The PROVE IT Act is a Win for U.S. Industry and the Environment

By Holly Rooper
February 1, 2024

On January 18, 2024, the U.S. Senate Committee on Environment and Public Works advanced the bipartisan “Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act.” Introduced by Senators Chris Coons (D-DE) and Kevin Cramer (R-ND), the bill tasks the Department of Energy (DOE) with analyzing the emission intensity of specific goods produced by the United States, key trading partners, and competitors. This effort establishes an official U.S. source for high-quality, verifiable emissions data, showcasing America’s carbon advantage.

The DOE’s analysis will verify what we already know—American manufacturers and producers across industries are among the cleanest in the world. Quantifying this distinct carbon efficiency advantage will reaffirm previously released analyses by the Council and the Organization for Economic Co-operation and Development (OECD), which clearly demonstrate that the U.S. maintains a carbon advantage and greater carbon efficiency than the global average across every sector examined.

The data from the PROVE IT Act provides tools for the U.S. to confirm and utilize its carbon advantage, benefiting domestic industries and the environment. The legislation can stimulate domestic investment and production, support U.S. interests in emerging trade deals abroad, and encourage the exploration of additional trade tools.

Data will articulate the U.S.’s carbon advantage

The PROVE IT Act will provide high-quality data that fully demonstrates the U.S.’s carbon advantage with emissions intensity data at a more granular level than is currently available and from an official source. With a clearer understanding of U.S. carbon advantage, industry, policymakers, and advocacy groups will have a strong foundation to identify opportunities to reduce emissions, strengthen the position of clean manufacturers, benefit trading partners, and bolster the U.S. position in carbon-related trade negotiations. Filling in critical knowledge gaps will set up the U.S. and trading partners to benefit from their carbon-efficient production.  

Promoting more domestic investment, production, and economic activity to lower global emissions

The PROVE IT Act can help align the U.S.’s economic and climate objectives. By further verifying and articulating emission intensity data, the U.S. can expand its market space while lowering global emissions. Affirming the carbon advantage also affirms a key tool in the fight against climate change: increasing U.S. production and manufacturing can yield better climate outcomes. Carbon-efficient U.S. goods can displace more carbon-intensive ones, both domestically and abroad. The data from the PROVE IT Act can drive home the importance of increasing investment in domestic manufacturing while addressing current barriers, like permitting speed and clarity so that the U.S. can capitalize on this emerging opportunity for domestic industries and the climate.

Supporting U.S. interests abroad

Trade policies that favor carbon-efficient goods are no longer theoretical. The PROVE IT Act

comes at a watershed moment. Many countries are considering measures to reduce the carbon intensity of trade flows and minimize carbon leakage. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is at the forefront, with import fees based on carbon intensity starting in 2026. Other key trading partners— Canada, Australia, Taiwan, India, South Korea, Japan, and the U.K. are also considering similar policy measures.

To implement these policies, countries will assign estimated values to the emissions measurements of American manufactured products. The EU has already conducted their own analysis of the carbon efficiency for covered U.S. products. Without the PROVE IT Act’s data, the U.S. has no comparable product-level emissions intensity data to dispute these assumptions.

However, with the data, the U.S. can defend the emissions performance of domestic firms, avoiding less favorable assessments by trading partners and appropriately evaluating the rigor of other countries’ stated emissions intensities. In turn, the data equips the U.S. to best assert the domestic interest in trade negotiations and dispute settlements over these policies in the future.

Exploring U.S. climate and trade policy

The PROVE IT Act can also arm policymakers to evaluate climate and trade policies that benefit domestic producers, reduce global emissions, and shape favorable geopolitical dynamics, like a climate import fee. The Council has shown through numerous modeling projects that a trade regime which rewards superior environmental performance would overwhelmingly benefit U.S.-based businesses and workers. As more trading partners adopt climate and trade policies, the U.S. can increase its exports of vital products with a significantly lower carbon footprint, validated by the PROVE IT Act, from primary commodities like steel to more complex items like solar panels. This data can support and inform policymakers as they engage in more robust discussions around climate and trade tools.

Enactment and implementation of the PROVE IT Act is an essential step for the U.S. to identify and articulate the carbon efficiency of dozens of industries across the world’s major economies. This legislation solidifies the U.S.’s position as a world leader in low-carbon manufacturing and allows domestic industries to capitalize on these emerging opportunities. The data opens the door for a wide range of policy approaches designed to lower global emissions and reward innovative American manufacturers and workers. The Council applauds the PROVE IT Act as a win for both U.S. industries and the environment.

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