The newly-introduced Foreign Pollution Fee Act could help grow America’s carbon removal industry

Today, Senator Bill Cassidy and Senator Lindsey Graham reintroduced the Foreign Pollution Fee Act. This bill would create a US Carbon Border Adjustment Mechanism (CBAM), a policy that aims to level the playing field for domestic manufacturers by setting an import fee for products coming into the U.S. from countries with more lax environmental standards. Right now, 75% of the goods we import into the U.S. are from less carbon-efficient countries, while goods manufactured in the U.S. are 44% more carbon-efficientopens in a new tab than the world average. This puts the U.S. in a unique position to leverage our global trade leadership to drive down global pollution and support domestic industries in the U.S. 

This bill is timely. A number of other countries are in the process of implementing CBAM policiesopens in a new tab and without our own policy, the U.S. may be put at a disadvantage in global trade. CBAM policies are popular too — a 2025 Rainey Centeropens in a new tab public opinion poll, nearly 70% of people from each political party agreed with the following statement: “[A CBAM] is a good policy. It’s not fair for US companies that have to comply with our environmental standards to compete with Chinese products that don’t face the same standards.”

The Foreign Pollution Fee Act can help support a domestic carbon removal industry

Domestic manufacturers aren’t the only industry that will benefit from the Foreign Pollution Fee Act. At the Carbon Removal Alliance, we’re excited that this bill will help support American innovators who are developing and deploying carbon removal technologies.

This bill can help support the carbon removal market — estimates from the Boston Consulting Group project that the implementation of these mechanisms across the globe could generate up to 550 million tons per year in durable carbon removal demand by 2050. 

Put another way, this is the type of demand-side policyopens in a new tab that this industry needs to scale. By creating a new pool of customers for carbon removal services, our American carbon removal companies can thrive.

How it works 

The Foreign Pollution Fee Act provides an option for foreign producers to reduce or “buy down” their tariff liability by reducing their carbon emissions either through capturing carbon dioxide within their operations or by purchasing a carbon removal credit. Importantly, the bill works to ensure that these efforts are done credibly. 

Without guardrails, foreign producers can often purchase low-quality or even fraudulent offsets to reduce their tariff liability. A recent Natureopens in a new tab analysisopens in a new tab found that less than 16% of all the carbon credits in the voluntary carbon market (VCM) represented real emissions reductions. These kinds of purchases could render a CBAM largely ineffective. 

The Foreign Pollution Fee Act sets key conditions for these purchases (many of which align with those outlined in our CBAM policy memoopens in a new tab), including: 

• Tons must be generated in the U.S or in a country that is not designated as a “foreign entity of concern”
• Tons must be accurately accounted for and verified through new processes set out by Treasury, EPA, and DOE
• Tons must be weighted according to their relative durability, drawing a distinction between non-durable and durable carbon removal (1,000+ years) 

It also creates an advisory board with representatives from the scientific research community with expertise in greenhouse gas accounting and the monitoring, reporting, and verification of carbon removal processes that can help support agency implementation. 

The Foreign Pollution Fee Act would create a fairer market for domestic manufacturers and foster innovation in the U.S. If passed, this bill would protect American entrepreneurs and advance a homegrown carbon removal industry poised to generate jobs and billions in economic growth nationwide. We look forward to working with Senators Cassidy and Graham to move this legislation forward in the 119th Congress. 

Find the Foreign Pollution Fee Act hereopens in a new tab. For more on Carbon Border Adjustment Mechanisms, read our policy memoopens in a new tab.

Photo by USDA on Flickr