Monday, August 3, 2009

Cap and Trade Bill Will Affect Importers.

H.R. 2454 commonly referred to as the cap and trade bill includes importers. It is unclear how this will operate because it leaves much of the formulation on the administration to develop the rules and regulations. But it makes a covered entity, any company that imports more than 25,000 tons of carbon dioxide or equivalent emission in a calender year. It then allows the administration to set up rules for that entity to begin purchasing or applying for emission rights.

One major difficulty will be how will them implement a carbon cap and trade on importers and still be compliant with article three of GATT. I do not see how it could easily work. People who should be most concerned are companies who import products whose production processes include the emission of one of the 16 greenhouse gases that have high carbon dioxide equivalents that will easily place them above the 25,000 ton ‘covered entity’ threshold.

The bill still needs to pass the Senate and will undoubtedly be changed several times before it becomes law. After that it would still have much more metamorphosing through the administrative rule making process before there would be any idea of the specifics of who it will affect. But it is more likely that it will affect importers so it is time to start watching it now.

I believe there should be a carbon tax straight out but that’s a topic for another article.