And it obviates the very reason why the EPA even exists, which is to balance the public health benefits and compliance costs of U.S. environmental policies.

Why do anything to clean up the environment if one assumes there are no benefits? /n

This runs counter to how cost-benefit analyses have been conducted by the U.S. government for decades, across both Republican and Democratic administrations. 2/

Stay tuned in the coming weeks as we apply this model to analyze CCA’s impacts on U.S. competitiveness, GHG emissions, GDP, and government revenue, as well as the impacts on our trading partners. /n

My team at @emlab.ucsb.edu has been building a state-of-the-art global computable general equilibrium (CGE) trade model to evaluate the economic and climate implications—both for the U.S. and globally—of paired domestic and trade climate policies like CCA. 8/

Together, these three pillars provide a comprehensive system of carrots and sticks for both domestic and foreign producers.

CCA recognizes the challenges of domestic industrial decarbonization and the geopolitical opportunities of trade agreements. 7/

Pillar #3: Domestic decarbonization investments

CCA returns revenue from the domestic performance fee & carbon import tariffs through grants, loans, & rebates to accelerate US industrial decarbonization.

In this era of budget deficits, CCA provides climate spending in a budget-neutral package. 6/

Importantly, CCA waives the US carbon tariff if a trade partner adopts comparable domestic climate policy.

This is crucial, as it lays the groundwork for a US-led global climate club: a trade agreement that rewards domestic climate action with market access. 5/

Pillar #2: Carbon import tariff with climate club provisions

US decarbonization is of little use if the rest of the world doesn’t also act.

To level playing field, CCA imposes a carbon tariff on imports from countries that are dirtier on average than the U.S., at the same $60/ton CO2e rate. 4/

Pillar #1: Domestic performance fee

CCA applies a performance fee of $60/ton CO2e to U.S. firms that are dirtier than U.S. average. Firms that are cleaner than average face no fee.

This creates an incentive for dirtier firms to clean up, and for cleaner firms to stay ahead. 3/

Manufacturing is where climate policy meets global competition.

In some sectors, US is among cleanest (eg metals). In others US is falling behind (eg EVs, renewables).

CCA aims for US industries to be globally competitive while achieving GHG cuts at home and abroad through 3 pillars. 2/

Shu-Chen Tsao

JMP: "Innovation and Adaptation to Expanding Biological Threats"

Website: sites.google.com/view/shuchen...

Jimena Rico-Straffon

JMP: "Impacts of Water Shortages on Labor Supply: Evidence from Mexico City"

Website: jimenaricostraffon.com

Risa Lewis

JMP: "Willingness to Pay to Avoid the Emotional Well-being Impact of Climate Change Information"

Website: risaalewis.com

Minwoo Hyun

JMP: “Trapped or Transferred: Worker Mobility and Labor Market Power in the Energy Transition”

Website: minwoo-hyun.github.io

Seonmin (Will) Heo

JMP: “Floods and the Frictions of Price Adjustment in Housing Markets”

Website: swheo.com

Yang Gao

JMP: "Beyond Emissions: The Implications of Capital Misallocation on Optimal Carbon Tax"

Website: yanggaolamb.github.io

Luorao Bian

JMP: “The Environmental Implications of Place-Based Policy: Evidence from Minimum Wage Ordinances”

Website: www.luoraobian.com