U.S. must tackle emissions first: Chu

Carbon tariffs spark debate over border adjustments as the U.S. weighs climate bill impacts on steel, cement, trade rules, and retaliation risks, while boosting clean energy and nuclear incentives to cut emissions and protect jobs.

The United States should get its own carbon-emitting house in order before looking to slap tariffs on energy-intensive goods from developing countries like China and India, U.S. Energy Secretary Steven Chu said.

Lawmakers have debated adding border fees on carbon intensive goods imported from developing nations should those nations not take action to reduce their own carbon emissions.

But the fees could be a headache for the U.S. government to administer and it's uncertain that they would be allowed by global trade rules.

"You don't have to talk about tariffs yet," Chu told the Reuters Washington Summit. "Lets's figure out what the U.S. can and must do," to reduce greenhouse gas emissions.

Carbon tariffs have been supported by several U.S. senators, especially ones from manufacturing states that are hit hard by high unemployment. A plan for how the fees would work was included in the U.S. climate bill narrowly passed by the House of Representatives in June.

Under the House bill, tariffs on imports of energy-intensive goods like steel, glass, cement, and chemicals from China, India and other countries would be triggered late in the next decade if the developing countries did not live up to promises of taking action on climate.

Several senators have supported such border fees as a guarantee they would not lose jobs and business in their home states, especially in energy-intensive industries that compete with cheap imported goods.

Chu said to start off immediately considering tariffs "does no one good."

The United States, which has less than 5 percent of the global population but is the world's top consumer of energy, should lead in the development of clean energy technologies, Chu said. He added doing so would boost the economy.

He called for more incentives for nuclear power in the climate bill that was under debate, which would help the United States produce more low-carbon power. That could win votes from senators like Republicans Lindsey Graham and John McCain. The Senate needs 60 votes to pass the climate bill, but it is uncertain if there are enough.

Even as some lawmakers support a carbon tariff, a major business group has reservations. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, speaking at a separate session of the Reuters summit, voiced concerns about climate legislation that could trigger taxes on imported goods.

Observers note that Canada faces pressure to align with U.S. green plans as policies evolve.

"The United States is still the world's largest exporter of goods and services. So the country with the most to lose in a trade retaliation game is us," Josten warned.

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