To advance commonsense priorities.
H.R. 3001, titled the MARKET CHOICE Act, is a broad, multi-title bill that would create a comprehensive framework to tax greenhouse gas (GHG) emissions in the United States and to address related policy objectives. The core part, under Title I (the Market Choice Act), imposes taxes on three broad categories of GHG emissions: (1) fossil fuel combustion when fuels are used in the U.S., (2) emissions from certain industrial processes, and (3) emissions from the use of certain manufactured products. The starting rate for the fossil fuel tax is $35 per metric ton of CO2-equivalent in 2027, with annual increases tied to the prior year’s rate plus 5 percentage points plus the rise in the Consumer Price Index (CPI). There is also a mechanism to adjust future rates upward if emissions exceed specified reduction targets. The bill includes credits and exemptions intended to incentivize lower-emission outcomes (e.g., refunds for products that reduce lifetime emissions, refunds for carbon capture and storage) and penalties for nonpayment. It also creates a framework for calculating taxable emissions, with rulemaking in coordination with the Department of Energy and other agencies to ensure consistency and avoid double-counting. A border adjustment program is included to prevent “carbon leakage” (shifting emissions to other countries) by taxing imported GHG-intensive goods at the equivalent domestic tax rate and providing credits or rebates for exports. The bill also establishes a National Climate Commission and a dedicated infrastructure fund (the Rebuilding Infrastructure and Solutions for the Environment Trust Fund, or RISE Trust Fund) to support related public projects, and it provisions several other policy priorities (e.g., health, PFAS coordination, and election-related measures) in separate titles. In short, the act would dramatically restructure U.S. climate policy around a broad GHG tax and border adjustments, with revenue directed toward infrastructure and related programs, while also packaging a number of other policy initiatives in separate sections.
Key Points
- 1Greenhouse gas taxes across three categories
- 2- Imposes a tax on: (a) fossil fuels combusted domestically or imported, (b) certain industrial-process emissions, and (c) GHG emissions from the use of specific manufactured products.
- 3- The initial fossil-fuel tax rate is $35 per metric ton of CO2e in 2027, with automatic annual increases: the rate rises by 5 percentage points plus CPI growth from the previous year. The CPI measure uses a specific urban-consumer index as defined in the bill.
- 4- There is a schedule-based mechanism to adjust rates if total emissions do not meet predefined trajectories; if emission levels exceed targets, the rate for the next year can be increased by an additional $4 per ton.
- 5Point of taxation, exemptions, and refunds
- 6- Tax is paid by the owner of the fossil fuel at the point of taxation (e.g., mine mouth for coal, refinery exit for petroleum products, processing plant exit for natural gas; for imports, at the first entry into the U.S.).
- 7- Exemptions and refunds: refunds are available for product manufacturers who demonstrate that a fossil fuel’s emissions are reduced/eliminated over the product’s lifetime; refunds are also available for carbon capture and storage (CCS) that sequesters emissions from taxed fossil fuels.
- 8- There is a credit for state payments: the Secretary would allow credits tied to payments made under state law, declining over a series of years (100% in the first year, tapering to 0% after the fourth year).
- 9Calculation and administration
- 10- Emissions-tax calculations are to be determined by DOE in cooperation with the EPA, with rules to define subcategories and methods for calculating taxable emissions.
- 11- The bill requires rules to minimize double counting of emissions taxed under multiple sections and to avoid excessive method costs relative to the tax owed.
- 12- Penalties for nonpayment are three times the applicable tax amount for the year.
- 13Border adjustments and avoiding carbon leakage
- 14- The bill adds a border-adjustment framework (Sec. 9911 et seq.) to tax imported covered goods at the same rate as domestic production and to rebate taxes on covered goods exported from the U.S.
- 15- “Covered goods” are defined broadly and are tied to NAICS codes and the Harmonized Tariff Schedule.
- 16- Eligible industrial sectors are identified by greenhouse-gas intensity and trade intensity criteria, ensuring sectors with higher emissions and significant trade are covered.
- 17- The program includes a mechanism to notify foreign countries and to publish annual lists of covered goods and corresponding border adjustments.
- 18National Climate Commission and infrastructure funding
- 19- A National Climate Commission is established to study and advise on climate policy (duties, powers, funding, and staff outlined in the bill).
- 20- Revenues from the emissions taxes would be redistributed under the plan, including to an infrastructure-focused trust fund (RISE Trust Fund) and to state grants, as part of “distribution of revenues from taxation of greenhouse gas emissions.”
- 21Other policy titles included in the bill
- 22- Title II: KO Cancer Act – increases the National Cancer Institute budget and reports on cancer drug shortages.
- 23- Title III: A coordinator for engagement with PFAS-impacted defense communities.
- 24- Title IV: National Bipartisan Fiscal Commission – aims to consider its recommendations in Congress.
- 25- Title V–XII include provisions on restrictions on trading by members of the House, anti-human trafficking measures in banking, safer schools, voting accessibility (Let America Vote Act), intelligence-sharing review with Ukraine, Election Day Act, support for veteran-owned small businesses, and ALS-veterans-related provisions.
- 26The bill is introduced in the House by Mr. Fitzpatrick and referred to multiple committees for consideration. The provided text shows Mr. Fitzpatrick as the introducer.