Overview

The Climate Leadership Council is a bipartisan non-profit organization based in the United States that focuses on advocating for market-based solutions to reduce global emissions. Established in 2017, the council operates as a key entity in the American energy and climate policy landscape, bringing together diverse political perspectives to address environmental challenges through economic mechanisms. The organization’s operational status remains active, continuing to influence policy discussions and legislative proposals aimed at mitigating climate change. Its approach emphasizes the integration of trade relationships and the market economy to foster greater international cooperation and advance climate progress.

The council was founded by prominent figures including Ted Halstead, James Baker, and George Shultz. These founders brought significant experience in public service and economic policy to the organization, shaping its strategic direction and advocacy efforts. The involvement of such notable individuals has helped the Climate Leadership Council gain visibility and credibility in both political and economic circles. Their leadership has been instrumental in developing the council’s core mission and expanding its influence in the realm of climate policy.

In 2022, the Climate Leadership Council launched the Center for Climate & Trade. This initiative leverages trade relationships and the market economy to promote international cooperation and climate progress. The center represents a strategic expansion of the council’s efforts, focusing on the intersection of trade policy and environmental sustainability. By integrating these two areas, the council aims to create more effective and comprehensive solutions to global emissions challenges. This development underscores the organization’s commitment to innovative approaches to climate leadership and policy implementation.

History and Founding Coalition

The Climate Leadership Council was established in 2017 as a bipartisan non-profit organization dedicated to advocating for market-based solutions to reduce global emissions. Its founding was characterized by the formation of a diverse coalition of members from across the political and economic spectrum, aiming to bridge ideological divides on climate policy. This initial gathering of supporters laid the groundwork for the Council’s strategic approach, which emphasizes economic mechanisms to drive environmental progress rather than relying solely on regulatory mandates. The organization’s structure was designed to incorporate perspectives from both corporate leaders and individual advocates, ensuring a broad base of support for its policy recommendations.

Coalition Composition

By 2021, the Council’s membership had grown to a total of 46 distinct entities, reflecting a strategic mix of corporate, environmental, and individual stakeholders. This coalition included 25 corporations, representing significant industrial and financial interests committed to market-driven climate action. Additionally, the membership comprised 3 environmental organizations, providing ecological expertise and advocacy balance to the corporate presence. The remaining 17 members were individuals, likely including prominent politicians, economists, and thought leaders who supported the Council’s bipartisan framework. This specific composition underscores the Council’s effort to create a unified front that integrates economic and environmental priorities.

Exxon Mobil Suspension

In 2021, the Council took the notable step of suspending Exxon Mobil Corporation from its membership ranks. This decision highlighted the dynamic nature of the coalition and the Council’s willingness to enforce alignment with its core principles, even among major corporate members. The suspension of such a prominent energy company signaled a shift in the Council’s strategic focus or a response to specific actions taken by the corporation that diverged from the group’s market-based climate solutions. This event drew attention to the internal dynamics of the coalition and the challenges of maintaining consensus among diverse stakeholders in the evolving climate policy landscape.

The Baker-Shultz Carbon Dividends Plan

The Climate Leadership Council advocates for a market-based approach to reducing global emissions, centered on the Baker-Shultz Carbon Dividends Plan. This framework relies on four interconnected pillars: a carbon fee, direct dividends to households, the phase-out of redundant regulations, and a border carbon adjustment. The plan aims to leverage trade relationships and the market economy towards greater international cooperation and climate progress.

The Four Pillars

The first pillar introduces a carbon fee on fossil fuels at the point of extraction or import. This fee is designed to be revenue-neutral, meaning the money collected is returned directly to citizens as dividends. The second pillar ensures that these dividends are distributed to all households, providing a direct financial incentive for energy efficiency while protecting lower-income families from rising energy costs. The third pillar involves the phase-out of existing environmental regulations that overlap with the carbon fee, thereby reducing regulatory complexity. The fourth pillar implements a border carbon adjustment, which applies the same carbon fee to imported goods to prevent carbon leakage and encourage international adoption of similar pricing mechanisms.

Economists' Statement and Roadmap

In 2019, the Council released an Economists' Statement signed by over 3,500 economists, including multiple Nobel laureates. This statement endorsed the carbon dividend plan as a politically viable and economically efficient solution to climate change. The following year, the Council published the 2020 Bipartisan Climate Roadmap, which provided specific policy details. The roadmap proposed a starting carbon fee of 40pertonofCO2emissions.Underthisstructure,therevenuegeneratedwouldbedistributedasanannualdividendofapproximately2,000 for a family of four. This model aims to create a bipartisan consensus by combining fiscal conservatism with environmental progress, ensuring that the cost of carbon pricing is directly offset by the dividends received by households. The plan continues to serve as a foundational proposal for market-based climate policy in the US.

What are the economic benefits of carbon dividends?

The Climate Leadership Council advocates for carbon dividends as a mechanism to stimulate economic growth while reducing global emissions. Projections associated with the Council’s market-based solutions indicate significant capital mobilization, including $1.4 trillion in new capital investment and 1.6 million new jobs by 2035 (Climate Leadership Council). These figures are cited to demonstrate the potential for broad-based economic expansion under a carbon pricing framework.

Comparative GDP Analysis

Economic modeling further supports the financial advantages of the Council’s approach. A study by NERA Economic Consulting predicts that the carbon dividend model could result in $190 billion higher annual GDP by 2036 compared to traditional regulatory approaches (NERA Economic Consulting). This analysis highlights the efficiency of market mechanisms in driving economic output relative to regulatory interventions.

Center for Climate & Trade and International Strategy

The Climate Leadership Council expanded its operational scope in 2022 with the launch of the Center for Climate & Trade. This initiative represents a strategic pivot towards integrating global commerce mechanisms with environmental policy, aiming to leverage "trade relationships and the market economy towards greater international cooperation and climate progress." The Center operates under the broader mission of the bipartisan non-profit, which advocates for market-based solutions to reduce global emissions. By establishing this dedicated arm, the Council sought to address the growing intersection of trade policy and climate action, recognizing that traditional domestic regulatory frameworks are increasingly insufficient to manage the transnational nature of carbon footprints.

Leadership and Governance

The Center for Climate & Trade is co-chaired by three prominent figures in international trade and policy: Charlene Barshefsky, James L. Connaughton, and Jennifer Hillman. This leadership structure reflects the Council's emphasis on bipartisan expertise and deep institutional knowledge of global markets. Barshefsky, a former U.S. Trade Representative, brings extensive experience in negotiating international trade agreements. Connaughton, a former member of the U.S. Council of Economic Advisers, contributes a strong macroeconomic perspective. Hillman, a former Deputy U.S. Trade Representative, offers specialized insight into the technical aspects of trade law and its application to emerging sectors. Together, these co-chairs guide the Center's strategy, ensuring that its recommendations are grounded in practical economic realities and political feasibility.

Strategic Focus on Decarbonization

A core tenet of the Center's strategy is the recognition that trade plays a critical role in global decarbonization efforts. The Center highlights that a quarter of global emissions are embedded in traded goods, underscoring the significance of supply chains and international commerce in the climate equation. This statistic illustrates that domestic production alone accounts for only a portion of a nation's total carbon output, with imports and exports significantly influencing overall emissions profiles. To address this, the Center advocates for policies that align trade incentives with climate goals, encouraging the adoption of carbon pricing mechanisms and border adjustments to level the playing field for low-carbon producers.

Furthermore, the Center emphasizes the massive capital requirements for a successful global transition. It notes that $215 trillion in investments are needed to achieve meaningful climate progress. This figure encompasses infrastructure upgrades, technological innovations, and shifts in energy production and consumption patterns across both developed and emerging economies. By framing climate action as a significant investment opportunity, the Center aims to attract private capital and stimulate market-driven solutions. The integration of trade policy with these investment flows is seen as essential for mobilizing the necessary financial resources and ensuring that climate-friendly goods and services can compete effectively in the global marketplace.

How does the US carbon advantage impact global trade?

The Climate Leadership Council has positioned itself as a key architect of US climate trade policy through its "America’s Carbon Advantage" reports, published in 2020 and updated in 2025. These analyses argue that the United States holds a significant competitive edge in global manufacturing due to lower carbon intensity compared to international peers. According to the Council’s findings, US goods are more than two times more carbon-efficient than the world average. This efficiency stems from a diverse energy mix that includes a substantial share of low-carbon sources, such as natural gas and nuclear power, which contrasts with the heavier reliance on coal in many emerging economies. The Council leverages this data to advocate for market-based mechanisms that translate domestic climate progress into tangible trade benefits.

Border Carbon Adjustment Mechanisms

A central pillar of the Council’s advocacy is the implementation of a border carbon adjustment (BCA) mechanism. This policy tool imposes a carbon price on imports based on the embedded emissions of foreign goods, effectively leveling the playing field for US manufacturers who already face domestic carbon costs. The mechanism is designed to prevent "carbon leakage," where production shifts to countries with laxer climate regulations, thereby undermining global emission reduction efforts. By charging importers for the carbon intensity of their products, the BCA encourages trading partners to adopt more rigorous climate policies to maintain market access to the US.

The Climate Leadership Council argues that a well-designed BCA serves as a powerful lever for international cooperation. It incentivizes other nations to price their carbon or implement comparable market-based solutions to reduce the tax burden on their exports. This approach aligns with the Council’s broader mission to leverage trade relationships for greater climate progress. The mechanism is not merely a protective tariff but a strategic tool to drive global decarbonization by making carbon efficiency a core component of trade competitiveness. The Council’s work in this area supports the establishment of the Center for Climate & Trade, which focuses on integrating climate goals with economic strategy.

See also