Friday, December 12, 2008

Climate Change Wrapup

Fred Yoder again, just wrapping up here at the UN Climate Change conference in Poznan, Poland. Today is the last day, and it has been a busy one. Al Gore addressed the delegation this afternoon as sort of a send-off to get ready for the final meeting in Copenhagen a year from now.

As we part from here, I do think there were many positive things that occurred. Yesterday and today, Sara Brodnax and I had meaningful exchanges with representatives from the EU, Brazil and India concerning agricultural solutions to climate change. As I said before, the ag presence here was next to nill, except for Brazil showcasing their low-carbon biofuels production. As we talked to them about soil carbon sequestration programs, it was not even on their radar screen. All who we talked to were very interested in continuing to exchange ideas and possibly develop ag-based solutions for this new treaty. In our discussions, it became apparent this type of program would benefit the developing countries as well since it could be implemented in a size-neutral way, giving everyone a stake in the solution regardless of their size or economic situation. Every country grows food.

As we leave Poznan, I can only hope we can continue to develop these new relationships and form meaningful partnerships. We need to develop ideas that would benefit all of the world's agriculture producers, and come back to the next conference with a real emphasis on agriculture as a major player. Together, we can have a real impact. As the world economic outlook looks bleak at the moment, surely we can be a driver to create efficient and economic incentives through the growing of crops worldwide while reducing our carbon footprint. At the same time I hope to continue building on those relationships with the legislative staff from the US who attended as well as we develop our own climate legislation.

So long from Poland,
Fred Yoder

Thursday, December 11, 2008

Poznan Update

Hello all, it’s Sara B here in Poznan as well. Today is the beginning of the high-level discussions among the heads of state and ministers here in Poland. These sessions of the Conference of the Parties (COP) conclude several weeks of meetings on technical aspects of the agreements that are taking shape in preparation for the negotiations next year in Copenhagen.

It is very clear that everyone is watching the United States to see how we move forward with climate change under the next administration … words like anticipation and expectation come to mind. On the US side, it seems that one likely scenario is that Congress may pass some type of “placeholder” legislation in the next year to outline GHG emission reduction targets and the structure of a cap-and-trade program. This (theoretically) would create the structure needed in order for the US to participate in developing the next international treaty on climate change in Copenhagen while leaving room for future iterations and improvements.

On the ag side, there has been some limited discussion here in Poznan on agriculture and soil carbon sequestration. Many expect that agriculture will increasingly enter the negotiations as ag producer countries such as the United States and Brazil become more involved in crafting the solution to climate change. There has also been a good deal of discussion on Reduced Emissions from Deforestation and Degradation (REDD), a proposal to slow tropical deforestation in developing countries (with implications for land use change and carbon sequestration).

That's all for now, thanks for staying tuned with us here in Poland!

Reporting from the UN Climate Conference

This is Fred Yoder again reporting from Poznan, Poland at the UN Climate Conference. Well, it has been an interesting couple of days so far. There are lots of meetings to pick and choose from as to what to attend. I have been trying to learn how other countries are regarding agriculture as part of a possible solution in the reduction of GHG. Unfortunately, there are very few countries here that I have been able to find as really engaged from that aspect. Brazil has probably taken the most active role in showcasing their renewable fuel production portfolio and talking about all they are doing in their quest for reducing GHG. Really, from what I have seen so far, we have a lot of work to do in talking up the benefits and possibilities that agriculture has to offer in this arena. This afternoon we are going to attempt to talk to some representatives from the E.U. countries to get their level of interest in pursuing the development of ag credits. There has been some real progress in the protocols to include ways the developing countries can get on board with the new agreement by using credits from the forestry sector whereby over time they can transition into more specific reduction systems. Lots of dialogue, and lots of possibilities. More later.

Fred Yoder

Wednesday, December 10, 2008

Hello from Poznan

This is Fred Yoder reporting to you from the UN Climate Conference in Poznan, Poland. I find it striking that as serious a subject that climate and GHG is, and will affect all of agriculture, I believe I am the only producer from the United States that I know of that is here in attendance. So far, Sara Brodnax and I have linked up with many U.S. legislative staff who are in attendance, and have had some great dialogue with others here from the European Union. I am trying to get a perspective of Europe's attitudes toward cap and trade, since they have had some challenges getting their systems to work. Also, it has been interesting to just observe all of the over 650 NGOs here in attendance and their various perspectives of what should happen as possible solutions. It is certainly evident that it is important to be present to represent one's own ideas, because if not, someone else will, and it may not be the desired message.

I am looking forward to a full day of meetings. It is difficult at times to decide which ones to attend because there are many which would be beneficial to sit in on. I just feel it is vitally important these folks understand the perspective and needs of both agriculture and forestry concerning these issues.

More later,
Fred Yoder

Friday, December 5, 2008

Poland Climate Talks

Hello, it's Sara B again. I will be leaving shortly for Poznan, Poland to observe the UN climate change conference next week.

What's happening in Poznan? Well, the UN climate people (under the UNFCCC or United Nations Framework Convention on Climate Change) and member country delegates (forming the COP or the Conference of the Parties) are meeting to discuss the current international agreement on climate change (the Kyoto Protocol). This conference is part of the process that will shape the agreement to succeed the Kyoto Protocol, which is set to expire in 2012. These discussions started last year in Bali and will end next year in Copenhagen.

What do I expect? Well, a lot of anticipation and speculation about how the US is going to handle climate change under the new Obama administration (note that the Bush administration will be officially representing the US at this COP). That is, will the US ratify the upcoming agreement or move forward with cap-and-trade on their own or ??

I'll be listening in particular for discussion of approaches to mitigation, including policies for soil carbon sequestration and avoided deforestation. There will likely be some buzz about how countries such as Brazil will be approching avoided deforestation. Brazil just announced bold targets for avoided deforestation and signed a landmark agreement with California and other states on REDD (Reduced Emissions from Avoided Deforestation and Degradation, more on this later).

Anyway, stay tuned and check back as I hope to blog from Poland if possible.

Thursday, November 13, 2008

Carbon Offset Consultation

Sara B here, I just wanted to share my thoughts following my participation in the recent Conservation Agriculture Carbon Offset Consultation in West Lafayette, Indiana. The consultation was sponsored by the Food and Agriculture Organization of the United Nations and Conservation Technology Information Center. The conference brought together a collection of experts and farmers from all over the world to share their experiences regarding conservation agriculture and the opportunities for soil carbon sequestration in a carbon market.

The consultation demonstrated the extensive knowledge and research available regarding the successful use of agricultural practices such as no-till to sequester soil carbon. Not only that, but at the end of the conference, the group was able to pull together their thoughts and experiences to develop a consensus document on the urgency of promoting conservation agriculture to offset carbon emissions.

In other words, a group of over 80 scientists, regulators and farmers from different countries got together in a room and agreed (yes, agreed!) that soil C sequestration is a ready, tested and critical piece of the solution to the issue of global climate change.

The consultation made it clear to me that to move forward we need:
o To institute a cap-and-trade system to establish the protocols and to create the market demand for soil C sequestration
o To involve farmers in the research, system design, and decision-making
o To establish flexible and cost-effective solutions to promote widespread adoption
o To agree on the answers to the solvable issues of additionality and permanence
o To avoid the trap of “paralysis by analysis” by fine-tuning and improving as we learn through experience
o To keep the doors open for international cooperation and the exchange of ideas

In the words of Michael, a farmer and aggregator with Carbon Farmers from Australia, the house is on fire and the children are at home ... so let's not argue about the color of the water bucket!

For a copy of the documents from the consultation, please check out the Resources over at the Ag Carbon Market Working Group website.

Wednesday, July 30, 2008

Defining Offsets

Below is a story about the National Farmers Union's recent efforts to gin up visibility and support on Capitol Hill for offsets in the next climate bill. While I applaud their efforts for bringing needed focus to the offsets issue, it is dangerous to tie all of agriculture -- and the fate of offsets, to the Chicago Climate Exchange (CCX) model. That model does not contain the rigor in either project design or measurement that will be required under a mandatory climate market.

The danger of being too closely associated with the CCX is that all those groups who campaign against offsets -- saying they are not real, not measured, and just another subsidy for agriculture, have a much easier time of making their case if offsets are confused with CCX pilot program credits. They are NOT the same thing and it is HIGHLY unlikely that the CCX model of generating offsets will be recognized in the new law.

How can I say this? To my knowledge, there is not one major environmental group that supports the way CCX defines ag ghg reductions/offsets. Not even groups that are very supportive of the concept of ag offsets in a carbon market -- and have put a lot of their own political capital on the line, would be supportive of a system like this.

It will be extremely difficult for any member of Congress to push an offsets title that has zero environmental support.

But beyond the politics -- lets remember, CCX was designed to be a voluntary market -- and it has worked well for what it was designed to be. Once you move into mandatory reductions -- and a program that provides credits to pollute -- which is what an offset will be, we are in a whole new world with new challenges that must be addressed.

If lawmakers get the idea that offsets = CCX, the battle to get the maximum market for agriculture will be made that much harder.


Environment & Energy Daily

CLIMATE: Farmers try to raise visibility of offsets for next warming debate
Allison Winter, E&E Daily reporter0 - 7/30/2008

Farmers are already trying to plant seeds on Capitol Hill for the next climate debate, in an attempt to grow their share of any future cap-and-trade legislation.

The National Farmers Union and key farm state senators met on Capitol Hill yesterday to tout the farm group's partnership with the Chicago Climate Exchange. NFU is sending out checks this weeks to more than 2,300 farmers and ranchers that participate in its carbon credit program, capturing carbon dioxide in their soil in exchange for payments from the carbon market.

The farm lobby wants to highlight its program to lawmakers, in the hopes that agriculture might get more consideration the next time a climate bill comes around. "We want to say, 'Here's something that is working," said National Farmers Union President Tom Buis after a briefing with reporters.

The group was largely preoccupied with the farm bill prior to this year's climate debate, but they are ramping up their presence for the next round on climate legislation. They want to make sure U.S. farmers have a major role in any cap and trade system. And they want a bigger piece of the pie for offsets than the Lieberman-Warner bill would have given them.

Lieberman-Warner put a 15 percent limit on offsets -- the amount of carbon reductions industry can buy from landowners who plant trees, erect methane digesters or practice no-till farming. Lawmakers with a heavy interest in agriculture, such as Sen. Debbie Stabenow (D-Mich.), had an amendment that would have greatly increased the share available for domestic offsets.

Stabenow and Sens. Dick Lugar (R-Ind.) and Ken Salazar (D-Colo.) all praised farmers' participation in carbon markets yesterday. Lugar is a carbon-trader himself. He planted black walnut trees on his Indiana farm to sequester an estimated 3,400 tons of carbon.

But Stabenow said agriculture continues to face a hurdle of proving that it can really reduce carbon. "The big debate is whether or not these are real offsets and can be measured," Stabenow said.

Some environmental groups, like the Natural Resources Defense Council, are skeptical of agricultural offsets. They say the long-term benefits of the offsets are dubious -- if a farmer decides later to till his 'no-till' plot, for instance, he can release much of the carbon he was previously paid to store.

The other major criticism is that offsets might not reduce the carbon in the atmosphere, especially if they are going to farmers who were already doing some of these practices on their land. NFU's program with the Chicago Climate Exchange does not pay farmers for any practice started prior to 1999, in an effort to address that criticism.

"I think there was this assumption, 'Well they're going to do it anyway,'" said Buis. "But if there isn't anything to encourage good behavior, they are going to have to incentivize it."

In addition to the farm lobby, Environmental Defense and other groups are big proponents of offsets as a way to promote conservation, reward private stewardship and reduce carbon. GOP presidential hopeful John McCain supports the use of unlimited domestic and international offset projects for industry compliance (E&ENews PM, May 12).

Offsets are also less expensive than forcing industry to cut its emissions on its own. U.S. EPA and Energy Information Administration studies have shown unlimited offsets could lower the climate program's costs by as much as 71 percent.

The National Farmers Union started its program two years ago. The group is an aggregator for carbon contracts to allow small landowners who would not qualify on their own for the climate exchange's 5,000 ton minimum. NFU identifies farmers who want to participate, enrolls them in the climate exchange and sells their offsets as a group.

Since it began in late 2006, the program has traded more than 86 million tons of carbon offsets and generated $8 million for producers. More than 2,000 farmers participate -- almost half of them in North Dakota, the first state where NFU started the program. Buis said interest continues to grow, mostly by word of mouth.

"What we find is after the checks go out the first year, people go to the coffee shop and tell their neighbors and it grows," Buis said. "We haven't put on a wild marketing program. This is mostly word of mouth."

Friday, July 25, 2008

Geologic vs Biological Sequestration of GHG

The article below is talking about geologic sequestration, not to be confused with soil carbon sequestration. The difference? Geologic seq (often referred to as Carbon Capture and Storage or CCS) refers to capturing CO2 and pumping it underground into geologic formations (underground caves, caverns, mines, etc) and permanently trapping it there. Soil carbon seq, or biological seq - refers to using plants and roots to convert CO2 into carbon, and storing the carbon in the soil as part of the soil.

A key point to note: If geologic sequestration is found too have too many complicating factors -- or is too expensive to become commercialized, than there may be even more demand for biological sequestration and agriculture offsets in the carbon market.

Environment & Energy Daily

Long-term effects of carbon [geologic] sequestration concern lawmakers
(07/25/2008)Katherine Boyle, E&E Daily reporter

Capturing large amounts of carbon dioxide emissions from power plants in order to fight global warming may be feasible in the future, but members of the House Energy and Commerce Committee are nervous about unintended consequences.

At an Environment and Hazardous Materials Subcommittee hearing yesterday, Democrats and Republicans alike said they were concerned burying carbon dioxide (CO2) beneath the ground could be risky and cause new environmental problems.

Rep. Hilda Solis (D-Calif.), for instance, is worried about the effects earthquakes could have on buried carbon stores, particularly in California along the San Andreas Fault. "We're preparing for a big California earthquake," Solis said. She questioned the corrosive properties of CO2 as well and asked what might happen when it is combined with lead or arsenic.

Subcommittee ranking member John Shadegg (R-Ariz.) reminded the panel of the gasoline additive methyl tert-butyl ether (MTBE), which was used to reduce tailpipe emissions but later found to contaminate large quantities of groundwater. "It would be a grave error to move forward with technology that would replace one environmental problem with another environmental problem," Shadegg said.

"That is the framework in which the American people will view whatever we do at this point," he added.

Shadegg also questioned how well the United States has examined environmental damage from carbon injection used to force oil and natural gas out of the ground.

Rep. Joe Barton (R-Texas) suggested EPA should focus more attention on CO2 conversion. "It yields more baking soda than we'll probably need, but it's dramatically easier to store" than gas or liquid, he said.

'Ace in the hole'

Newly appointed subcommittee Chairman Gene Green (D-Texas) questioned how carbon sequestration could affect groundwater reclamation from saline aquifers, if the water in those aquifers could be purified.

This week, U.S. EPA released its proposal to regulate the underground injection of carbon dioxide by power plants and other industrial pollution sources.

EPA's proposed rule is aimed at protecting drinking water sources during and after the geologic sequestration process. In carbon capture and sequestration, CO2 is captured from fossil-fuel power plants, industrial facilities or other sources and then compressed. At the sequestration site, CO2 is injected into deep subsurface rock formations via one or more wells.

Proposed EPA permitting requirements address well location, construction, testing, monitoring and closure. The goal is to prevent CO2 from migrating into underground water supplies. If the gas infiltrates drinking water, it could push other substances that occur underground naturally, like salt, into the drinking water source. It could also create a corrosive carbonic acid that could lead to CO2 leaks (E&E Daily, July 21).

Benjamin Grumbles, EPA's assistant administrator for water, emphasized that the EPA proposal is only meant to address drinking water concerns.

He predicted carbon capture and sequestration could reduce greenhouse gases by 15 percent to 55 percent over the next century. "Geologic sequestration may not be a silver bullet, but it may be our ace in the hole," he said.

Scott Klara, director of the Energy Department's Strategic Center for Coal, said DOE is working with universities, private partners, regions and states to ensure geologic sequestration will be a safe and viable way to reduce greenhouse gas emissions. DOE is working with regional partners on pilot projects to learn more about the technology needed.

"The ultimate success of sequestration will hinge, in part, on our ability to measure the amount of carbon dioxide stored on a site, prevent environmental impacts and mitigate" any harmful effects, Klara said. Another essential aspect is determining whether adequate storage space exists throughout the United States and Canada, he added.

Tuesday, July 22, 2008

Broad Support Emerges for Offsets

Apologies for my long absence on this blog. During early June, there was a vote on the climate bill and my energies were diverted into working on that. For any of you that follow politics, you know that sometimes in order to maintain the trust of those you are working with -- you just can't share everything publicly in real time.

But, now I'm back to providing as much good info as I can on the ag offsets issue - so please check back often.

Below is a letter with some very impressive signers in support of good offsets policy within a climate bill. This letter came about after the strong efforts of Senators Stabenow, Brownback, Crapo and others who pulled together an amendment that would have created strong offsets policy within a climate change bill.

As you can see by those signing the letter, a strong coalition has finally formed to champion good offsets policy within mandatory climate change legislation. Bravo to the groups who rolled up their sleeves and jumped in to shape what could be agriculture's third or fourth largest market: carbon.

Now it is important that the coalition remain together and continue to work with staff in the Senate and the House so that when a bill comes up and passes in the next Congress, agriculture's interest will have been fully accounted for.

June 12, 2008

The Honorable Debbie Stabenow
United States Senate
Washington D.C. 20510

Dear Senator Stabenow:

We are writing to thank you for your leadership
in promoting the key
benefits thatoffsets, particularly
agriculture and forestry offsets, can
provide in
addressing greenhouse gas emissions reductions. Offsets

projects are critical to ensuring that any legislation to
address global
climate change can achieve meaningful
environmental results in a
cost-effective manner. In
addition to these economic benefits of
emissions offsets
projects, they can help drive new technologies and

services, and provide extensive environmental benefits.

Your amendment to the Climate Security Act (S. 3036)
a useful framework for developing offsets policy
that will
engage agriculture and forestry interests,
utilities and industry
seeking to reduce their emissions,
entities that finance and develop
offset projects, and
environmental groups. We look forward to
continuing to
work with you and your staff to craft a robust,

sustainable, offsets policy that efficiently reduces costs
and maintains environmental integrity.


Agricultural Carbon Market Working Group

American Farm Bureau Federation

American Farmland Trust

American Soybean Association

Business Council for Sustainable Energy

Carbon Offset Providers Coalition

--Blue Source

--The Carbon Neutral Company


--Greenhouse Gas Services, a GE AES venture

--Kolibri Group

--MGM International

--N.serve Environmental Services

Coalition for Emission Reduction Projects

--American Electric Power
--Blue Source

--Deutsche Bank

--Duke Energy



--El Paso Corporation

--Environmental Credit Corp
--Equator Environmental
--First Climate

--Leaf Clean Energy Company

--MGM International


--Stark Investments

Deere & Company
The Dow Chemical Company


Duke Energy


Environmental Defense Fund

FPL Group

General Electric

National Association of Conservation Districts

National Barley Growers Association

National Association of Wheat Growers

National Cattlemen’s Beef Association

National Corn Growers Association

National Farmers Union

National Milk Producers Federation

The Nature Conservancy

NRG Energy


Wednesday, June 25, 2008

New U.S. National Intelligence Report Warns of Security Threats from Climate Change

SECURITY: Intel report warns of climate threats to U.S.

Lisa Friedman, ClimateWire reporter

A new U.S. national intelligence report out today warns that climate change has serious implications for U.S. national security.

The National Intelligence Council will warn Congress that climate change poses major challenges, from regional instability to water scarcity to new and growing immigration pressures, for America's military as well as its diplomatic and trade missions, according to several experts who have reviewed the first-ever U.S. government report linking climate and security.

"There's a lot at stake," said Kent Butts, a professor of political-military strategy at the U.S. Army War College.

Butts, who will testify today before a joint session of the House Select Committee on Energy Independence and Global Warming and a House Intelligence subcommittee, called the intelligence assessment "broad."

But, he said, "It did what it needed to do. It signaled that climate change is indeed a serious issue, and it's affecting U.S. security interests globally."

The report, "National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030," comes on the heels of several international studies, mostly from Germany and the United Kingdom, warning that a failure to address climate change could destabilize nations and provoke serious threats.

Water scarcity, sea level rises, migration mean increasing instability

Indeed, members of Congress including Rep. Ed Markey (D-Mass.), Sen. Richard Durbin (D-Ill.) and Sen. Chuck Hagel (R-Neb.) called for the intelligence report after a group of retired U.S. military leaders with the Center for Naval Analyses (CNA) last year found climate change to be a serious threat to the country.

Sherri Goodman, former deputy undersecretary of defense and now general counsel of the Center for Naval Analyses, also reviwed the new intelligence report and called it consistent with the think tank's findings.

"It reflects many of the concerns that we found in terms of increased water scarcity, sea level rises, storm surges," Goodman said.

Security experts said the report details destabilizing threats in different regions of the world, focusing in particular on sub-Saharan Africa. The region is considered extraordinarily vulnerable both because of dire poverty and disease and because it will suffer higher temperatures and longer droughts, leading to water scarcity and decreased crop production.

It also points to a rise in immigration pressures, particularly from the Caribbean, as a challenge headed America's way as sea levels rise and storm surges increase. It describes the United States as largely well-equipped to deal with domestic challenges, but does note that wildfires will increase and several coastal military installations could be at risk of storm surges.

Butts said members of Congress specifically asked him to speak to security implications with China. He said he plans to tell the panels that climate change will lead to the United States and China competing for the same resources, particularly in Africa, a major source of oil for both countries. The answer, he argued, is for the countries to start working together now.

U.S. and China should cooperate in Africa

"To the degree we have destabilizing climate change in Africa, it makes sense to see the U.S. and China cooperate and help build the capacities of governments to adapt," he said, adding that the United States would be "well-served to be more proactive."

Monmouth University President and retired Adm. Paul Gaffney, a top contributor to the CNA report who reviewed an early version of the intelligence estimate, said he believes it underscores a need for detailed climate data.

In order for the U.S. government and military to respond to possible threats or step in before problems start to loom, Gaffney said scientists need to provide more localized information about weather disasters.

"When you're talking about security, you need to be more specific. Are we dealing with drought and famine? Are we dealing with floods and storms?" he said. "It makes a difference, because you might need more helicopters in one place, and in other places you might need more food drops."

Agreed Goodman, "Now we're getting a better handle on what are the right questions to ask."

Political risks heightened by food production risks

Mark Levy, deputy director of Columbia University's Center for International Earth Science Information Network, said the intelligence assessment uses a country risk-assessment the organization did recently as one basis for its findings. CEISIN ranked countries based on sea-level rise, increased water scarcity and an aggregate measure of vulnerability to higher temperatures compared to the country's ability to adapt.

"We can pinpoint areas of high projected climate change that are also in historically unstable regions. This suggests that climate change is likely to heighten political risks," Levy said.

Butts also noted that the United States will have to pay special attention to climate disasters that could destroy food production in parts of the Middle East to prevent new regions from becoming terrorist training grounds.

The intelligence assessment does not question the science of climate change, and relies on the fourth assessment of the Intergovernmental Panel on Climate Change, those who reviewed it said.

Butts said he hopes the study helps move Congress toward addressing the problems.

"I hope they will come together and move beyond the cause of climate change to focus on the security dimensions and look for common ground on a U.S. approach to dealing with this," he said.

Tuesday, June 10, 2008

House Agricultural Policy Climate Change Briefing

Thursday, June 12th

1300 Longworth

11am - noon

Designing Offsets Policy: Implications for U.S. Agriculture

Dear Colleague:

As you know, legislation on climate change will be coming to Congress soon. One of the most important aspects of this complex issue is creating a robust and real “offsets” market whereby regulated entities can pay farmers and foresters to reduce greenhouse gas emissions through a number of conservation practices. Getting this mechanism right is extremely important to ensure both a minimal cost to the economy and environmental integrity. Additionally, this issue is of vital importance to America’s agriculture community with the offset and allowance opportunities for agriculture estimated to bring $24 billion annually to the sector.

I would like to invite your staff to a briefing with representatives from Duke University’s Nicholas Institute for Environmental Policy Solutions, as well as experts working with the agriculture sector, to discuss offsets infrastructure issues and recommendations from both the offset buyer and seller positions.

If you have any questions, please contact Ashley Martin in my office at 5-2801.

Date: Thursday, June 12, 2008

Time: 11am - 12pm

Place: 1300 Longworth


  • Dr. Lydia Olander, author of Nicholas Institute’s Offsets Architecture working group paper
  • Tim Profeta, director of Duke University’s Nicholas Institute for Environmental Policy Solutions
  • Sara Hessenflow Harper - The Clark Group - The market potential of agriculture offsets
  • Mark Gaede - National Association of Wheat Growers - The stakes for agriculture in climate legislation

/s Stephanie Herseth Sandlin
Member of Congress

Wednesday, May 28, 2008

Tougher climate bill being proposed by Rep Markey

Below is a story about a new climate bill coming out from the House of Representatives. This bill is much more stringent than the Lieberman-Warner bill and provides little transition assistance for industry and consumers.

Although this story says the bill will have an offset market, I am very dubious that the architecture of that program will be workable at all since it has the praise of groups like Environment America (formerly known as US-PIRG) and they are notorious in their opposition to agriculture offsets.

Just another thing to keep your eye on -- and another reason why it is so critical for agriculture to be championing its own interest. If the ag industry can not bring something positive to the table, they will get something negative. That's just the way the process works.

CLIMATE: Markey unveils bill for slashing emissions 85 percent (05/28/2008)

Darren Samuelsohn, Greenwire senior reporter

A close ally of House Speaker Nancy Pelosi (D-Calif.) detailed a new global warming bill today that presses for cuts in U.S. heat-trapping emissions that far exceed those in other proposals being debated in Congress, including a Senate measure scheduled for floor debate early next week.

Massachusetts Democrat Ed Markey's climate bill -- to be formally introduced Tuesday -- seeks to curb midcentury carbon dioxide and other greenhouse gas emissions by 85 percent through a cap-and-trade system that would start operating in 2012. (Click here to read the executive summary of the bill.)

Climate Change: Taking stock of Industrial Emissions -- An E&E Special Report
Lieberman-Warner: The 60-vote climb chart

Speaking at the Center for American Progress in Washington, Markey said his bill was the byproduct of lessons learned during his 17 months as chairman of the Pelosi-created House Select Committee on Energy Independence and Global Warming. Since January 2007, Markey has held more than 40 hearings on climate and energy issues and led lawmaker delegations to India, Greenland and the Amazon rainforest.

Markey calls his bill the "Investing in Climate Action and Protection Act." For the tech-savvy, he also dubbed it "iCap."

The climate legislation takes a more aggressive stance on emission limits compared with the Senate bill due on the floor next week from Sens. Joe Lieberman (I-Conn.), John Warner (R-Va.) and Barbara Boxer (D-Calif.). That bill would reduce emissions by 71 percent in 2050.

Markey's plan also reaches further than the Lieberman-Warner-Boxer bill in heeding environmentalists' calls for the distribution of hundreds of billions of dollars in emission credits.

At its start, the Markey bill would auction 94 percent of the program's allowances. The auction proceeds would be used for a cross-section of items Markey sees as helping to make the U.S. economy more climate-proof, including tax cuts for low- and middle-income Americans, energy technology research, energy efficiency and adaptation.

The remaining 6 percent of the allowances would be given away to U.S. manufacturers most vulnerable to trade competition, including the steel, aluminum, paper, iron and cement sectors. By 2020, those industries would no longer get any allowances for free as the cap-and-trade program transitions to a complete, 100 percent auction.

Overall, Markey said his bill covers heat-trapping emissions from 94 percent of the economy. That means mandatory limits for some 10,000 major industrial facilities, such as power plants, petroleum refineries and natural gas distributors.

'Breath of fresh air'

Prospects for Markey's bill are far from clear. The lawmaker said he had briefed Pelosi on the new legislation but offered no other assurances it would see action this year.

Markey, a 17-term congressman, holds a senior position on the House Energy and Commerce Committee, which holds jurisdiction over climate legislation. But to date, that panel's chairman, Rep. John Dingell (D-Mich.), has taken a far more methodical approach to dealing with global warming.

"It's intended to be another important part of the debate as we move forward with the House and in the negotiations with the House and Senate and with the administration," Markey said. "It's going to be ultimately many different ideas that are competing. I think it's important for us to put together the legislation that reflects the best ideas of what's been heard."

Environmentalists welcomed the legislation for pushing further than the Senate plan and also for going into greater detail on many of the more complicated and contentious items required of a cap-and-trade policy.

"It's a breath of fresh air," said Emily Figdor, a top federal climate analyst at Environment America (formerly known as US-PIRG)

A Dingell spokesman said Markey’s office hasn’t yet provided the committee with a copy of the new climate bill.

Mirrors Senate bill

On many of the bill's more technical details, Markey's plan follows the Senate bill by Lieberman, Warner and Boxer.

It would give industry a break from high compliance costs by meeting up to 15 percent of the program's requirements through the use of domestic offsets, such as methane capture or soil sequestration. Companies also could turn to international climate activities for up to 15 percent of the compliance requirements.

The Markey bill also does not have any "safety valve" provisions, such as an absolute ceiling on the price of an emission allowance. Instead, Markey's ideas for cost containment revolve around letting companies bank away an unlimited amount of their emission credits for future use.

To engage China, India and other developing countries, Markey calls on the president to study other climate plans to determine which have taken comparable actions to the United States. If they meet the president's criteria, Markey would give the countries access to tens of billions of dollars in new technology and deforestation funding.

But Markey's bill also mirrors the Lieberman-Warner-Boxer plan by providing a trade stick. Countries that do not take comparable action by 2020 would need to purchase emission allowances if they want to import their carbon-intensive goods into the United States.

Markey's bill includes several other notable points. It would override the Bush administration's controversial decision last December to deny California's request for a waiver while following that state's lead in setting up a nationwide low carbon fuel standard.

If Markey's proposal became law, all new coal-fired power plants with construction that started after January 2009 would need to capture and store 85 percent of their greenhouse gas emissions. U.S. EPA would need to set up a legal framework for the underground storage of greenhouse gases.

And EPA would be ordered to set mandatory standards for greenhouse gas emitters not covered by the cap, including coal mines, landfills, wastewater treatment systems and large animal feeding operations.

Tuesday, May 27, 2008

Dr. Keith Paustian - Colorado State University

At the Senate briefing I put together last week, Dr. Keith Paustian of Colorado State University presented information on measurement and modeling for soil carbon sequestration. The bottom line is that soil carbon sequestration can be measured accurately and with minimal cost at a national level.

You can view Dr. Paustian's presentation by clicking here.

Ag Carbon Market Potential

Last week I put together a briefing for Senate staff examining the carbon market potential for the agriculture sector. This briefing looks at some of the issues surrounding a mandatory climate change law that would allow a carbon offsets provision. This is one of the key provisions that agriculture should defend in any climate legislation.

You can view the presentation by clicking here.

Wednesday, May 14, 2008

Ag Offsets Briefing - This Friday - May 16th

I want to let you know about a briefing on agriculture offsets that I'll be participating in this Friday. Details are below. The goal of this briefing is to provide an overview of the science of offsets measurement, market potential, and to hear an agriculture perspective from a group (National Association of Wheat Growers) who have been studying the issue for some time and have taken a true leadership role within the agriculture sector on this issue.


Date: Friday, May 16, 2008

Time: 2-4pm

Place: 406 Dirksen Senate Office Building
(Senate Environment & Public Works Committee Room )


Keith Paustian - Colorado State University soil scientist - The science of soil carbon measurement & modeling

Sara Hessenflow Harper - The Clark Group - The market potential of agriculture offsets

Mark Gaede - National Association of Wheat Growers - The stakes for agriculture in climate legislation

Questions & Answers

Monday, April 21, 2008

Ag Carbon Market Working Group Website

Climate Legislation Could Benefit Agricultural Community

New Website Serves As Resource For Farmers

For more information contact:

Laura Sands, Ag Carbon Markets Working Group Coordinator, (307) 683- 2730 or

(307) 751- 0501

Jennifer Dickson, Environmental Defense Fund, (202) 572-3401 or (202) 520-1221

(Washington - April 20, 2008) This week the Ag Carbon Markets Working Group (ACMWG) launched as a resource tool for the agriculture community. The website is geared towards helping farmers understand the potential financial benefits of climate legislation pending before Congress.

“Our website will help farmers better understand the value of agriculture offsets like methane capture and soil carbon sequestration,” said Laura Sands, coordinator of the Ag Carbon Markets Working Group. “This is an opportunity for the ag community to find new revenue streams that help their pocket books while protecting the environment.”

The website also introduces a radio ad that features famers calling on Congress to take action to reduce greenhouse gas emissions through carbon offsets. The ad will be airing in markets across the U.S. over the coming weeks.

Current estimates of U.S. greenhouse gas markets indicate that U.S. farms have the potential to mitigate as much as 40% of our nation's total climate impact with practices such as soil carbon sequestration or methane capture.

Under the Lieberman Warner Climate Security Act, which is now before the Senate, U.S. agricultural producers could receive billions of dollars annually from offset markets or choose to participate in a USDA carbon conservation program funded by the climate market. However, these new markets are not assured as the final bill has not passed the Senate floor, and the House has yet to announce their own version of a climate bill.

“Congress has some pretty important decisions ahead of them and farmers can play a crucial role,” said Sands. “ACMWG wants to ensure farmers have a seat at the table when the final bill is negotiated. Our website is a resource driven site that hopes to pull all of the material about ag offsets into one location to make it as easy as possible for interested parties to learn more.”

The Ag Carbon Markets Working Group (ACMWG) was developed through a process of collaboration between Environmental Defense Fund, concerned farmers and industry experts. ACMWG has spent two years studying and addressing potential carbon offset markets for agriculture that could result from national policy and works cooperatively with other entities interested in seeing carbon markets for agriculture.


Friday, April 18, 2008

Terrific New Ag-Climate Website Launches

Great News! A new easy-to-use resource tool has just been launched to help provide the latest information, research and policy ideas to the agricultural community and to policymakers o ag carbon offset markets.

The website:

What makes this resource unique is that it is a product of the Ag Carbon Market Working group -- which is comprised of several farmers who have been past presidents and board members of various commodity groups -- and have been studying the ag-carbon issue for almost 3 years now.

This group has been working in cooperation with the Environmental Defense Fund -- one of the few environmental groups that has a long track record of supporting agriculture offsets within climate policy legislation.

I urge you to check it out -- and report back on your thoughts about it -- and what more it may need?


Monday, March 24, 2008

Climate battle continues in Kansas

Kansas' governor vetoes power plant permit (03/24/2008)

Debra Kahn, ClimateWire reporter

Kansas' fight over two coal-fired power plants is intensifying, raising the possibility of multi-state battles over such plants unless the federal government steps in with greenhouse gas emission regulations.

Gov. Kathleen Sebelius (D) vetoed a bill Friday that would have reversed the denial of two coal-fired power plants. In addition to vetoing the bill, she created a state Energy and Environmental Policy Advisory Group to examine ways Kansas can reduce its greenhouse gas emissions.

The Kansas Department of Health and Environment denied the plants' air quality permits in October, citing the potential damage caused by global warming. The two 700-megawatt plants proposed by Sunflower Electric Power Corp. would be located in Holcomb, next to an existing plant.

In response, state legislators filed and speed-tracked bills in both the House and Senate to overturn the state's decision. The bills argue that the state agency went outside its scope in taking CO2 emissions into account in denying the permits. Sunflower says it followed existing state rules. It also argued appeals before two state courts in November, one of which is now pending before the state Supreme Court.

Kyle Nelson, Sunflower's vice president of power production and engineering, said his interpretation of the law was the same as U.S. EPA's. A provision in the Clean Air Act allows EPA to act to prevent imminent health threats from pollution sources, but that provision is meant only for existing emissions sources for which sudden, new information is revealed, Nelson said. What Kansas did "had the effect of creating new law outside the legislative effort," he asserted.

The bill "acknowledges greenhouse emissions are a global problem and a patchwork of individual state rules are likely only to lead to inconsistency in application, and a more holistic approach is appropriate," Nelson said.

Kansas says it is following the Supreme Court's decision

Kansas is citing last April's Massachusetts v. EPA decision as a precedent for its opposition. In testimony to the House Select Committee for Energy Independence and Global Warming earlier this month, Rod Bremby, who heads the Kansas health agency, said the decision that greenhouse gases are an air pollutant subject to the Clean Air Act was "highly influential."

Furthermore, Bremby testified, EPA's failure to decide whether CO2 contributes to air pollution is limiting Kansas' ability to address emissions. "It would make sense from both a human health and business perspective for EPA to issue its regulations as quickly as possible," he said.

Federal politicians, in turn, are using Kansas' decision as fodder against EPA; committee Chairman Ed Markey (D-Mass.) hailed Bremby and Kansas state Rep. Joshua Svaty (D) as "climate heroes."

"Unlike the EPA administrator, who still can't seem to accept the scientific consensus and declare that greenhouse gas emissions are dangerous, Kansas used its own state authority to deny a permit for a new coal-fired power plant on just those grounds," Markey said.

In her veto, Sebelius offered Sunflower a compromise: one power plant of about 660 MW, equipped with carbon capture and sequestration technology, for which Kansas' baseload power needs would receive top priority. Sunflower officials did not respond to a request for comment but said in a statement that "this veto will unnecessarily raise electric rates for Kansas families and punish our Kansas workers and industries."

The supply's side

"Lots of people have attacked us based on, 'You want to build a coal plant because you're greedy and you want to make a profit,'" Nelson said. "That's a great story, but we're a co-op and don't operate for profit. There is no shareholder that we're answering to that has a profit motive. We have no fuel bias, we don't want to build coal forever."

"Just because we want to build a coal plant doesn't mean we don't like windmills or natural gas," he said. "They see it like a beauty contest -- they want to pick the one prettiest girl. I say it's like drafting a sports team: If you already have a point guard, you need a center."

Sunflower said its opposition was mainly in the form of 501(c)(4) groups funded by generators of other forms of energy, like Know Your Power, a coalition organized by natural gas company Chesapeake Energy Corp.

A spokesman for Know Your Power's ad agency, Corporate Communications Group, said the group has run a few print, television and Internet commercials aimed at the Holcomb plants.

"It's been an interesting dogfight," said spokesman Michael Grimaldi. "There are a lot of organizations that have a dog in this fight and are contributing to it in different ways."

Another group, Great Plains Alliance for Clean Energy, is funded by wind power interests. Its primary target is the Holcomb project, but it also features articles maligning biomass and other alternative energies.

Grimaldi said Know Your Power was pleased with Sebelius' decision but that the compromise proposal was "not something we've talked about in our team meetings."

What's next?

While Kansas' legislative session ends April 5, a session where lawmakers can try to override Sebelius' vetoes begins April 30. In the state House, the votes have fallen short of a two-thirds majority.

But another bill to allow Sunflower to build its plants may be in the works. According to a report by Harris News Service, the bill might include mandates for Sunflower to report its emissions and pledge to reduce them. Sunflower spokesman Miller pledged to continue the fight as well. "We'll be here till this place closes down," he said.

Tuesday, March 18, 2008

New EPA Analysis Released on Climate Bills

March 14, 2008

Lieberman, Warner Welcome EPA Finding that Climate Bill Achieves Strong Results With Manageable Costs

Senators Joseph Lieberman (ID-CT) and John Warner (R-VA) today thanked the U.S. Environmental Protection Agency for completing the analysis that they had requested of their Climate Security Act (S. 2191) last November. (The slides presenting the results of EPA’s analysis are available at The Senate Environment and Public Works Committee favorably reported the bill on December 5, 2007. The full Senate is expected to consider the measure this June.

“EPA’s detailed analysis indicates that the US can curb global warming without sacrificing economic prosperity,” Lieberman said. “We will examine the results closely for improvements that they might suggest for the bill.”

Warner said, “I am satisfied that EPA’s analysis demonstrates what we have long known: You can control greenhouse gas emissions in a manner that leaves the economy whole and is not burdensome on consumers.”

The ADAGE (Applied Dynamic Analysis of the Global Economy) computer model used by EPA projects the economic impacts of government policies that are designed to speed advanced energy technologies to market. The Climate Security Act is such a policy. ADAGE contains detailed treatment of new technology deployment in the power sector and explicitly models the global economy.

EPA has not yet updated the ADAGE model to reflect the provisions of the energy bill enacted last year. In order to approximate the underlying impact of those provisions, however, EPA selected a “high technology reference scenario” when running the Climate Security Act through the ADAGE model. That modeling run found:

Ø The Climate Security Act’s cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO2 concentrations below 500 parts per million in 2100. [Slide 141] The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.

Ø Under the conservative assumptions described above concerning action by other nations, the Climate Security Act does not shift US greenhouse-gas emissions abroad. In EPA’s words, “no international emissions leakage occurs.” [Slide 5]

Ø Under the same conservative assumptions, the Climate Security Act causes US exports of energy-intensive products (e.g., steel, cement) to developing nations to increase and causes US imports of energy-intensive products from developing nations to decrease. [Slide 83]

Ø Under the Climate Security Act, US gross domestic product grows by 80% from 2010 to 2030. That is just one percentage point less than the growth in the absence of the bill. [Slide 61]

Ø Under the Climate Security Act, average annual per-household consumption in the US grows by 81% from 2010 to 2030. That is just two percentage points less than the growth in the absence of the bill. [Slide 65]

Ø EPA notes, “The economic benefits of reducing emissions were not determined for this analysis,” [Slide 3] and “While the models do not represent benefits, it can be said that as the abatement of GHG emissions increases over time, so do the benefits of the abatement.” [Slide 108]

Ø The Climate Security Act’s allowance price and financial support for carbon capture and sequestration (CCS) make that technology a commercial reality in the US by 2015 – several years earlier than in the absence of the bill. [Slide 4]

Ø One of the effects of the accelerated CCS deployment is to drive natural gas out of the electricity sector, to the benefit of manufacturers who use natural gas. [Slide 57]

Ø Under the Climate Security Act, the price of an emission allowance is $22 in 2015 and $46 in 2030. [Slide 24] That is significantly lower than allowance price predictions made by models that ignore the recent energy bill, artificially limit technology deployment, and ignore technology incentives and cost-saving provisions of the bill.

Ø Under the Climate Security Act, increases in average US electricity prices materialize slowly and gradually. Even forty years after enactment, those prices reach a level only 18% higher than the 2005 level. [Slide 55] Over that period, the bill directs more than $1 trillion to lowering and offsetting US consumers’ actual energy costs.

The analysis also includes, at the request of critics of climate legislation, other modeled scenarios that make highly pessimistic assumptions about constraints on technology deployment, the formation of natural gas cartels, and the like. In responding to the same request last October, the Energy Information Administration concluded that an analysis would be realistic without those pessimistic assumptions.

– 30 –

Friday, March 14, 2008

EEI Members Call for More Accurate Climate Cost Projections in CRA study

As I discussed here before, the Charles River Associate (CRA) study that is being used by the Chamber of Commerce and others claiming that the Lieberman-Warner bill will generate "catastrophic" economic costs is incredibly flawed.

Now -- it appears, that many of the members of EEI (Edison Electric Institute), the energy association that paid for the study, agree that the study is flawed and should be more responsible. The story below discusses the efforts many of the power generation sector is taking to try to make sure that the flawed study is re-done -- an interesting development to say the least!

The Energy Daily

Nuclear Utilities Press For Changes In EEI Climate Costs Study

March 5, 2008

Under pressure from a coalition of member companies with abundant nuclear generation, the Edison Electric Institute has agreed to direct economic consultant CRA International to make modest changes in assumptions underlying a controversial CRA analysis that projects sharply higher cost impacts from Senate climate change legislation than predicted by other analyses.

A draft presentation of the CRA analysis, obtained last month by The Energy Daily, examined legislation (S. 2181) by Sens. Joseph Lieberman (I-Conn.) and John Warner (R- Va.) to establish a greenhouse gas cap-and-trade program on most of the U.S. economy beginning in 2012.

The analysis concluded the legislation would sharply increase electricity prices, force many power companies to switch from coal-fired generation to natural gas and impose an average cost of $1,500 on every U.S. household by 2015.

The CRA analysis drew immediate criticism from a variety of stakeholders in the national climate change debate, who charged that unrealistic assumptions in the CRA model led the consultant to conclude, for example, that carbon dioxide (CO2) allowance prices in 2015 would reach $64--a price projection far higher than what other studies have predicted.

CRA assumed, for example, that no utilities would take advantage of provisions in the bill that allow the banking of emission allowances and the use of international emissions offsets to reduce compliance costs. CRA said the emission caps in the early years of proposed mandate are so severe that utilities will need all their allowances, and that European Union countries will scoop up all the available overseas offsets.

The analysis also assumed that a Carbon Market Efficiency Board (CMEB) the bill would establish would take no action to limit sharp allowance price increases, as the bill would authorize.

The CRA study prompted behind-the-scenes moves by several members of EEI who also belong to the Clean Energy Group (CEG), a coalition of utilities whose generation portfolios include robust percentages of nuclear, natural gas and renewable resources. The CEG companies for weeks have pressured EEI to change some of the underlying assumptions in advance of a new CRA modeling run on the Lieberman-Warner bill.

EEI has agreed to include in the new CRA analysis provisions of the Energy Independence and Security Act of 2007 (EISA)--approved in December--that tighten federal fuel economy requirements for motor vehicles, boost alternative fuel use and strengthen efficiency standards for appliances and buildings.

In addition, CRA will also incorporate results of the Energy Information Administration's analysis of S.2181--including an expected change in EIA's baseline "reference case" used to model future U.S. energy use--as well as the findings of a separate Environmental Protection Agency analysis of the bill. Both the EPA and EIA analyses are expected later this month.

In a March 4 letter to EEI President Thomas Kuhn obtained by The Energy Daily, the chief executive officers of seven CEG utilities urged EEI to change other assumptions in the CRA analysis, including those concerning the use of allowance banking and international offsets; actions the CMEB might be expected to take to reduce the costs of the cap- and-trade program; and provisions to reduce the impacts of higher energy prices on low-income households.

"We think this is a positive and important development, and we believe the CRA analysis will be both more robust and received as more reliable with the additions you have indicated," the CEG letter said, referring to the changes EEI has agreed to make. "In our view, it is critical that EEI be viewed as a credible voice in the climate change debate. It is our hope that EEI's work will allow members, Congress, the administration and other interested parties to make informed decisions about various policies and proposals before them in terms of impacts on our industry and our customers."

The letter was signed by the CEOs of Avista Corp., Constellation Energy Group, Entergy Corp., Exelon Corp., FPL Group Inc., National Grid and PG&E Corp. and Public Service Enterprise Group Inc.

A CEG representative said the CEOs "are planning to be very much involved and on top of the whole EEI process" as the CRA analysis proceeds.

"The message between the lines is that these companies are going to be insisting that EEI have a more balanced approach throughout the climate change debate and represent the collective views of all EEI members and not just the views of the coal generators," the CEG representative said.

An EEI official told The Energy Daily Tuesday, however, that--aside from including the EISA provisions and the expected EIA reference case changes--EEI has not decided if it will direct CRA to make other changes, such as accounting for banking and the use of international offsets.

"We're still considering what we are going to do," said Bill Fang, EEI deputy general counsel and climate issue director. "We'll have to consider all that. CEG has raised some good issues, but other member companies have raised other issues. We have to get the views of other companies."

The national advocacy group Environmental Defense, in a February critique of the CRA study, called the analysis "a dramatic outlier when compared to a range of economic models maintained by researchers in academia and government. For example, CRA's estimates for the impact of the bill in 2015 on greenhouse gas emission prices, GDP figures and electricity prices are 75 percent to 300 percent higher than those found by a study done by researchers at Duke University and Research Triangle Institute."

The CRA cost projections also are sharply higher than those found in an analysis of the bill by the Cambridge, Mass.-based Clean Air Task Force, which concluded CO2 emission allowances would cost about $17 in 2015, nearly 75 percent less than what CRA projected.

Fang countered, however, that CRA's assumptions for the likely penetration of new nuclear generation are less optimistic than in other studies and more optimistic for the deployment of new renewable generation.

Tuesday, March 11, 2008

Be Wary of the Agenda Behind Flawed Cost Projections

We've all seen the damage that can come from "studies" that are designed to achieve a given result rather than truly examining the potential cost, impacts or benefits of a given issue. It is often hard to judge the veracity of studies -- which is why it is absolutely critical that the assumptions used are transparent and reasonable -- so as to prove there is no hidden agenda being served.

The latest round of fliers and "fact sheets" being pushed by the Chamber of Commerce is unfortunately relying on a very flawed and secretive analysis done by Charles River Associates (CRA) and paid for by the electric industry group, Edison Electric Institute. The study was so flawed that many of the EEI members have called for it to be re-done using more plausible assumptions. Below is a great analysis of the many flaws of the CRA economic projections -- and why folks need to be careful before believing the cost projections of Lieberman-Warner from groups that clearly have an agenda that is not good for agriculture (i.e favoring a carbon tax instead of a carbon market).

Environmental Defense Fund

The CRA Climate Analysis: Extreme Again

America’s Climate Security Act of 2007 [S. 2191) is a bipartisan bill that would create a cap and trade program to cut greenhouse gas emissions in the U.S. The Edison Electric Institute, a trade organization representing electric utilities, recently paid consulting firm Charles River Associates International (CRA) to assess the possible economic impacts of the legislation. An assessment of CRA’s analysis using accepted academic modeling reaches the following conclusions:

· CRA has a history of presenting extreme views for its industry clients. For example, CRA’s
analysis in 2003 of the McCain-Lieberman Climate Stewardship Act projected household costs that were three to four times higher than the upper range of results in an MIT study, and 10 to 14 times higher than MIT’s lower range.

· CRA’s results are dramatically different than economic assessments by researchers in
academia and government. For example, CRA’s estimates for the impact of the bill in 2015 on
greenhouse gas emission allowance prices, economic output (GDP), and electricity prices are 75%
300% higher than those found by a study performed by researchers at Duke University and Research Triangle Institute.

· Determining exactly why CRA’s numbers are so high is difficult, both because of how CRA
reports their results and because the CRA model remains a “black box” to outsiders. Although
CRA released some information in a response to a request from Senator Lieberman, they have never fully opened up their model to outside peer review, so key assumptions remain hidden. Moreover, CRA lumps together results from various scenarios without specifying which scenarios lead to which results. One reason for the divergence from other models, however, appears to be that CRA ignores the role of international credits, which under the Lieberman-Warner bill could meet up to 15% of compliance obligations. In addition, their analysis assumes high costs for new coal-fired power plants with carbon capture and sequestration technology, and imposes artificial constraints on how widely that technology is used.

· Like most economic forecasting models, CRA’s analysis considers only one side of the ledger:
it considers the costs of reducing emissions, but fails to examine the costs of inaction.

· No single model should be relied upon for policy making. Instead, policy makers should look to
the full range of economic models for guidance on the possible impacts of climate policy. And when confronted with a range of numbers, a common rule of thumb is to throw out the lowest and highest numbers, and concentrate on the middle of the range. Former Federal Reserve Chairman Paul Volcker summarized the economic situation best: “If you don't
take action on climate change, you can be sure that our economies will go down the drain in the
next 30 years. What may happen to the dollar, and what may happen to growth in China or
whatever, will pale into insignificance compared with the question of what happens to this planet
over the next 30 or 40 years if no action is taken."

Our analysis is based on testimony by CRA, documentation supporting that testimony, CRA’s recent update to their analysis, and economic models by researchers at MIT, Research Triangle Institute, and the Department of Energy.