America's Clean Future Fund Act

Bill Number

S. 2712

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-09-04: Read twice and referred to the Committee on Finance. (text: CR S6321-6329)

Last Updated

2025-09-23T15:27:37Z

AI-Generated Summary

Purpose of the Legislation

The America's Clean Future Fund Act aims to combat climate change by imposing a carbon fee on fossil fuels and certain emissions to reduce U.S. greenhouse gas emissions, while funding clean energy projects, community transitions, and rebates for citizens. It seeks to achieve a 45% net reduction in emissions by 2030 and 100% by 2050 (from 2018 levels) through financial incentives, infrastructure support, and equitable investments prioritizing vulnerable communities.

Key Provisions

• Climate Change Finance Corporation (C2FC): Establishes an independent federal agency to finance clean energy, low-emission technologies, resilient infrastructure, and high-risk climate projects.
• Managed by a 7-member Board of Directors appointed by the President (with Senate confirmation), representing diverse interests like agriculture, labor, and environmental justice.
• Includes working groups for environmental justice, worker transitions, and research/innovation to provide community input and ensure equitable funding.
• Prioritizes investments in overburdened communities (e.g., low-income, communities of color, those reliant on fossil fuels).
• Tools include grants, 75% loan guarantees, and other financing (e.g., zero-interest loans); requires prevailing wages (Davis-Bacon Act) and U.S.-made iron/steel (Buy America, with waivers).
• Initial funding: $7.5 billion annually for FY 2026-2027.
• Biennial reviews and public reporting on progress toward emission goals.

• Carbon Fee: Imposes a fee starting in 2027 on "covered entities" (e.g., refineries, coal producers, natural gas producers/importers) for using, selling, or transferring covered fuels (crude oil, natural gas, coal, and derivatives that emit greenhouse gases).
• Rate: $75 per metric ton of CO2-equivalent in 2027, increasing by $10 annually (with inflation adjustments); escalates further ($15-$25 increments) if emission targets are missed.
• Covers non-fuel emissions (e.g., fugitive methane from production) starting 2029 for large emitters (>25,000 metric tons/year).
• Exemptions/refunds for non-emitting uses and carbon capture/sequestration (up to the fee rate paid).
• EPA develops emissions accounting rules, with third-party verification; quarterly payments required.
• Border adjustments: Refunds for U.S. exports of carbon-intensive products/fuels; equivalency fees on imports (reduced if foreign carbon pricing exists) to prevent offshoring emissions.

• America's Clean Future Fund: A Treasury trust fund financed by carbon fees (after refunds and a $100 billion initial drawdown over 14 years).
• Allocations (phased over time):
• ~75-80% for carbon fee rebates (see below).
• 7% initially for agricultural decarbonization (phased out after 10 years).
• 15-20% for C2FC investments.
• 10% initially for community transition assistance (phased down to 0% after 14 years).

• Carbon Fee Rebates (Stimulus Payments): Quarterly payments to eligible U.S. residents (age 18+, valid SSN/ITIN, principal residence in U.S.).
• Amount: Pro-rata share of 25% of fund allocations per quarter (estimated annually); phases out for higher incomes (starting at $75K single/$150K joint, reduced by 5% per $1K over threshold).
• Not taxable; excluded from federal benefit calculations.
• Initial payments in FY 2026-2027 from $75 billion appropriation; terminates if emissions goals met or payments fall below $20/quarter for 8 quarters.
• Public awareness campaign and coordination with agencies for distribution (e.g., via tax returns or EBT cards).

• Agricultural Decarbonization Transition Payments: USDA program (FY 2027-2036) providing payments to farmers/ranchers for adopting climate-smart practices (e.g., efficient energy use, soil health improvements) on eligible land.
• Focuses on measurable emission reductions; prioritizes underserved producers (e.g., veterans, low-income, socially disadvantaged).
• Includes data collection for baselines, inventories, and verification services; ensures privacy and prevents double-dipping with other programs.
• Ineligible if violating environmental laws.

• Transition Assistance for Impacted Communities: Commerce Department grants (coordinated with Labor) to labor groups, governments, tribes, nonprofits in affected areas (e.g., fossil fuel-dependent, disaster-prone, polluted communities).
• Uses: Job training/apprenticeships (prioritizing displaced workers), economic diversification, resiliency infrastructure (e.g., flood-proofing), environmental cleanup (e.g., mine reclamation), and early retirement subsidies.
• Requires prevailing wages and Buy America; encourages partnerships.
• Initial funding: $5 billion annually for FY 2026-2027; ongoing from the fund.
• Triennial report to Congress on outcomes (e.g., jobs created, wages).

• Study on Carbon Pricing: EPA commissions National Academy of Sciences reviews (starting 2029, every 5 years) evaluating fee effectiveness against emission goals, including air quality in justice communities, policy comparisons, and international decarbonization.

• Carbon Sequestration Targets: Council on Environmental Quality sets achievable targets for natural sinks (land/water) and strategies for ecosystem protection (e.g., flood control, biodiversity); reports to Congress on needs.

Significant Changes to Existing Law

• Amends Internal Revenue Code (Chapter 38, adding Subchapter E; Chapter 98, adding trust fund) to create a new carbon fee mechanism, distinct from existing excise taxes (e.g., on coal/gasoline), with dynamic rates tied to emissions performance.
• Establishes C2FC as a new independent agency, similar to but broader than existing entities like the Export-Import Bank, with explicit equity mandates.
• Modifies Greenhouse Gas Reporting Program (EPA) for fee compliance; adds disclosure rules for rebates (IRC §6103).
• Introduces border fee adjustments, a novel trade-linked carbon policy not in prior U.S. law.
• Phases in agricultural payments building on but expanding USDA conservation programs (e.g., EQIP); adds workforce grants under Commerce/Labor, integrating with Workforce Innovation Act.

Potential Impacts

• Government Agencies: Creates administrative burdens for Treasury/IRS (fee collection/refunds), EPA (emissions tracking), USDA (farm payments), and Commerce (grants); funds new agency and programs, potentially shifting budgets toward climate (e.g., $100B+ initial outlay). Biennial reviews could influence policy adjustments.
• Citizens: Provides direct rebates (potentially $300-500/quarter per person initially, varying by revenue), job training, and infrastructure benefits, but raises energy costs (fee passed to consumers). Benefits low-income and justice communities via prioritized funding; supports farmers with transition aid.
• International Relations: Border adjustments promote fair trade by penalizing high-emission imports, potentially straining ties with non-pricing countries (e.g., China, EU) but aligning with global pacts like Paris Agreement; refunds for exports aid U.S. competitiveness.

Main Stakeholders Affected

• Energy and Industrial Sectors: Fossil fuel producers/importers face fees, incentivizing shifts to clean tech; clean energy firms benefit from C2FC financing.
• Communities: Environmental justice, low-income, rural, and fossil-dependent areas gain prioritized investments, rebates, and remediation; displaced workers access training.
• Farmers and Agriculture: Eligible for payments to adopt low-emission practices, with data tools for carbon markets.
• General Public: Receives rebates but may see higher fuel/consumer goods prices; long-term gains from reduced emissions and resilient infrastructure.
• Government and Nonprofits: Agencies implement programs; tribes, locals, and NGOs receive grants for transitions.
• Trade Partners: Exporters/importers of carbon-intensive goods affected by border fees.

Notable Legal, Constitutional, or Political Implications

• Legal: Fee structured as an excise tax under Congress's taxation power; carbon capture refunds tie to existing §45Q credit. Potential litigation over fee constitutionality (e.g., as regulatory taking) or border adjustments (WTO compliance). Davis-Bacon/Buy America enforce labor/domestic content, with waiver flexibility.
• Constitutional: Relies on spending clause for fund allocations and commerce clause for emissions/trade regulation; equity focus advances equal protection but may invite challenges if seen as preferential.
• Political: Represents comprehensive carbon pricing (fee + rebates + investments), balancing revenue recycling to mitigate regressivity. Ties funding to emission targets introduces accountability; prioritizes justice communities, potentially polarizing along environmental/economic lines. Study provision ensures ongoing evaluation, adaptable to future administrations.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Durbin, Richard J. [D-IL]

Recent Actions

• 2025-09-04: Read twice and referred to the Committee on Finance. (text: CR S6321-6329)
• 2025-09-04: Introduced in Senate

Bill Versions

• America's Clean Future Fund Act — issued 2025-09-04 — PDF (82 pages)