the covered primary 
good shall be equal to the product of--
``(I) an amount equal to the 
quotient of--
``(aa) the carbon intensity 
of the general economy of the 
country of origin of such good, 
divided by
``(bb) the carbon intensity 
of the general economy of the 
United States, multiplied by
``(II) the carbon intensity of the 
covered national industry in the United 
States for such good for the preceding 
calendar year.
``(ii) Industry data.--If the Secretary (in 
coordination with the relevant parties) 
determines that transparent, verifiable, and 
reliable information is available with respect 
to any covered national industry in the country 
of origin of the covered primary good and that 
such country of origin is a transparent market 
economy, the carbon intensity with respect to 
the covered primary good shall be equal to the 
relevant covered national industry carbon 
intensity of the country of origin of such 
good.
``(iii) Manufacturer data.--If a petition 
under subparagraph (C) has been approved, the 
carbon intensity with respect to the covered 
primary good shall be equal to the average 
carbon intensity with respect to the production 
of such good by the manufacturer within the 
country of origin.
``(iv) Estimates for significant imports.--
If the Secretary (in coordination with the 
relevant parties) determines that--
``(I)(aa) greater than 10 percent 
of the value of imports of covered 
primary goods in a covered national 
industry come from a single country of 
origin, or
``(bb) when applied to imports of 
covered primary goods in a covered 
national industry from a country of 
origin, the carbon intensity determined 
under clause (i) fails to maintain the 
integrity and efficacy of this 
subchapter, and
``(II)(aa) transparent, verifiable, 
and reliable information is not 
available to determine the carbon 
intensity of the covered national 
industry in such country of origin, or
``(bb) such country of origin is 
not a transparent market economy,
the Secretary (in coordination with the 
relevant parties) shall estimate the 
carbon intensity of the covered 
national industry in the country of 
origin using best available data (such 
as the production processes used by the 
facilities in the country).
``(B) Carbon intensity of the general economy.--For 
purposes of this subchapter, with respect to any 
country, the carbon intensity of the general economy of 
such country shall be an amount equal to the quotient 
of--
``(i) the greenhouse gas emissions of such 
country for the most recent year for which the 
Secretary determines there is reliable 
information, divided by
``(ii) the gross domestic product of such 
country for the year described in clause (i).
``(C) Petition for foreign manufacturer data.--
``(i) In general.--In the case of any 
entity which imports a covered primary good for 
which the carbon intensity can be determined 
under subparagraph (A)(ii) from a country of 
origin where there is no evidence of inter-firm 
resource shuffling, such entity may file a 
petition with the Secretary to determine the 
charge under section 4692, if any, based on the 
average carbon intensity with respect to the 
production of such good by the manufacturer 
within the country of origin.
``(ii) Aggregation rule.--For purposes of 
this subparagraph, the average carbon intensity 
with respect to the production of a covered 
primary good shall be determined based upon 
greenhouse gas emission and production data 
from all facilities which produce such good 
which are under common control of the 
manufacturer of such good, including any 
subsidiary, parent company, or joint venture of 
such manufacturer within the country of origin.
``(iii) Data provision.--In the case of an 
entity which files a petition described in 
clause (i), such entity shall provide the 
Secretary with an environmental product 
declaration containing--
``(I) any information which would 
otherwise be required to be reported 
under subsection (a) if the facilities 
which produced the covered primary good 
to which the petition applies were 
subject to the reporting requirements 
under the Greenhouse Gas Reporting 
Program, and
``(II) any other information which 
is necessary (as determined by the 
Secretary, in coordination with the 
relevant parties) to calculate the 
carbon intensity of the covered primary 
good in accordance with any relevant 
methodologies for allocating the carbon 
intensity of the covered primary good 
under paragraph (1)(C)(iv).
``(iv) Data standards.--The Secretary shall 
only grant such a petition if the information 
provided pursuant to clause (iii) meets the 
quality, verification, and completeness 
requirements of the equivalent Federal carbon 
accounting rules and standards that would apply 
if the covered primary good were produced 
domestically.
``(D) Inputs.--With respect to any covered primary 
good which is imported into the United States and for 
which other covered primary goods (other than 
petroleum, natural gas, coal, or any waste or scrap 
product) from other covered national industries were 
used as inputs in the production of the imported 
covered primary good, the quantity of such inputs used 
in the production of the imported covered primary good 
shall be treated as separate covered primary goods 
that, without double-counting emissions, shall be 
considered to be imported for purposes of this 
subchapter.
``(E) Exclusion.--
``(i) In general.--Subject to clause (ii), 
in the case of any covered primary good 
(including any covered primary good which is an 
input of a finished good) which is imported 
into the United States and was produced in a 
relatively least developed country (as 
described in section 124 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2151v)), this 
paragraph shall not apply.
``(ii) Exception.--Clause (i) shall not 
apply if the country described in such clause 
produces at least 3 percent of total global 
exports by value of the covered primary good.
``(F) Inter-firm resource shuffling.--For purposes 
of this paragraph, the term `inter-firm resource 
shuffling' means any buying, selling, trading, 
exchanging, or other transfer of control of production 
facilities between entities based on the carbon 
intensity of such facilities for the purpose of 
creating entities with relatively lower carbon 
intensity and entities with relatively higher carbon 
intensity.
``(G) Trading partners.--For countries with which 
the United States has agreements that facilitate trade, 
commit the parties to refrain from imposing new trade 
barriers, and establish high standards for labor and 
environmental protection and human rights, the 
Secretary (working with the relevant parties) shall 
make best efforts to work with the government of such 
country to improve data sharing, accuracy, and 
transparency such that imports of covered primary goods 
from such country have their carbon intensity 
determined under subparagraph (A)(ii).
``(c) Publication.--The Secretary (in coordination with the 
relevant parties) shall--
``(1) annually publish any carbon intensity which has been 
determined under subsection (b) with respect to any eligible 
facility, covered national industry, covered primary good, 
foreign manufacturer, or country of origin (including the 
physical unit of measurement which serves as the relevant 
quantity with respect to any covered primary good),
``(2) publish (and update, as appropriate) a list of each 
covered primary good, as categorized by the covered national 
industry in which such good is included, and
``(3) publish (and update, as appropriate) a list of each 
good that qualifies as a finished good, as determined by the 
Secretary pursuant to section 4695(9).

``SEC. 4692. IMPOSITION OF CARBON INTENSITY CHARGE.

``(a) In General.--
``(1) Importation of goods.--
``(A) In general.--
``(i) Covered primary goods.--Subject to 
section 4694, in the case of any covered 
primary good imported into the United States 
during any calendar year beginning after 
December 31, 2025, there is hereby imposed a 
charge in an amount (rounded to the nearest 
dollar) equal to the product of--
``(I) the amount (if any) by which 
the carbon intensity determined under 
section 4691(b)(3) with respect to such 
good exceeds an amount equal to the 
applicable percentage of the baseline 
carbon intensity of the covered 
national industry which includes such 
good, multiplied by
``(II) the total relevant quantity 
of the good imported into the United 
States, multiplied by
``(III) the cost of pollution (as 
determined under subsection (c)).
``(ii) Finished goods.--
``(I) In general.--Subject to 
section 4694, in the case of any 
finished good which is imported into 
the United States during any calendar 
year beginning after December 31, 2027, 
there is hereby imposed a charge in an 
amount equal to the sum of the amounts 
determined under subclause (II) with 
respect to each covered primary good 
which is an input of such finished 
good.
``(II) Components.--The amount 
determined under this subclause with 
respect to any covered primary good 
which is an input of a finished good is 
an amount equal to the product of--
``(aa) the amount (if any) 
determined under clause (i)(I) 
if such clause were applied 
with respect to such good, 
multiplied by
``(bb) the total relevant 
quantity of the covered primary 
good, multiplied by
``(cc) the cost of 
pollution (as determined under 
subsection (c)).
``(B) Charge due.--The charge imposed under this 
paragraph with respect to any goods imported during any 
calendar year shall be paid by the entity which 
imported such goods not later than September 30 of the 
calendar year subsequent to such year.
``(C) Exclusion.--
``(i) In general.--Subject to clause (ii), 
in the case of any covered primary good 
(including any covered primary good which is an 
input of a finished good) which is imported 
into the United States and was produced in a 
relatively least developed country (as 
described in section 124 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2151v)), this 
paragraph shall not apply.
``(ii) Exception.--Clause (i) shall not 
apply if the country described in such clause 
produces at least 3 percent of total global 
exports by value of the covered primary good.
``(D) Foreign carbon prices.--If the Secretary (in 
coordination with the relevant parties) determines that 
a foreign country has implemented policies which impose 
explicit and verifiable fees, costs, or penalties on 
the emission of greenhouse gases which--
``(i) are economically similar to the 
charges imposed pursuant to the provisions of 
this subchapter, and
``(ii) have not been rebated by such 
foreign country,
the charge (or a portion of the charge which is 
equivalent to the fees or costs imposed by the foreign 
country) which would otherwise be imposed under this 
section with respect to covered primary goods produced 
in such foreign country may be waived.
``(2) Domestic production of covered primary goods.--
``(A) In general.--In the case of any eligible 
facility, for each calendar year beginning after 
December 31, 2025, there is hereby imposed a charge in 
an amount (rounded to the nearest dollar) equal to the 
product of--
``(i) the amount (if any) by which the 
carbon intensity of such facility (as 
determined under section 4691(b)(1)(A)) exceeds 
an amount equal to the applicable percentage of 
the baseline carbon intensity for the covered 
national industry (as determined under section 
4691(b)) which includes any covered primary 
good produced by such facility, multiplied by
``(ii) the total relevant quantity of any 
covered primary goods produced by such facility 
during such calendar year, multiplied by
``(iii) the cost of pollution (as 
determined under subsection (c)).
``(B) Charge due.--The charge imposed under this 
paragraph with respect to any calendar year shall be 
paid by the covered entity not later than September 30 
of the calendar year subsequent to such year.
``(b) Applicable Percentage.--For purposes of paragraphs (1)(A) and 
(2)(A) of subsection (a), the applicable percentage shall be--
``(1) for calendar year 2026, 100 percent,
``(2) for calendar years 2027 through 2030, the applicable 
percentage for the preceding calendar year, reduced by 2.5 
percentage points,
``(3) for calendar years 2031 through 2047, the applicable 
percentage for the preceding calendar year, reduced by 5 
percentage points, and
``(4) for any calendars years subsequent to calendar year 
2047, 0 percent.
``(c) Cost of Pollution.--
``(1) In general.--For purposes of paragraphs (1)(A) and 
(2)(A) of subsection (a), the cost of pollution shall be--
``(A) for calendar year 2026, $60, and
``(B) for each calendar year subsequent to the 
calendar year described in subparagraph (A), an amount 
equal to the sum of--
``(i) the cost of pollution for the 
preceding year, plus
``(ii) an amount equal to--
``(I) the amount described in 
clause (i), multiplied by
``(II) the percentage by which the 
CPI for the preceding calendar year 
exceeds the CPI for the second 
preceding calendar year, increased by 6 
percentage points.
``(2) CPI.--Rules similar to the rules of paragraphs (4) 
and (5) of section 1(f) shall apply for purposes of this 
subsection.
``(3) Rounding.--Any applicable amount determined under 
this subsection which is not a multiple of $1 shall be rounded 
to the nearest dollar.
``(d) Carbon Removal.--
``(1) In general.--With respect to the amount of any 
charges imposed under subsection (a) during a calendar year, 
such amount shall be reduced by an amount (rounded to the 
nearest dollar) equal to the product of--
``(A) the total amount (as measured in metric tons) 
of greenhouse gas emissions which are captured directly 
from the ambient air during such calendar year pursuant 
to the requirements under paragraphs (2) and (3), and
``(B) the cost of pollution (as determined under 
subsection (c)).
``(2) Removal requirements.--The requirements described 
under this paragraph with respect to captured greenhouse gas 
emissions are that such emissions are captured during the 
preceding calendar year and--
``(A) disposed of in secure geological storage (in 
compliance with the regulations established under 
section 45Q(f)(2)), or
``(B) utilized in a manner (other than for enhanced 
oil or gas recovery and in compliance with the 
regulations established under section 45Q(f)(5)) 
whereby such emissions are not combusted or otherwise 
emitted into the atmosphere.
``(3) Direct air capture.--For purposes of this subsection, 
with respect to any greenhouse gas emissions which are captured 
directly from the ambient air, the operator of the facility 
which captured such emissions may--
``(A) apportion such emissions removal amongst any 
eligible facilities which are under common control of 
such operator, or
``(B) enter into binding and exclusive agreements 
(which meet such requirements as determined necessary 
by the Secretary to ensure fair and accurate emissions 
accounting) with--
``(i) any operator of an eligible facility, 
for the purpose of permitting such operator to 
reduce the charge imposed under subsection (a) 
with respect to any eligible facilities which 
are under common control of such operator, or
``(ii) any importer of covered primary 
goods, for the purpose of permitting such 
operator to reduce the charge imposed under 
subsection (a) with respect to any of their 
imported covered primary goods.
``(4) Limitation.--For purposes of this subsection, in the 
case of any covered primary good imported or produced at an 
eligible facility, the amount of any reduction of the charge 
imposed under subsection (a) with respect to such covered 
primary good or production of such good shall not exceed the 
lesser of--
``(A) the amount of the charge imposed under such 
subsection, or
``(B) an amount equal to the product of--
``(i) the first quartile in terms of carbon 
intensity with respect to facilities operating 
in the United States which produce covered 
primary goods which are included within the 
same covered national industry, as determined 
by the Secretary (in coordination with the 
relevant parties), multiplied by
``(ii) the relevant quantity of such 
covered primary good, multiplied by
``(iii) the cost of pollution (as 
determined under subsection (c)).
``(5) Ensuring integrity.--The Secretary, in coordination 
with the Administrator and the Secretary of Energy, shall issue 
such regulations as may be necessary to prevent double-counting 
and to ensure the additionality and permanence of captured 
emissions.
``(e) Regulations and Trade Actions.--The Secretary shall issue 
such regulations as may be necessary to carry out this subchapter and 
shall work closely with the relevant parties to pursue such trade 
actions as may be necessary to maintain the integrity and efficacy of 
this subchapter.

``SEC. 4693. REBATE.

``(a) Exportation of Covered Primary Good.--Subject to subsections 
(c) and (d), in the case of a person who exports any covered primary 
good from the United States which was produced in an eligible facility 
for which a charge has been imposed under section 4692, a refund shall 
be allowed to such person in the same manner as if it were an 
overpayment of the charge imposed by such section in an amount equal to 
the charge that would be imposed under subsection (a)(1)(A)(i) of such 
section with respect to such good.
``(b) Exportation of Finished Good.--Subject to subsection (c), in 
the case of a person who exports any finished good from the United 
States for which a charge has been imposed under section 4692 on such 
finished good or any of its components, a refund shall be allowed to 
such person in the same manner as if it were an overpayment of the 
charge imposed by such section in an amount equal to the charge that 
would otherwise be imposed under such section with respect to such 
finished good (as determined pursuant to subsection (a)(1)(A)(ii) of 
such section).
``(c) Exception for Certain Foreign Policies.--In the case of any 
exports from the United States for which a charge has been imposed 
under section 4692, if--
``(1) the covered primary good or finished good is imported 
by a country with policies that impose tariffs, fees, or 
penalties on the emission of greenhouse gases associated with 
imports, and
``(2) the country described in paragraph (1) would credit 
the charge imposed under section 4692 against such tariffs, 
fees, or penalties,
any portion of a rebate otherwise allowable under this section shall 
not be allowed to the extent that it would reduce the amount credited 
by such country against such tariffs, fees, or penalties.
``(d) Preventing Domestic Resource Shuffling.--For purposes of 
determining the amount of any refund pursuant to subsection (a), the 
carbon intensity with respect to the eligible facility shall be 
determined by applying section 4691(b)(1)(A) by substituting `all 
eligible facilities by the covered entity which produced the covered 
primary good described in section 4693(a)(1)' for `such facility' each 
place it appears in such section.

``SEC. 4694. CARBON CLUBS.

``(a) In General.--To accelerate the pace of global decarbonization 
and expand markets for goods with lower carbon intensities, the 
President may, in coordination with the Secretary and the relevant 
parties--
``(1) enter into negotiations with 1 or more foreign 
countries to establish or expand a carbon club agreement under 
this section,
``(2) perform any enforcement activities necessary to 
uphold the requirements under such agreement, and
``(3) remove any foreign country from a carbon club 
agreement if such country is determined to have failed to 
comply with the requirements described in subsection (b) or any 
additional requirements established under such agreement.
``(b) Requirements.--Any foreign country which has entered into a 
carbon club agreement under this section shall be subject to the 
following requirements:
``(1) Ensure its methodologies for the measurement, 
reporting, and verification of the carbon intensity of covered 
national industries match, or are interoperable with, those 
used to determine the carbon intensity of covered national 
industries in the United States.
``(2) Permit any other country which is a party to such 
agreement to regularly validate the measurement, reporting, and 
verification of the carbon intensity of their covered national 
industries.
``(3) Ensure, in law and in practice, that all workers in 
the territory of the country are guaranteed the following 
internationally recognized rights and freedoms, including those 
guaranteed in the Declaration on Fundamental Principles and 
Rights at Work of the International Labour Organization and its 
Follow-up:
``(A) Freedom of association and the effective 
recognition of the right to collective bargaining.
``(B) Elimination of all forms of forced or 
compulsory labor.
``(C) Effective abolition of child labor, a 
prohibition on the worst forms of child labor, and 
other labor protections for children and minors.
``(D) Elimination of discrimination in respect of 
employment and occupation.
``(E) Acceptable conditions of work with respect to 
minimum wages, hours of work, and occupational safety 
and health.
``(4) Create or maintain, as well as implement and 
verifiably enforce--
``(A) domestic policies (including any investments 
made possible by assistance provided under section 2(d) 
of the Clean Competition Act) which reduce the carbon 
intensity of its covered national industries in a 
magnitude greater than that which would feasibly be 
induced as a result of--
``(i) the charges imposed under section 
4692(a)(1), or
``(ii) similar fees on the emissions of 
greenhouse gases associated with the production 
of imports levied by other countries which are 
parties to such agreement,
``(B) trade policies, such as the charge imposed 
under section 4692(a)(1), which give preference to 
goods with lower carbon intensities,
``(C) domestic policies which reduce pollutants 
other than greenhouse gases, and
``(D) policies that prevent such country from 
facilitating transshipment from other countries.
``(c) Prioritization.--In negotiations with respect to any carbon 
club agreement under this section, the President shall seek to reach an 
agreement with foreign countries which prioritizes the following goals 
in the following order of importance:
``(1) Reduction of global greenhouse gas emissions.
``(2) Securing access for the United States to materials 
and inputs necessary to manufacture products with lower carbon 
intensity, particularly those that are not feasibly produced 
domestically.
``(3) Strengthening the global market competitiveness of 
lower carbon intensity goods.
``(4) Advancing the national security and diplomatic 
interests of the United States.
``(d) Benefits.--With respect to any country which has entered into 
a carbon club agreement under this section, if such country--
``(1) is not contributing to global industrial overcapacity 
(as determined by the United States Trade Representative, in 
coordination with other relevant parties), the charge which 
would otherwise be imposed under section 4692(a)(1) with 
respect to covered primary goods produced in a foreign country, 
as well as any similar fees on the emissions of greenhouse 
gases associated with the production of imports levied by other 
countries which are parties to such agreement, may be waived, 
provided that such country establishes or maintains policies 
that reduce the emission of greenhouse gases from its covered 
national industries with commensurate effect as the carbon 
intensity charges imposed under section 4692(a)(2), and
``(2) has a low-income economy, lower-middle-income 
economy, or upper-middle-income economy (as determined based on 
classification of the economy of such country by the World 
Bank), such country shall receive preference for assistance 
provided under section 2(d) of the Clean Competition Act.
``(e) Phase-In.--
``(1) In general.--Subject to paragraph (2), for purposes 
of any carbon club agreement under this section, a country may 
limit application of such agreement to certain covered national 
industries, in which case any requirements or benefits provided 
pursuant to such agreement shall be limited to such industries 
and any covered products produced by such industries.
``(2) Limitation.--Not later than 10 years after the date 
on which any country enters into a carbon club agreement under 
this section, all covered national industries of such country 
shall be subject to the requirements of such agreement.

``SEC. 4695. DEFINITIONS.

``For purposes of this subchapter--
``(1) Administrator.--The term `Administrator' means the 
Administrator of the Environmental Protection Agency.
``(2) Baseline carbon intensity.--The term `baseline carbon 
intensity' means, with respect to a covered national industry, 
the carbon intensity of the covered national industry in the 
United States for calendar year 2025.
``(3) CO2-e.--
``(A) In general.--Subject to subparagraph (B), the 
term `CO2-e' means, with respect to a greenhouse gas, 
the quantity of such gas that has a global warming 
potential equivalent to 1 metric ton of carbon dioxide, 
as determined pursuant to table A-1 of subpart A of 
part 98 of title 40, Code of Federal Regulations, as in 
effect on the date of the enactment of this subchapter.
``(B) Methane.--In the case of methane, the term 
`CO2-e' means the quantity of methane that has the same 
global warming potential over a 20-year period as 1 
metric ton of carbon dioxide, as determined by the 
Administrator in accordance with the findings of the 
most recent Assessment Report of the Intergovernmental 
Panel on Climate Change as of the date of enactment of 
this subchapter.
``(4) Covered entity.--The term `covered entity' means any 
entity which--
``(A) produces any covered primary good, and
``(B) is required to report emissions of greenhouse 
gases under the Greenhouse Gas Reporting Program (or 
would be required to report such emissions 
notwithstanding any other provision of law prohibiting 
the implementation of or use of funds for such 
requirements).
``(5) Covered national industry.--
``(A) In general.--Except as provided under section 
4691(b)(1)(B)(ii), the term `covered national industry' 
means any industry which is assigned a 6-digit NAICS 
code which is included in any of the following clauses:
``(i) 211120 (petroleum extraction).
``(ii) 211130 (natural gas extraction).
``(iii) 212114 or 212115 (coal mining).
``(iv) 322110 (pulp mills).
``(v) 322120 (paper mills).
``(vi) 322130 (paperboard mills).
``(vii) 324110 (petroleum refineries).
``(viii) 324121 (asphalt paving mixture and 
block manufacturing).
``(ix) 324122 (asphalt shingle and coating 
materials manufacturing).
``(x) 324199 (all other petroleum and coal 
products manufacturing).
``(xi) 325110 (petrochemical 
manufacturing).
``(xii) 325120 (industrial gas 
manufacturing).
``(xiii) 325193 (ethyl alcohol 
manufacturing).
``(xiv) 325199 (other basic organic 
chemical manufacturing).
``(xv) 325311 (nitrogenous fertilizer 
manufacturing).
``(xvi) 327211, 327212, 327213, or 327215 
(glass).
``(xvii) 327310 (cement).
``(xviii) 327410 or 327420 (lime and gypsum 
product manufacturing).
``(xix) 331110 (iron and steel).
``(xx) 331313 or 331314 (aluminum).
``(B) Exceptions.--
``(i) Industrial gas manufacturing.--
Subparagraph (A)(xii) shall apply only with 
respect to the production of hydrogen.
``(ii) Other basic organic chemical 
manufacturing.--Subparagraph (A)(xiv) shall 
apply only with respect to the production of 
adipic acid.
``(6) Country of origin.--The term `country of origin' 
means, with respect to a covered primary good, the country 
where an energy-intensive or emissions-intensive process 
occurred that transformed the inputs of the good into the 
covered primary good.
``(7) Covered primary good.--The term `covered primary 
good' means any good which is produced as part of a trade or 
business operating within a covered national industry--
``(A) including (except as otherwise provided under 
subparagraphs (B)(ii) and (C) of section 4691(b)(1)) 
any good classifiable under the same 6-digit subheading 
of the Harmonized Tariff Schedule of the United States, 
and
``(B) excluding any waste or scrap byproducts which 
are not sold.
``(8) Eligible facility.--The term `eligible facility' 
means any facility (as such term is defined for purposes of the 
Greenhouse Gas Reporting Program) which is--
``(A) operated by a covered entity for the 
production of any covered primary good, and
``(B) located within the United States.
``(9) Finished good.--
``(A) In general.--The term `finished good' means 
any good (as determined pursuant to a 6-digit 
subheading of the Harmonized Tariff Schedule of the 
United States) which is not a covered primary good and 
which, as determined by the Secretary--
``(i) for calendar years 2028 and 2029--
``(I) typically contains greater 
than 1,000 pounds of any combination of 
any covered primary goods, or
``(II) is typically produced from 
inputs of any combination of covered 
primary goods, the combined value of 
which comprise more than 90 percent of 
the total value of the material inputs 
involved in the production of such 
good,
``(ii) for calendar years 2030 and 2031--
``(I) typically contains greater 
than 500 pounds of any combination of 
any covered primary goods, or
``(II) is typically produced from 
inputs of any combination of covered 
primary goods, the value of which 
comprise more than 75 percent of the 
total value of the material inputs 
involved in the production of such 
good, and
``(iii) for any calendar year after 
calendar year 2031--
``(I) typically contains greater 
than such amount as is determined by 
the Secretary (as determined in 
coordination with the relevant parties, 
and which shall not be greater than 500 
pounds) of any combination of any 
covered primary goods, or
``(II) is typically produced from 
inputs of any combination of covered 
primary goods, the value of which 
comprise more than such percentage as 
is determined by the Secretary (as 
determined in coordination with the 
relevant parties, and which shall not 
be greater than 75 percent) of the 
total value of the material inputs 
involved in the production of such 
good.
``(B) Exception.--The term `finished good' shall 
not include any waste or scrap product which is 
imported or exported.
``(10) Greenhouse gas.--The term `greenhouse gas' has the 
meaning given such term under section 211(o)(1)(G) of the Clean 
Air Act, as in effect on the date of the enactment of this 
subchapter.
``(11) Greenhouse gas emissions.--The term `greenhouse gas 
emissions' means the amount of greenhouse gases, expressed in 
metric tons of CO2-e, which were emitted to the atmosphere.
``(12) Greenhouse gas reporting program.--The term 
`Greenhouse Gas Reporting Program' means the Greenhouse Gas 
Reporting Program established under part 98 of title 40, Code 
of Federal Regulations, as in effect on January 1, 2025.
``(13) Market economy.--The term `market economy' means any 
country which is not designated as a nonmarket economy country 
pursuant to section 771(18) of the Tariff Act of 1930 (19 
U.S.C. 1677(18)).
``(14) NAICS.--The term `NAICS' means the North American 
Industrial Classification System.
``(15) Regional grid.--The term `regional grid' means the 
smallest defined region of interconnected power grid (including 
power generation assets) from which a facility draws power that 
accounts for the total power supplied to the facility by the 
grid and for which there is reliable data.
``(16) Relevant parties.--The term `relevant parties' 
means--
``(A) the Administrator,
``(B) the Secretary of Energy,
``(C) the Secretary of Commerce,
``(D) the Secretary of Homeland Security,
``(E) the United States Trade Representative, and
``(F) the Chair and Vice Chair of the United States 
International Trade Commission.''.
(b) Clerical Amendment.--The table of subchapters for chapter 38 of 
the Internal Revenue Code of 1986 is amended by adding at the end 
thereof the following new item:

``subchapter e--carbon intensity charge''.

(c) Investing in Industrial Competitiveness.--
(1) Definitions.--In this subsection:
(A) Administrator.--The term ``Administrator'' 
means the Administrator of the Environmental Protection 
Agency.
(B) Advanced industrial technology.--The term 
``advanced industrial technology'' means a technology 
that--
(i) is directly involved in an industrial 
process described in paragraphs (1) through (6) 
of section 454(c) of the Energy Independence 
and Security Act of 2007 (42 U.S.C. 17113(c)); 
and
(ii) is designed to accelerate greenhouse 
gas emissions reduction progress to net-zero at 
an eligible facility, as determined by the 
Secretary.
(C) Ambition level.--The term ``ambition level'' 
means the level of reduction in carbon intensity 
described in each of subclauses (I) through (III) of 
paragraph (3)(C)(iv).
(D) Applicable fair market value.--The term 
``applicable fair market value'', with respect to an 
eligible good, means the average market dollar value of 
1 unit of the relevant quantity of that eligible good, 
as determined by the Secretary using publicly available 
market prices and other market data.
(E) Baseline carbon intensity.--The term ``baseline 
carbon intensity'' has the meaning given the term in 
section 4695 of the Internal Revenue Code of 1986 (as 
added by subsection (a)).
(F) Benchmark carbon intensity.--The term 
``benchmark carbon intensity'', with respect to a 
covered primary good or eligible good, means the carbon 
intensity of the covered national industry in the 
United States for that covered primary good or eligible 
good for the preceding calendar year.
(G) Best-in-class carbon intensity.--The term 
``best-in-class carbon intensity'', with respect to any 
proposed eligible facility, means that the carbon 
intensity of such facility would be not greater than 
the carbon intensity of the existing facility with the 
lowest carbon intensity within the relevant covered 
national industry, as determined as of the date of the 
application for a grant under the program.
(H) Carbon intensity.--The term ``carbon 
intensity'' has the meaning given the term under 
section 4691(b)(1) of the Internal Revenue Code of 1986 
(as added by subsection (a)).
(I) Covered primary good.--The term ``covered 
primary good'' has the meaning given the term in 
section 4695 of the Internal Revenue Code of 1986 (as 
added by subsection (a)).
(J) Covered program.--The term ``covered program'' 
means each of the programs established under paragraphs 
(2)(A) and (3)(A).
(K) Covered national industry.--The term ``covered 
national industry'' has the meaning given the term in 
section 4695 of the Internal Revenue Code of 1986 (as 
added by subsection (a)).
(L) Eligible entity.--The term ``eligible entity'' 
means any person that operates an eligible facility or 
will operate a proposed eligible facility.
(M) Eligible facility.--The term ``eligible 
facility'' has the meaning given the term in section 
4695 of the Internal Revenue Code of 1986 (as added by 
subsection (a)).
(N) Eligible good.--The term ``eligible good'' 
means a covered primary good determined eligible for a 
contract for difference by the Secretary under 
paragraph (3)(B).
(O) Eligible goods class.--The term ``eligible 
goods class'' means an eligible goods class as 
described in paragraph (3)(C)(iii).
(P) Price discovery.--The term ``price discovery'' 
means a process of determining the true and accurate 
price of producing 1 unit of the relevant quantity of 
an eligible good using a unique production process.
(Q) Relevant quantity.--The term ``relevant 
quantity'' has the meaning given the term under section 
4691(b)(1)(E) of the Internal Revenue Code of 1986 (as 
added by subsection (a)).
(R) Secretary.--The term ``Secretary'' means the 
Secretary of Energy (or a designee).
(S) Strike price.--The term ``strike price'' means 
the dollar value of 1 unit of the relevant quantity of 
an eligible good.
(2) Investments in advanced industrial technology.--
(A) Establishment.--The Secretary shall establish a 
competitive program (referred to in this paragraph as 
the ``program'') to award to eligible entities grants, 
rebates, or low-interest loans, as determined 
appropriate by the Secretary, to support investments in 
advanced industrial technology, including in dedicated 
power generation and storage--
(i) in the case of an existing eligible 
facility, to reduce the carbon intensity of the 
existing eligible facility by at least 20 
percent;
(ii) in the case of a proposed eligible 
facility, to ensure at least best-in-class 
carbon intensity of that proposed eligible 
facility, with a goal of achieving net-zero 
carbon intensity; and
(iii) in the case of existing and proposed 
eligible facilities--
(I) to increase the technological 
and economic competitiveness of covered 
national industries in the United 
States;
(II) to increase the viability and 
competitiveness of United States 
industrial exports; and
(III) to achieve emissions 
reduction in covered national 
industries.
(B) Application process.--The Secretary shall 
develop an application process for the program similar 
to the application process for the national grant 
program of the Administrator under subtitle G of title 
VII of the Energy Policy Act of 2005 (42 U.S.C. 16131 
et seq.).
(C) Preference.--In awarding funding under the 
program, the Secretary shall give preference to 
eligible entities--
(i) for projects that would--
(I) result in the greatest decrease 
in carbon intensity;
(II) support the demonstration and 
catalyze the deployment of first-of-a-
kind technologies and processes;
(III) provide the greatest benefit 
for the greatest number of people 
within the area in which the eligible 
facility is located;
(IV) advance United States global 
strategic interests;
(V) provide the greatest potential 
for direct and indirect domestic job 
creation; and
(VI) maximize improvement in local 
air quality; and
(ii) for facilities located in--
(I) economically distressed 
communities that have experienced a 
loss of manufacturing jobs; and
(II) communities with high 
cumulative pollution burdens, as 
determined by the Administrator.
(D) Cost share.--The Secretary shall require an 
eligible entity to provide not less than 50 percent of 
the cost of a project carried out pursuant to the 
program.
(E) Recapture of funds.--The Secretary shall 
recapture, pursuant to such regulations or other 
guidance issued by the Secretary, the funding awarded 
to an eligible entity if the eligible entity fails--
(i) within 3 years of the award of funding, 
to complete the proposed investments or achieve 
an interim progress milestone agreed to with 
the Secretary; or
(ii) during the 10-year period after the 
proposed investments are placed in service--
(I) in the case of an existing 
eligible facility, to achieve and 
maintain the reduction in carbon 
intensity proposed in the application; 
or
(II) in the case of a proposed 
eligible facility, to achieve and 
maintain the best-in-class carbon 
intensity proposed in the application.
(F) Outreach.--The Secretary shall conduct 
outreach--
(i) to notify the public about the program; 
and
(ii) to inform eligible entities of 
technologies that can reduce facility carbon 
intensity or ensure best-in-class carbon 
intensity.
(3) Contracts for difference.--
(A) Establishment.--The Secretary shall establish a 
program (referred to in this paragraph as the 
``program'') to enter into contracts for difference 
(referred to in this paragraph as ``covered 
contracts''), on a competitive basis, with eligible 
entities for payment of costs associated with the 
production of eligible goods manufactured by those 
eligible entities--
(i) to accelerate the deployment of 
commercially available advanced industrial 
technology;
(ii) to demonstrate and advance the 
commercialization of first-of-a-kind advanced 
industrial technology;
(iii) to increase the technological and 
economic competitiveness of covered national 
industries in the United States;
(iv) to increase the viability and 
competitiveness of United States advanced 
industrial technology exports; and
(v) to reduce the carbon intensity of 
covered national industries in the United 
States.
(B) Eligible goods.--
(i) In general.--The Secretary shall 
determine which covered primary goods are 
eligible for covered contracts under the 
program.
(ii) Priority.--In making determinations 
under clause (i), the Secretary shall give 
priority to covered primary goods--
(I) that contribute a greater 
proportion of total covered emissions 
relative to other covered primary goods 
in the same covered national industry;
(II) the market conditions for 
which are conducive to fair and 
competitive auctions;
(III) that have transparent and 
accurate price indices;
(IV) that face large marginal costs 
of decarbonization that cannot feasibly 
be equalized by the carbon intensity 
charge levied under section 4692 of the 
Internal Revenue Code of 1982 (as added 
by subsection (a));
(V) that provide the greatest 
potential for direct and indirect 
domestic job creation;
(VI) that are feasibly expected to 
continue to have robust market demand 
for the duration of the applicable 
covered contract; and
(VII) that have the greatest 
ability to reduce hazardous local air 
quality if awarded a covered contract.
(C) Auctions.--
(i) In general.--To award covered contracts 
under the program, the Secretary shall hold 
competitive auctions for each eligible goods 
class.
(ii) Application.--To participate in an 
auction under clause (i), an eligible entity 
shall submit to the Secretary an application 
that includes--
(I) a description of the eligible 
goods covered under the proposed 
covered contract;
(II) information on any existing or 
proposed facilities that will produce 
the eligible goods covered under the 
proposed covered contract, including 
location, employment numbers, and any 
planned or ongoing investments in or 
retrofits of the facilities;
(III) a description of the method 
of production, including technologies 
and feedstocks, that will be used to 
manufacture the eligible goods covered 
under the proposed covered contract;
(IV) the details of any investments 
or retrofits required to produce the 
eligible goods covered under the 
proposed covered contract, including 
the construction of new facilities;
(V) the expected carbon intensity 
of the eligible goods covered under the 
proposed covered contract for each year 
of the duration of the proposed covered 
contract;
(VI) the proposed strike price of 
the eligible goods covered under the 
proposed covered contract;
(VII) the expected annual 
production volume (expressed in the 
relevant quantity) of the eligible 
goods covered under the proposed 
covered contract for each year of the 
proposed covered contract; and
(VIII) any other information 
determined necessary by the Secretary.
(iii) Eligible goods class.--
(I) In general.--For each auction 
under clause (i), the Secretary shall 
assign each eligible good to an 
eligible goods class, which may 
comprise a single eligible good or 
multiple eligible goods.
(II) Class of multiple eligible 
goods.--In determining the eligible 
goods that shall be grouped into a 
single eligible goods class for 
purposes of an auction under clause 
(i), the Secretary shall--
(aa) only group eligible 
goods that can reasonably 
compete with each other for 
market share in the economy and 
on the basis of carbon 
intensity in the auction; and
(bb) prioritize the 
creation of eligible goods 
classes that are conducive to 
fair and competitive auctions.
(III) Benchmark carbon intensity.--
The benchmark carbon intensity for an 
eligible goods class with eligible 
goods from multiple covered national 
industries shall be the mean benchmark 
carbon intensity of those covered 
national industries (after converting 
to the same relevant quantity, if 
necessary).
(iv) Ambition level.--If the Secretary 
determines that there are conditions to support 
sufficient auction competitiveness, the 
Secretary may hold separate auctions within an 
eligible goods class for projects that yield 
each of the following percentages of reduction 
in carbon intensity:
(I) A reduction in carbon intensity 
from benchmark carbon intensity of not 
less than 20 percent but not more than 
50 percent.
(II) A reduction in carbon 
intensity from benchmark carbon 
intensity of not less than 50 percent 
but not more than 80 percent.
(III) A reduction in carbon 
intensity from benchmark carbon 
intensity of more than 80 percent.
(v) Selection.--The Secretary shall 
determine the winners of each auction under 
clause (i) by selecting projects in rank order 
from the lowest to the highest value of the 
quotient obtained by dividing--
(I) the expected per-unit payment 
amount described in subparagraph 
(F)(ii)(II), which shall be determined 
by the Secretary using the proposed 
strike price of the eligible entity and 
the fair market value at the time of 
auction; by
(II) an amount equal to the 
difference between--
(aa) the benchmark carbon 
intensity; and
(bb) the carbon intensity 
of the eligible good under the 
proposed covered contract.
(vi) Administration.--
(I) In general.--The Secretary 
shall design and manage competitive 
auctions under clause (i) to maximize 
fairness, competitiveness, accurate 
price discovery, and the most efficient 
utilization of public funds to achieve 
reductions in carbon intensity and the 
other goals of the program.
(II) Auction budget.--The Secretary 
shall establish a budget for each 
auction held under the program.
(D) Requirements.--
(i) Carbon intensity reduction.--Each 
covered contract awarded under the program 
shall be required to achieve at least a 20 
percent reduction in carbon intensity as 
compared to the benchmark carbon intensity on 
the date of commencement of the contract.
(ii) Labor.--An eligible entity awarded a 
covered contract under the program shall be 
required--
(I) to pay prevailing wages for any 
work performed, including for the 
execution of any investments or 
retrofits necessary to produce the 
applicable eligible goods; and
(II) to establish a community 
benefits agreement in conjunction with 
the production of the applicable 
eligible goods, including the execution 
of any investments or retrofits 
necessary to produce those eligible 
goods.
(E) Contract terms.--Each covered contract under 
the program shall include the following:
(i) A description of the project under the 
covered contract, including--
(I) details on the eligible goods, 
including relevant distinguishing 
qualities and properties and the 
methodology of producing those eligible 
goods;
(II) the execution of any 
investments or retrofits necessary to 
produce those eligible goods; and
(III) performance requirements for 
the project and procedures and 
penalties if those requirements are not 
met.
(ii) The maximum payment amount determined 
pursuant to subparagraph (F)(iv).
(iii) The expected carbon intensity of each 
eligible good covered under the covered 
contract, estimated for each year of the 
duration of the covered contract.
(iv) The strike price for each eligible 
good under the covered contract, including any 
procedures for adjusting the strike price over 
time, pursuant to subparagraph (F)(iii).
(v) The methods and data sources to be used 
for calculating covered emissions and the 
applicable fair market value of eligible goods, 
as established by the Secretary.
(vi) Details of the community benefits 
agreement established pursuant to subparagraph 
(D)(ii)(II).
(vii) The duration of the covered contract, 
subject to any early termination rules 
established by the Secretary.
(viii) Any other terms determined necessary 
by the Secretary.
(F) Payments.--
(i) In general.--Under each covered 
contract entered into under the program, the 
Secretary shall make at least 1 payment 
annually.
(ii) Amount.--The amount of a payment under 
clause (i), with respect to an eligible good 
produced by an eligible entity over a 
designated period of time, as determined by the 
Secretary, shall equal the product obtained by 
multiplying--
(I) the quantity of the eligible 
good (expressed in the relevant 
quantity) produced by the eligible 
entity during the designated period of 
time; and
(II) the per-unit payment amount, 
which shall be the difference between--
(aa) the strike price; and
(bb) the average applicable 
fair market value of the same 
eligible good during the 
designated period of time, as 
determined by the Secretary.
(iii) Dynamic indexing.--The Secretary 
shall adjust the strike price established in 
each covered contract over time to account 
for--
(I) inflation; and
(II) changes in the cost of key 
inputs to the production of the 
eligible good, as determined by the 
Secretary, including, at a minimum--
(aa) natural gas;
(bb) hydrogen; and
(cc) electricity.
(iv) Maximum payment amount.--For each 
covered contract under the program, the 
Secretary shall establish a maximum amount that 
may be paid under that covered contract, which 
amount--
(I) takes into consideration 
expected levels of--
(aa) the quantity of 
eligible goods covered under 
the covered contract (expressed 
in the relevant quantity) 
produced over the duration of 
the covered contract; and
(bb) the per-unit payment 
amount described in clause 
(ii)(II);
(II) maximizes the deployment of 
available appropriations and the 
achievement of the goals of the 
program; and
(III) ensures that obligated 
expenditures do not exceed available 
appropriations.
(G) Penalties.--The Secretary may impose financial 
and other penalties on any eligible entity that fails 
to meet the performance requirements established by the 
Secretary for the covered contract of that eligible 
entity.
(H) Public notice.--Not later than 180 days before 
each auction is held under the program, the Secretary 
shall publish guidance on the auction process, 
including--
(i) the timeline and selection process;
(ii) a list of eligible goods, eligible 
goods classes, and ambition levels, if 
applicable;
(iii) the auction budget for each eligible 
goods class and ambition level, if applicable;
(iv) the benchmark carbon intensity for 
each eligible goods class;
(v) the applicable fair market value for 
each eligible goods class, measured as the 
average applicable fair market value over the 
preceding 12 months; and
(vi) any additional information needed to 
facilitate a fair and competitive auction, as 
determined by the Secretary.
(I) Rulemaking.--
(i) In general.--The Secretary shall--
(I) not later than 1 year after the 
date of enactment of this Act, 
promulgate rules for the implementation 
of the program; and
(II) update those rules at least 
once every 5 years thereafter.
(ii) Effect on contracts.--Any update made 
under clause (i)(II) shall not apply to covered 
contracts under the program in effect before 
the date of effectiveness of the update.
(4) Emissions reduction goal.--In awarding funding under 
the covered programs, the Secretary shall seek to keep the 
aggregate carbon intensity of each covered national industry in 
the United States below the value of the applicable percentage 
of the baseline carbon intensity for that covered national 
industry.
(5) Allocation of funding.--In awarding funding under the 
covered programs, the Secretary shall, to the maximum extent 
practicable, allocate funds to eligible entities that produce 
covered primary goods that are included within a covered 
national industry in approximate proportion to the share of 
total greenhouse gas emissions that the covered national 
industry is responsible for emitting.
(6) Offices.--The Secretary may establish 1 or more offices 
within the Department of Energy to administer the covered 
programs.
(7) Evaluation and report.--Not later than January 1, 2032, 
the Secretary shall submit to Congress a report evaluating the 
efficacy of the covered programs.
(8) Appropriations.--
(A) In general.--For fiscal year 2027 and each 
subsequent fiscal year, in addition to amounts 
otherwise available, there are appropriated, out of any 
funds in the Treasury not otherwise appropriated, to 
the Secretary to carry out this subsection an amount 
equal to the amount determined under subparagraph (B) 
with respect to such fiscal year.
(B) Appropriation.--
(i) Fiscal year 2027.--For fiscal year 
2027, the amount appropriated for purposes of 
paragraph (2) shall be $75,000,000,000.
(ii) Subsequent fiscal years.--For fiscal 
year 2028 and each subsequent fiscal year, the 
amount appropriated for purposes of paragraph 
(2) shall be equal to the applicable amount (as 
determined under subparagraph (C)) for the 
preceding fiscal year.
(C) Applicable amount.--For purposes of this 
paragraph, the term ``applicable amount'' means--
(i) for any fiscal year beginning prior to 
the date on which the Secretary of the Treasury 
determines the total increase in revenues to 
the Treasury by reason of the application of 
subchapter E of chapter 38 of the Internal 
Revenue Code of 1986 (as added by subsection 
(a)) is equal to or greater than 
$100,000,000,000, $0; or
(ii) with respect to any fiscal year 
beginning after the date described in clause 
(i), an amount equal to 25 percent of the 
increase in revenues to the Treasury during 
such fiscal year by reason of the application 
of subchapter E of chapter 38 of the Internal 
Revenue Code of 1986 (as added by subsection 
(a)).
(d) Economic Support Fund of Department of State.--
(1) In general.--For fiscal year 2027 and each subsequent 
fiscal year, in addition to amounts otherwise available, there 
are appropriated, out of any funds in the Treasury not 
otherwise appropriated, to the Department of State an amount 
equal to the amount determined under paragraph (2) with respect 
to such fiscal year, with such amount to be made available for 
bilateral and multilateral assistance to support climate and 
clean energy programs.
(2) Preference.--In providing assistance under paragraph 
(1), the Secretary of State (in conjunction with the Secretary 
of the Treasury, the Secretary of Energy, and the Administrator 
of the Environmental Protection Agency) shall allocate such 
assistance in a manner which prioritizes the following goals in 
the following order of importance:
(A) Facilitating the negotiation of carbon club 
agreements pursuant to section 4694 of the Internal 
Revenue Code of 1986 (as added by subsection (a)).
(B) Providing assistance to countries described in 
section 4694(d)(2) of such Code.
(C) Maximizing the reduction of global greenhouse 
gas emissions.
(D) Securing access for the United States to 
materials and inputs necessary to manufacture products 
with lower carbon intensity, particularly those that 
are not feasibly produced domestically.
(E) Supporting human development and reductions in 
poverty.
(F) Advancing the national security and diplomatic 
interests of the United States.
(3) Appropriation.--
(A) Fiscal year 2027.--For fiscal year 2027, the 
amount appropriated for purposes of paragraph (1) shall 
be $25,000,000,000.
(B) Subsequent fiscal years.--For fiscal year 2028 
and each subsequent fiscal year, the amount 
appropriated for purposes of paragraph (1) shall be 
equal to the applicable amount (as determined under 
paragraph (4)) for the preceding fiscal year.
(4) Applicable amount.--For purposes of this subsection, 
the term ``applicable amount'' means--
(A) for any fiscal year beginning prior to the date 
on which the Secretary of the Treasury determines the 
total increase in revenues to the Treasury by reason of 
the application of subchapter E of chapter 38 of the 
Internal Revenue Code of 1986 (as added by subsection 
(a)) is equal to or greater than $100,000,000,000, $0, 
or
(B) with respect to any fiscal year beginning after 
the date described in subparagraph (A), an amount equal 
to 25 percent of the increase in revenues to the 
Treasury during such fiscal year by reason of the 
application of subchapter E of chapter 38 of the 
Internal Revenue Code of 1986 (as added by subsection 
(a)).
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