Introduction

The Clean Competition Act has re-emerged in 2025 as one of the most detailed and consequential U.S. climate policy proposals aimed at industrial emissions. Rather than introducing an economy-wide carbon tax, the Act focuses on emissions-intensive industrial production and links climate performance directly to competitiveness in domestic and global markets. This approach reflects a growing recognition in Washington that decarbonization policy must address trade exposure, supply chains, and manufacturing resilience alongside emissions reduction.

Reintroduced in 2025 as a bicameral bill by Senator Sheldon Whitehouse of Rhode Island in the Senate and Representative Suzan DelBene of Washington in the House, the Clean Competition Act establishes a structured system for measuring, benchmarking, and ultimately pricing carbon intensity across key industrial sectors. Its architecture places data, transparency, and comparability at the center of future carbon fees and border measures, signaling a shift toward carbon-based industrial policy rather than abstract climate targets.

Policy Objective and Scope of the 2025 Clean Competition Act

The central objective of the Clean Competition Act is to reward lower-carbon industrial production while ensuring that U.S. manufacturers are not disadvantaged by weaker climate standards abroad. Instead of applying a uniform price on all greenhouse gas emissions, the Act targets energy- and emissions-intensive industries that are both economically strategic and exposed to international competition.

The policy relies on carbon intensity benchmarks rather than absolute emissions levels. Facilities are assessed based on the emissions associated with producing a unit of output, allowing more efficient producers to maintain a competitive advantage even as overall emissions decline. This design aligns climate incentives with productivity and process improvements rather than production cuts.

By anchoring the system in measurable, facility-level data, the Act creates the foundation for both domestic carbon fees and equivalent charges on imports. The scope is intentionally narrow at the outset, focusing on sectors where emissions are concentrated and data quality is highest.

Covered Entities and Covered National Industries

The Clean Competition Act defines covered entities by reference to the Greenhouse Gas Reporting Program as in effect on January 1, 2025. Coverage under the Act follows a two-step determination.

Facilities initially captured under the program include:

• Facilities that emit at least 25,000 metric tons of carbon dioxide equivalent annually under the Greenhouse Gas Reporting Program
• Producers of fuels, industrial gases, aluminum, ammonia, and cement, regardless of total emissions

GHGRP coverage alone does not automatically trigger obligations under the Clean Competition Act. A facility is considered a covered entity only when it produces goods that fall within a designated covered national industry, as defined in statute and further specified by the U.S. Department of the Treasury under Section 4695, subject to Section 4691(b).

Covered national industries are structured to capture the majority of U.S. industrial greenhouse gas emissions while ensuring a clear one-to-one relationship between products and industries to avoid inconsistent treatment. These industries are aligned with existing industry classification systems, while still granting Treasury discretion to ensure fair and accurate application across different production processes.

Treasury is authorized to assign facilities and processes to covered national industries and may adjust classifications to ensure fair treatment across products. Companies may petition Treasury to establish a separate covered national industry where their goods are sufficiently distinct from others currently grouped together.

Reporting and Transparency

Covered entities are required to report annually to the U.S. Department of the Treasury, the Department of Energy, and the Environmental Protection Agency.

Required reporting data includes:

• Direct greenhouse gas emissions
• Electricity consumption and associated emissions, including power purchase agreements
• Total quantities of primary goods produced
• Additional information required by Treasury to determine carbon intensity

Reporting timeline:

• June 30, 2026: First reporting deadline
• Annually thereafter: Ongoing reporting requirement

To promote transparency and competition, Treasury is required to maintain a public database of determined carbon intensities. The database will also identify which primary goods are included in each covered national industry and which products qualify as finished goods.

Carbon Intensity Calculation Framework

At the core of the Clean Competition Act is a standardized method for calculating carbon intensity. Facility-level carbon intensity is defined as the total greenhouse gas emissions associated with producing a good divided by the relevant quantity of that good produced.

How carbon intensity is calculated at the facility level:

• Total greenhouse gas emissions associated with production at the facility
• Includes direct emissions and emissions associated with electricity use
• Electricity emissions may reflect power purchase agreements only when generation can be shown to hourly match facility electricity consumption
• Total emissions are divided by the relevant quantity of goods produced

Relevant quantity rules:

• Default unit of measurement is metric tons of product
• Treasury may authorize alternative physical units such as volume or energy content when products are not typically traded by mass

At the industry level, carbon intensity is calculated by aggregating emissions from all covered primary goods in an industry and dividing that total by overall industry output. These industry averages serve as benchmarks against which facility-level performance can be assessed.

Treatment of Imported Goods and Country of Origin

To prevent carbon leakage and ensure fair competition, the Clean Competition Act applies carbon intensity determinations to imported goods using a tiered methodology based on data availability and reliability.

Tiered approach for determining the carbon intensity of imports:

Tier	Data source	When applied	Key conditions
Economy-wide default	National emissions per unit of GDP	When reliable industry data is unavailable	Adjusted for industry-level variability
Industry-level data	Foreign industry emissions data	Transparent market economies	Data must be trustworthy
Manufacturer-level data	Firm-wide emissions data	By petition	No evidence of inter-firm resource shuffling
Treasury estimate	Treasury-developed estimate	When defaults are inadequate or imports exceed 10 percent from one country	Best available estimate

The country of origin for a covered primary good is defined as the country where an energy- or emissions-intensive process transformed inputs into that good.

Additional import rules:

• Least developed countries are exempt unless they exceed 3 percent of global export share in a covered good
• For trading partners with high labor and environmental standards, Treasury must make best efforts to rely on national-level data rather than punitive defaults

Conclusion

The 2025 Clean Competition Act represents a significant evolution in U.S. climate policy. By centering industrial decarbonization on measurable carbon intensity and embedding it within trade and competitiveness frameworks, the Act moves beyond aspirational targets toward enforceable, data-driven policy.

For covered facilities and global suppliers alike, the reporting and calculation rules outlined in the Act are foundational. The June 2026 reporting start date marks the beginning of a new era of carbon accountability in U.S. industrial policy, making early preparation and data quality a strategic imperative rather than a compliance exercise.

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