Ag has concerns over cap-and-trade provisions

For the full article, click on the headline above.

Several key agricultural groups expressed concern this week over a proposed climate change bill introduced in the House, outlining the potential for negative economic impacts to the agriculture sector if a cap-and-trade system is not structured properly.

This week the House Energy and Commerce Committee began consideration of the American Clean Energy and Security Act (H.R. 2454) introduced by Chairman Henry Waxman, (D., Calif.) and Edward Markey, (D., Mass.). It has been referred to eight other committees for review and consideration, including the Agriculture Committee.

Although House Agriculture Committee Chairman Collin Peterson, (D., Minn.,) said he would not support any climate change legislation in a hearing earlier this month, National Farmers Union President Roger Johnson warned Peterson the failure to pass climate change legislation could lead to regulation of greenhouse gas farm emissions by the Environmental Protection Agency (EPA).

At press time 23 groups had written letters to Congress voicing concerns over the bill. No agricultural groups have formally come out in favor of the bill, although several agricultural industry entities voiced support for certain provisions of the bill.

The Rural America Solutions Group, a group of House Republicans, is speaking out about what they see as negative impacts of what they dubbed the "national energy tax legislation" on rural America. The group said the bill as it currently stands would "disproportionately spike rural American energy bills, harm agriculture production and threaten small businesses."

Estimates vary, but experts predict that under the new energy tax proposals, energy prices will increase anywhere between 15% and 125%. This could be detrimental since on average, 65% of farmers' variable input costs are fuel, electricity, fertilizer, and chemicals.

"In recent years, our grower members have seen increasingly higher input costs,•bCrLf said National Corn Growers Association President Bob Dickey. "Each year, growers must commit even more funds to put a crop in the ground and it would be beneficial to have the opportunity to generate revenue from greenhouse gas reduction practices.•bCrLf

Dickey said the bill does not clearly provide for a mechanism by which corn growers can sell carbon credits on the market. "We strongly believe the bill will increase input costs without specific opportunities to offset those additions," he said.

A broad range of agriculture organizations compiled a list of nine key principles that highlight the potential opportunities for production agriculture in a market based cap-and-trade system.

One of the most important principles suggests that any cap-and-trade legislation should fully recognize the wide range of carbon mitigation or sequestration benefits that agriculture can provide. Recognizing this should allow farmers to earn the potential revenue from carbon sequestration trading to offset increased input costs of such items as diesel, fertilizer and steel. As it currently stands, the legislation does not mention agriculture offsets.

In a letter to members of the committee, American Farm Bureau Federation President Bob Stallman said that while the bill does not include agriculture under the greenhouse gas cap provisions, in other respects, the bill fails to include key principles Farm Bureau identified as critical to U.S. agriculture.

"We have consistently advocated that any cap-and-trade bill must: recognize and support the benefits agriculture can provide; make economic sense for agriculture; provide for a strong leadership role for USDA; and base any carbon sequestration program on sound science,•bCrLf the letter stated.

According to Stallman, some sectors of the economy were accommodated as the legislation was crafted, yet the bill ignores the complex needs of American agriculture.

"The (bill) is laden with so many policy prescriptions that its impact on the U.S. is almost impossible to measure and evaluate,•bCrLf Stallman said. "We can be certain of some things, however—it will increase our operating costs and reduce our competitiveness abroad.•bCrLf

According to Stallman, the measure does not adequately provide for alternative sources of energy that will "plug the hole•bCrLf created when fossil fuel costs escalate dramatically. Farm Bureau is also concerned about the potential impact on fertilizer prices, given their sensitivity to natural gas costs.

"The bill would effectively lock the United States into these changes regardless of what is done by other countries, such as China and India,•bCrLf Stallman said. "Such an approach is little more than gambling with U.S. jobs and productivity. Taken as a whole, the bill falls far short of what is necessary for agriculture to survive and grow.•bCrLf

Industry support

Agribusinesses such as DuPont and Deere and Company, as members of the U.S. Climate Action Partnership (USCAP), voiced support for provisions of the bill and encouraged it to go before the full House for continued improvements in the bill.

Properly designed climate change legislation will provide U.S. companies with the certainty they need to innovate, creating new market opportunities and jobs for American workers, DuPont Chair Charles Holliday, Jr. told the U.S. Senate Environment and Public Works Committee Tuesday.

"Environmentally effective and economically sustainable climate legislation will encourage markets to turn increasingly to greater energy efficiency, low carbon energy forms and bio-based products, accelerating development and deployment of technologies that will be critical for a low-carbon economy,•bCrLf Holliday said. "This opportunity will help American companies grow, invest and add jobs.•bCrLf

Pioneer Hi-Bred, a DuPont business, provides farmers with seeds that are increasingly resistant to adverse weather conditions, pest resistant, fertilizer efficient and high yielding. With legislation, DuPont predicts an increase in demand for agricultural practices like no-till that help sequester carbon across hundreds of millions of acres. This will increase demand for seeds and related agricultural products that expand yield while enabling low-carbon growing practices.

The bill currently includes a renewable electricity standard. The National Milk Producers Federation submitted a letter to Congress earlier this year outlining its support for a national renewable electricity standard.

Today some dairy outfits are producing renewable electricity using dairy digester systems. In states where there is no electricity standard, the digesters are not as cost-effective as those states with a standard. NMPF said a national RES would harmonize policy and give producers the ability to enter new energy markets, which will benefit both consumers and producers of renewable energy.