Despite trade tensions, there remains room for optimism regarding trade’s role in the fight against climate change, as Members of the WTO continue to advance trade-related climate measures that will reduce emissions and pollution while expanding economic opportunities available to their citizens. Brazil, as host to COP 30, has worked to frame climate and trade as an enabler and accelerator for climate action, illustrating the growing significance of this trend.

Throughout the week, participants called for the Members of the WTO to ensure predictable and stable rules for trade, including by ensuring that greenhouse gas emissions accounting requirements and methods are transparent and compatible across jurisdictions. Preceding the week of events, Australia, Japan, Korea, and the United Kingdom submitted non-binding guidance for establishing methodologies for calculating the emissions embodied in traded goods, complementing discussions in the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) and G7 Climate Club.

Ensuring that these methodologies are compatible across borders prevents businesses from having to comply with multiple accounting frameworks, which would raise costs and inefficiencies. As the representative from the Adani Group, an Indian conglomerate, stated, businesses would rather have to meet one strict but internationally recognized standard than be required to comply with a global “spaghetti bowl” of regulations. Negotiating one such harmonized standard remains unlikely in the immediate future. But this statement reinforces the need for interoperable methodologies to account for the emissions embodied in traded goods, echoing C2ES’s call for G7 cooperation on this issue.

The United States must remain engaged in carbon accounting methodology negotiations at the WTO, IFCMA, and G7 Climate Club, not only to advance effective climate action but also to preserve the interests of U.S. industry. Taking a leading role in these discussions ensures that the resulting standards reflect the interests of U.S. industry, among other diverse perspectives. Doing so will require the United States to better understand the emissions intensity of its own industry by developing internationally interoperable emissions monitoring, reporting, and verification schemes down to the product level.

Even as countries work to reduce emissions, the increasingly visible effects of a changing climate illustrate the need to not only mitigate but also adapt to climate change. Adaptation will be crucial for the health and economic welfare of vulnerable communities around the world. Participants at Trade and Environment Week therefore drew attention to the role trade can play in facilitating climate change adaptation and resilience, whether by disseminating key technologies and services, or by providing developing states with new economic opportunities in low-carbon value chains, reducing emissions while making them less vulnerable to an altered climate.

Climate-aligned trade policies will extend to cross-border trade in services, either through foreign direct investment or through activities like the installation, maintenance, and operation of renewable energy facilities. The international proliferation of climate-aligned trade policies creates an opportunity for the United States to capitalize on its claimed carbon advantage and advanced manufacturing capabilities by leading the way in developing the markets and value chains associated with climate-aligned goods and services. This could take the form of collaborating with key trading partners to promote the offtake of low-carbon industrial and consumer products or by developing and exporting advanced technologies.

Discussions at this year’s convening demonstrate that countries continue to engage actively in climate and trade policy development. As part of its mission to accelerate a resilient, just, and thriving net-zero economy, C2ES supports the advancement of trade policies that create economic opportunities while reducing the emissions embodied in traded goods. C2ES will continue its advocacy for such policies in the United States and around the world.

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RGGI is the first mandatory cap-and-trade program in the United States to limit carbon dioxide emissions from the power sector. California’s program was the first multi-sector cap-and-trade program in North America. Massachusetts has also implemented regulations to establish an additional cap-and-trade program for its power sector that runs in parallel with RGGI but extends out to 2050. Washington state established the second multi-sector cap-and-trade program in the United States. New York is preparing a multi-sectoral cap-and-invest program that is expected to launch in 2026, either in addition to or in place of its RGGI participation. And Oregon completed a rulemaking process to reestablish a program that places a declining cap on emissions associated with fossil fuel combustion in the state.

Last Updated January 2025.

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This factsheet compares border adjustment-related proposals introduced in the 118th Congress (2023–2024). It also outlines key considerations in designing a carbon border adjustment.

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Carbon pricing offers a cost-effective way to reduce greenhouse gas emissions. Thirteen states are already pricing carbon, and a number of states are considering similar action. This factsheet summarizes and compares five federal carbon pricing proposals that were introduced in the 118th Congress (2023–2024), highlighting similarities and differences. Three of these proposals would establish a carbon tax (or “carbon fee”), and two would establish a cap-and-trade program (or “cap-and-invest program”). They are:

• the Energy Innovation and Carbon Dividend Act of 2023 (H.R. 5744) reintroduced by Rep. Salud Carbajal (D-Calif.) on September 27, 2023
• the Modernizing America with Rebuilding to Kickstart the Economy of the Twenty-first Century with a Historic Infrastructure-Centered Expansion Act of 2023 (MARKET CHOICE Act, H.R. 6665) reintroduced by Reps. Brian Fitzpatrick (R-Pa.) and Salud Carbajal (D-Calif.) on December 7, 2023
• Climate Pollution Standard and Community Investment Act of 2023 (H.R. 9230) introduced by Rep. Paul Tonko (D-N.Y.) on July 30, 2024
• the America’s Clean Future Fund Act (S. 5107) introduced by Sen. Dick Durbin (D-Ill.) on September 19, 2024
• the Healthy Climate and Family Security Act of 2024 (S. 5495 and H.R. 10418) reintroduced by Sen. Chris Van Hollen (D-Md.) and Rep. Don Beyer (D-Va.) on December 11, 2024.

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• a renewable portfolio standard (RPS) — adopted by 18 states and the District of Columbia — requires a certain percentage of a utility’s electricity to come from renewable energy sources
• a clean energy standard (CES) — adopted by 8 states — requires a certain percentage of a utility’s electricity to come from low- or zero-carbon emitting energy sources
• an alternative portfolio standard (APS) requires a certain percentage of a utility’s electricity to come from other energy sources that are not necessarily renewables (e.g., combined heat and power, storage, efficient steam technologies).
• electric sector zero-emission standards — adopted by Colorado, North Carolina, and Oregon – require utilities to achieve an emissions reduction of 100 percent or carbon neutrality relative to a baseline.

Qualifying electricity sources vary for these ambitious standards. Some states also include “carve-outs” (requirements that a certain percentage of the portfolio be generated from a specific energy source, such as solar power) or other incentives to encourage the development or maintenance of particular resources (e.g., nuclear power) in their standards.

Colorado, North Carolina, and Oregon’s electric sector emissions standards operate through utility plans for emissions reduction submitted to their state public utility commissions. In 2019, Colorado enacted legislation that requires utilities serving greater than 500,000 customers to supply 80 percent of retail sales with clean energy sources by 2030 and 100 percent of retail sales with clean energy sources by 2050. In 2021, North Carolina enacted legislation that requires the Utility Commission to reduce power sector carbon dioxide emissions 70 percent from 2005 levels by 2030 and achieve carbon neutrality by 2050. In 2021, Oregon enacted legislation that requires retail electricity providers to reduce greenhouse gas emissions associated with electricity to 80 percent below baseline emissions levels by 2030, 90 percent below baseline emissions levels by 2035 and 100 percent below baseline emissions levels by 2040.

Six states have voluntary electricity goals, which generally lack enforcement mechanisms, unlike states with legally binding standards. Some states have multiple, legally binding standards. For example, Massachusetts has an alternative portfolio standard (APS), RPS, and CES. Twelve states have also passed technology-inclusive clean energy policies, which allow for the support of technologies such as nuclear or carbon capture and sequestration (CCS).

Although climate change may not be the primary motivation behind the implementation of these standards, the use of renewable or clean energy can deliver significant greenhouse gas reductions. Other benefits of increasing a state’s use of zero-emitting energy include job creation, energy security, and cleaner air. The majority of states passed or strengthened their standards after 2000; consequently, while many of these efforts have increased the penetration of renewables, others have not been in effect long enough to do so. Many states allow utilities to comply with the RPS, CES, or APS through tradeable credits.

While the success of state efforts to increase renewable or alternative energy production will depend in part on federal policies like production tax credits, states have been effective in encouraging the deployment of clean energy generation.

Last Updated August 2024.

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