The Foreign Pollution Fee Act May be the Key to Getting the Carbon Market Moving Again
“Big beautiful tariffs” sounds like the last thing we need more of, but if the concept were applied to carbon it could both stimulate the nascent carbon offset market as well as take a meaningful bite out of climate change. The idea is pretty simple, even if the wording is provocative—a price on carbon, imposed by whatever means, would incentivise companies to pollute less. At the same time it might drive investment into the market for carbon removals projects — a great thing for the climate. The reason, of course, is that some carbon emissions are unavoidable and companies need removals credits to account for them.
Carbon prices, usually proposed as a tax or a “cap and trade” scheme, have never gotten very far on a national level in the United States, usually due to opposition from the GOP, often to please a constituency that hasn’t typically taken climate change seriously. But that does not mean Republicans have always been opposed to pricing carbon - it’s just a matter of how you sell the idea.
Two Republican Senators, Bill Cassidy (R-LA) and Lindsey Graham (R-SC), have introduced a new carbon tariff proposal, officially known as the Foreign Pollution Fee Act. The bill takes a page from Europe’s Carbon Border Adjustment Mechanism (CBAM) but with a twist that may make it more palatable to US politics in 2025. The idea is to place a tariff on imported goods based on the amount of greenhouse gas emissions associated with their production.
Here’s the logic: If U.S. companies are subject to stricter environmental regulations and carbon-related costs, it’s unfair—and environmentally counterproductive — to let more carbon-intensive imports undercut them on price. The bill would level the playing field by putting a “fee” on imports of energy-intensive goods like steel, aluminum, cement, and fertilizers from countries with weaker climate rules.
The downside, of course, is that such a tariff would probably increase consumer prices on imports in much the same way as a regular tariff, but on the other hand it would give a price advantage to US businesses because the US energy grid is generally cleaner than, say, China’s. It would also incentivise other countries to clean up their act in terms of electricity production and other sources of CO2.
Those of us who work in or around the carbon removals marketplace might also get a boost, assuming the purchase of credits are accepted as a way to reduce a company’s footprint. Either way, emitted CO2 goes down and useful projects are funded.
Lets get into the details…
It Creates a Price Signal Where None Exists
One of the biggest criticisms of the voluntary carbon market has been the lack of a consistent price signal. Without mandatory pricing mechanisms or regulatory pressure, carbon credits have remained largely symbolic for many businesses - a nice-to-have, not a need-to-have.
A price on carbon changes that. If companies that import goods into the U.S. suddenly have to pay based on the carbon intensity of their supply chains, they’ll have a real financial incentive to decarbonize. And that means carbon accounting—and carbon crediting—become strategic tools, not just sustainability talking points. If this bill passes, we’ll likely see a spike in demand for carbon offsets.
Rewards Clean Innovation - at Home and Abroad
Another win here is the way this tariff encourages innovation. American companies are already leading the charge on decarbonization, particularly those that have invested in cleaner production methods or renewable energy. These companies will have a cost advantage over dirtier foreign competitors. That rewards forward-thinking companies and nudges laggards to get with the program.
If international suppliers want to stay competitive in US markets, they’ll need to measure and reduce their carbon footprints - and may look to carbon projects as a way to do that.
Raising the Bar on Carbon Accounting
The bill hinges on measuring the “embedded emissions” of imported goods. That means companies must know—and disclose—how much carbon went into making their products. In other words, carbon accounting becomes mandatory, not optional.
This is a huge step forward. Accurate emissions measurement is the foundation of a functioning carbon market. If every steel mill, cement plant, and fertilizer facility exporting to the U.S. has to disclose emissions data, we’ll see a much-needed acceleration in standardization and transparency.
That, in turn, will give voluntary carbon markets the data infrastructure they’ve been lacking—and make it much easier to identify where carbon credits can be most effective and additional.
Putting Climate Policy on a Bipartisan Track
One of the most overlooked upsides here is politics. The voluntary carbon market has always been vulnerable to political headwinds—especially when associated with progressive climate agendas. But this proposal has backing from Republicans, and it doesn’t rely on a domestic carbon tax or cap-and-trade system (still politically toxic in some circles).
Instead, it leverages border policy and trade—areas where, even before we started hearing so much about it, Republicans have long supported tariffs as tools for economic leverage. That makes this bill a rare example of climate-smart policy with real bipartisan potential. And if it becomes law, it could create a durable framework that survives election cycles and administration changes.
For the carbon market, that means stability—something it desperately needs.
The Bigger Picture
The voluntary carbon market has always operated in the shadow of regulatory uncertainty. Now, for the first time in years, we’re seeing signs that climate policy and market mechanisms are aligning in a way that makes carbon markets more relevant — and necessary — than ever.
If you care about scaling carbon solutions, driving private investment into decarbonization, or simply making climate action more real and less performative, you should be paying attention to this bill. Carbonmark is building the infrastructure to support this transition. As the voluntary carbon market moves closer to regulatory alignment, businesses will need trusted platforms to access diverse carbon credits, ensure transparency in transactions, and meet evolving compliance and reporting demands. Carbonmark connects buyers directly to verified climate projects—eliminating middlemen, enabling real-time pricing, and ensuring every credit makes a real impact. Whether you’re preparing for new trade policies or aiming to lead in corporate climate action, Carbonmark is your partner in scaling decarbonization with confidence.
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