H.R. 1135: Polluters Pay Climate Fund Act of 2025

This bill, titled the "Polluters Pay Climate Fund Act of 2025," aims to address climate change primarily by imposing a tax on companies responsible for significant fossil fuel emissions. The key components of the bill include:

Establishment of a Tax on Fossil Fuel Emissions

The bill introduces a tax that requires companies, referred to as "assessable persons," to pay based on their emissions of carbon dioxide (CO2). The tax is designed as follows:

• Each company that **exceeds a specific threshold** of CO2 emissions (over 1 billion metric tons) will be taxed, with the total tax amounting to around **$100 billion annually**.
• The tax collected will contribute to a dedicated fund known as the **Polluters Pay Climate Fund**.
• The method for assessing the taxes considers each company's **proportion of total emissions** in relation to the aggregate emissions of all liable entities.

Polluters Pay Climate Fund

The bill establishes the **Polluters Pay Climate Fund** to manage the funds collected from the emissions tax. Key provisions include:

• Funds will be used to finance a range of activities aimed at facilitating climate resilience, adaptation, and disaster response.
• Specific focuses include mitigating climate-related disasters, enhancing infrastructure resilience, supporting environmental justice initiatives, and addressing public health issues connected to climate change.
• A sizeable portion (40%) of the fund is earmarked for investments benefiting **environmental justice communities**, which include areas heavily populated by underserved groups, low-income populations, and Indigenous peoples that face a higher risk from climate change effects.

Incremental Payment Option

Entities liable for the tax may choose to pay their obligation in **nine annual installments**, with different proportions allocated for the first installment compared to subsequent payments.

Regulatory Oversight and Reporting

The bill grants the Secretary of the Treasury authority to implement necessary regulations concerning tax assessments and oversight of fund expenditures. The Secretary is also tasked with defining compliance measures for companies to avoid penalties.

Continuing Legal Obligations

Importantly, the bill clarifies that it does not free any entity from legal accountability under existing laws related to climate change, including potential civil suits for damages caused by fossil fuel emissions.

Non-Preemption Clause

The bill specifically states that it does not preempt or supersede state or local laws related to greenhouse gas emissions, thereby allowing existing regulations to remain in force.

Conclusions on Funding and Accountability

The tax imposed is regarded as just a small fraction of the overall costs incurred by the government in responding to climate impacts, which emphasizes the bill's intention to increase financial accountability on the part of major polluters.

Relevant Companies

• XOM (Exxon Mobil Corporation) - This company is a prominent fossil fuel extractor that would be directly affected by the emissions tax based on its significant contributions to CO2 emissions.
• CVX (Chevron Corporation) - Similar to Exxon, Chevron is engaged in large-scale fossil fuel production, which would place it under the tax requirements of the bill.
• BP (BP p.l.c.) - As another major player in the fossil fuel market, BP's operations would result in substantial tax liabilities under this legislation.
• RDS.A (Royal Dutch Shell plc) - Shell is likely to face significant tax implications due to its large emissions footprint associated with its fossil fuel extraction and refining activities.