SQ Efforts spillover to international action

American law requires official support for low-greenhouse-gas (ghg) hydrogen made from renewables, nuclear power and fossil fuels with carbon capture. Some activists are hostile towards carbon-capture technologies, which they believe are giving Big Oil a longer lease on life, but un climate experts have said they are needed to achieve long-term climate goals. America will support all forms of carbon capture capable of making it the global leader in this nascent area. Bloombergnef (bnef), a research firm, reckons that merely the projects announced so far will propel America to a six-fold increase in its ccs utilisation by 2030. Also encouraging are early indications that the Biden administration wants to soften problematic protectionist provisions written into the new laws. One worry was that the desire to combat Chinese domination of vital supply chains will lead to an overreaction, with stringent tax guidance forcing American firms to domesticate supply chains radically and quickly or risk losing out on subsidies. Proposals are also making the rounds in Congress for an anti-China border tax on carbon that could become a form of protectionism. But there are further signs of pragmatism. To avoid a tit-for-tat battle over carbon border taxes, European and American trade officials are discussing forming a carbon club of economies that would levy tariffs on steel and aluminium based on the ghg-intensity in their production. On March 31st the Treasury unveiled rules governing the tax credits available for evs. If these had been written in the most stringent way, they would have made it much harder to earn tax credits for new ev models. In the event, the proposal widened eligibility such that it would make it easier to source some key inputs from countries lacking the comprehensive free-trade deals long enjoyed by Canada and Mexico. The rules were denounced by Senator Joe Manchin, an influential Democrat from West Virginia favouring much stronger protectionism, as “horrific”.