China’s economic growth is dirty. The U.S. can PROVE IT.

By Dan Romito

The cornerstone of the Trump administration’s agenda is implementing “America First” policies, which aim to bolster domestic industries, enhance domestic safety and reduce dependency on foreign manufacturing, namely China’s.

China’s rapid economic growth heavily relies on manufacturing, constituting approximately 33% of its annual GDP, and it is inherently emissions-intensive, with around 70% of its energy consumption dedicated to manufacturing. China’s industrial prowess is built specifically on coal-powered manufacturing, significantly increasing its carbon footprint.

Despite investments in renewable energy, coal still represents about 56% of China’s energy mix, implying it will remain relatively carbon-intense for the foreseeable future. Industries such as steel, cement, and chemicals are among the most carbon-intensive, making Chinese exports vulnerable to carbon tariffs and environmental regulations in the West.

In contrast, the United States has decarbonized for the last four decades while expanding GDP per capita by over 50%.  This decoupling of economic growth from carbon emissions demonstrates the effectiveness of advanced technologies, cleaner energy sources and efficiency improvements. 

Data-driven policy

China is our most significant economic rival, posing strategic threats through unfair trade practices, theft of intellectual property, and state subsidies distorting global competition. China also accounts for nearly 30% of global carbon emissions, making it highly susceptible to international emissions regulations, particularly in the European Union.

While the U.S. government should continue to shed layers of inefficient bureaucracy, we should investigate how one federal legislative proposal, Providing Reliable, Objective, Verifiable Emissions Intensity and Transparency (PROVE IT) Act, could serve as a strategic lever to enforce carbon tariffs on carbon-intensive imports from China.

As proposed, The PROVE IT Act is built on three fundamental pillars:

Data Collection on Emissions Intensity: The Act mandates the systematic collection of emissions data for industrial goods such as steel, aluminum, cement, chemicals, fertilizers, and oil & gas. By quantifying the carbon footprint of these products, the U.S. can empirically demonstrate its lower emissions intensity compared to foreign counterparts, particularly Chinese goods.

Comparative Analysis: The PROVE IT Act highlights the environmental advantages of American products by comparing U.S. emissions data with foreign emissions. Given China’s coal-heavy energy mix and emissions-intensive industries, this comparison underscores the sustainability gap and provides a compelling case for carbon tariffs assigned to the Chinese.

Basis for Carbon Tariffs: The empirical data gathered through the PROVE IT Act can serve as a baseline for imposing carbon tariffs on imports with high emissions intensity. This approach would level the playing field for American manufacturers while incentivizing China to reduce its carbon footprint.

As the world's largest steel, cement, and chemicals producer, China would face the prospect of substantial carbon tariffs on its exports to the U.S. and other Western economies. 

Additionally, the emissions associated with raw material extraction, processing, and transportation further amplify the carbon intensity of Chinese products.  Given the anticipated demand for data centers, infrastructure, and fertilizer, this could become a decisive competitive advantage for the United States.

Objective and transparent

The PROVE IT Act aligns with emerging international standards for carbon transparency, including the European Union’s Carbon Border Adjustment Mechanism and OGMP 2.0 Level 4. As Western economies converge on standardized carbon reporting, China’s emissions-intensive exports could face increasing scrutiny and economic penalties.

By leveraging the PROVE IT Act, the U.S. can effectively constrain China’s economic expansion while promoting sustainable industrial practices. The emphasis on transparent, objective, and verifiable data provides a robust framework for penalizing emissions-intensive imports, compelling China to address its carbon footprint.

If the Western governments, particularly those in the European Union, remain adamant about decarbonization, we should allow the data to talk.  The U.S. has the single best decarbonization profile on the planet, and we should utilize that as leverage and as a tool.

Dan Romito is managing director overseeing the Consulting & Advocacy practice at Pickering Energy Partners. He previously worked at Nasdaq, and his writing has been published in Harvard Business Review, Bloomberg and CNBC.

_{*The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.}