Questions for how CCL's carbon fee could be assessed

For the  border adjustment tax on steel, how would the fee be assessed on imported steel from another country if that country did not have a price on carbon or a price which was different than our price?  There seem to be many different variables that might affect the emissions/ton for a particular steel manufacturer. For example, there seems to be whether the steel came from raw ore (generally more energy intensive) or from recycled steel (generally less energy intensive).  What kind of furnaces are used and how are they powered? For example, an electric arc furnaces  vs. a coke fueled blast furnace.  And, then, if a manufacturer is using modern all-electric technology, the amount of emissions produced would depend on the source of the electricity… 

I have made a contact who works with the steel industry, and there is a conference in Pittsburgh where I live that I might attend to make some connections. I've read some articles that seem to indicate the industry might be open to supporting climate action, and I'd like to have a better understanding of how our policy would interact with the different steel making technologies out there. 

Thank-you!

Dana

Thanks Dana!  Check out the training page on Understanding Border Carbon Adjustments and its resources to see if that helps you address your key questions!

@Ricky Bradley   After watching the Carbon Fee training, I still wonder :  the CCL main website on Carbon Fee and Dividend states:  The CCL website says:  Carbon Fee and Dividend
Putting a price on carbon involves placing a fee on these fossil fuels and carbon pollution. The carbon pricing fee is based on the metric tons of carbon dioxide (CO2) the fuel would generate, and it would be assessed at the earliest point of entry into the economy—as close as possible to the well, mine, or port. This carbon price flows through the economy, incentivizing businesses and people to switch to clean energy.

But Many times fossil fuels would be used, but it totally depends on how it is used as to its CO2 emissions.  Suppose we have two manufacturers who use the same fossil fuel (even a refiner), and one uses CO2 scrubbers (at a cost) and the other doesn't.  They'd be charged the same fee on the field delivered, so what then is the incentive to use an expensive CO2 scrubber if it isn't legally required?  

So I don't quite get why the tax would be "as close as possible  to.....".     Should it not be when the fuel is actually burned, whether than is emissions at a refiner, or at a steel manufacturer

However, in the detailed training it seems like the actual regulation allows the fee to be imposed as far downstream as where the fuel is burned, so how does this work? It seems like this will all be extremely complicated?
 

@Frans Kopp Thank you for the thoughtful question. I'm going to ask @Tony Sirna or @Dana Nuccitelli to address your query as my days of being a policy go-to are behind me. I depend on the experts now 😉

Thanks for all you do!
 

Hi @Frans Kopp.  There are other policy mechanisms that can tackle the issue you raise. For example, there's a tax credit called 45Q that creates a separate financial incentive for carbon capture and storage.  It's just much simpler to assess a carbon price right when the fossil fuel is extracted rather than trying to assess it further down the chain when the fossil fuel is about to be burned, and in the policy world, simplicity is very valuable!

Hi @Frans Kopp - In the Energy Innovation Act the fee is asessed upstream as far as practical and then the fee is rebated for non-emissive uses (Section 9902 d) and for CO2 that is captured and sequestered (Section 9905). This is by far simpler than assessing the fee where it is combusted, just because the the number of places where fees are assessed and refunded are fewer. But if deemed more practical, a fee can be assessed further downstream (eg at the refinery rather than the well).
 

@Tony Sirna  Thank you Dana and Tony - very helpful, especially quick response so I don;t go down rabbit holes.  I am just starting in CCL and on the steep learning curve especially on how the credit mechanism would work.  It all makes sense.