09. US Clean Competition Act (CCA)

Overview. The US Clean Competition Act (CCA) is a proposed carbon border adjustment mechanism that applies to both domestic and imported products. Unlike the EU CBAM, the CCA uses industry-average benchmarks and imposes charges on entities with carbon intensity above those benchmarks, ensuring a level playing field between US producers and foreign importers.

1) CCA Structure

• Coverage: Energy-intensive, trade-exposed sectors (EITE), such as steel, aluminum, cement, chemicals, glass, pulp & paper.
• Obligation: Applies equally to US producers and importers of covered goods.
• Charge basis: Carbon intensity of production relative to industry benchmark.
• Carbon price: Pegged to US average carbon cost per ton CO₂e (set administratively).

2) CCA Calculation Formula

CCA Charge ($) = (CI_actual – CI_benchmark) × Quantity × Carbon Price

Where:
  CI_actual   = Actual carbon intensity of the product (tCO2e per ton)
  CI_benchmark= Industry-average benchmark intensity (tCO2e per ton)
  Quantity    = Tons of product produced or imported
  Carbon Price= $/tCO2e (set annually by US authority)
    

3) Key Features vs EU CBAM

• CCA applies to both domestic and imports, whereas EU CBAM only applies to imports.
• CCA uses benchmarks, EU CBAM requires facility-level data when possible.
• CCA is fiscal (tax) in nature, EU CBAM is linked to EU ETS allowance prices.

4) Worked Example – US Steel Producer

Scenario: A domestic US steel mill produces 1 million tons of crude steel.

• Actual CI (CI_actual) = 2.0 tCO₂e/ton.
• Industry benchmark (CI_benchmark) = 1.5 tCO₂e/ton.
• Carbon Price = $55/tCO₂e.

Step 1: Excess intensity.

Excess CI = 2.0 – 1.5 = 0.5 tCO2e/ton
    

Step 2: Total excess emissions.

Total excess = 0.5 × 1,000,000 = 500,000 tCO2e
    

Step 3: CCA charge.

CCA Charge = 500,000 × $55 = $27,500,000
    

Result: The US steel mill pays $27.5 million in CCA charges.

5) Worked Example – Imported Cement

Scenario: An importer brings 200,000 tons of cement from Country Y.

• CI_actual (export facility) = 0.9 tCO₂e/ton.
• CI_benchmark (US average) = 0.6 tCO₂e/ton.
• Carbon Price = $55/tCO₂e.

Step 1: Excess intensity.

Excess CI = 0.9 – 0.6 = 0.3 tCO2e/ton
    

Step 2: Total excess emissions.

Total excess = 0.3 × 200,000 = 60,000 tCO2e
    

Step 3: CCA charge.

CCA Charge = 60,000 × $55 = $3,300,000
    

Result: Importer must pay $3.3 million in CCA charges.

6) Compliance & Reporting

• Annual reporting required for CI and production/import quantities.
• Verification of CI data (facility-level if available, otherwise default values).
• Benchmark updates based on industry-wide data, reviewed periodically.

Note: While still a proposal, the CCA signals a major policy shift in the US—tying competitiveness directly to carbon efficiency benchmarks rather than absolute emissions.