# Plain Language Summary: Energy Innovation and Carbon Dividend Act of 2021

This bill creates a new tax on fossil fuels—specifically oil, coal, and natural gas—based on how much carbon pollution they produce. The tax starts at $15 per metric ton of carbon dioxide in 2021 and increases by $10 each year (adjusted for inflation). The money collected from this tax goes into a special fund called the Carbon Dividend Trust Fund, which gets distributed back to American people as dividends. The idea is that by making polluting fuels more expensive, companies and consumers will have a financial incentive to switch to cleaner energy sources, while regular people get compensated through the dividend payments.

The tax applies to the companies that first bring these fuels into the market—refineries selling oil, coal mining operations, and natural gas distributors. It also applies to anyone importing these fuels into the United States. However, the bill includes some exemptions: farmers using fuel for farming activities get refunds of the carbon fees they paid, and the military's fuel use is also exempt. The tax rate can increase faster if the country misses its emissions reduction targets, but it stops increasing once emissions drop to just 10 percent of 2010 levels, giving the system a built-in finish line.

The bill also sets up a "carbon border fee adjustment," which means imported products from countries without similar carbon pricing could face additional fees to prevent companies from just moving their operations overseas to avoid the tax. This is designed to keep American manufacturers competitive while encouraging global emissions reductions. The Environmental Protection Agency and Treasury Department would handle the details of how the system actually works, including which products count as carbon-intensive and how to calculate emissions.

Energy Innovation and Carbon Dividend Act of 2021

Deutch, Theodore E.

Energy Innovation and Carbon Dividend Act of 2021 This bill imposes a fee on the carbon content of fuels, including crude oil, natural gas, coal, or any other product derived from those fuels that will be used so as to emit greenhouse gases into the atmosphere. The fee is imposed on the producers or importers of the fuels and is equal to the greenhouse gas content of the fuel multiplied by the carbon fee rate. The rate begins at $15 per metric ton of CO2-e in 2021, increases by $10 each year, and is subject to further adjustments based on the progress in meeting specified emissions reduction targets. The bill includes <ul> <li> exemptions for fuels used for agricultural or nonemitting purposes,</li> <li>exemptions for fuels used by the Armed Forces,</li> <li> rebates for facilities that capture and sequester carbon dioxide, and</li> <li>border adjustment provisions that require certain fees or refunds for carbon-intensive products that are exported or imported. </li> </ul> The fees must be deposited into a Carbon Dividend Trust Fund and used for administrative expenses and dividend payments to U.S. citizens or lawful residents. The fees must be decommissioned when emissions levels and monthly dividend payments fall below specified levels.