One point to note on this story -- when Rick Krause says that the Senate bill could result in both a cap-trade system and EPA regulation, I think he is missing the point that the legislation will pre-empt EPA regulation, which EPA itself has said it would prefer . . . so you would not have both, you would have the legislation replacing EPA regulation. There is no reason for EPA to regulate GHG emissions under the Clean Air Act if they have a separate and specific piece of legislation directing their efforts on GHG emissions! EPA is proceeding with regulation under the Clean Air Act because they don't have climate law to use instead.
That's the best way to describe how ag groups reacted this week to a cap and trade bill introduced in the Senate by the Chairman of the Environment and Public Works Committee Barbara Boxer (D-CA) and Senator John Kerry (D-MA), who heads the Foreign Relations Committee.
"We opposed the House bill and we think this bill basically takes one step back from that," Rick Krause, the American Farm Bureau lobbyist working in clean air issues told Agriculture Online.
Like the House bill passed last summer, Boxer's bill includes a long list of agricultural practices that could bring payments for carbon credits--practices such as no-till and capturing methane on big livestock operations.
But the bill leaves the final decision to the President, he said.
"Everything is up to the discretion of the White House as to what gets on the list," he said.
Krause said Farm Bureau, which has been worried about higher fuel and fertilizer costs to farmers and ranchers from cap and trade legislation, is unlikely to support a final bill.
Most Washington insiders say the Boxer-Kerry bill is a starting point and that some of their concerns may be fixed as it moves through the Senate. Senator Tom Harkin, who has stepped down as the Senate Ag Committee Chairman to head the Health Committee, told Agriculture Online Thursday, "We've got a bunch of votes on the Ag Committee and they need our votes to get this passed."
But Krause, National Farmers Union and American Farmland Trust, are all disappointed that provisions in the House bill aimed at agriculture were left out of the Senate Bill.
House Agriculture Committee Chairman Collin Peterson got the House bill amended to put USDA, instead of EPA, in charge of paying farmers and landowners for carbon offsets. The money would come from electric utilities, oil companies and other industries whose carbon dioxide emissions are limited, or capped. The Peterson amendment also prevents EPA from writing regulations for ethanol and biodiesel that include a theory that raising U.S. crops for those fuels leads to deforestation in the tropics. That so-called indirect land use change is strongly opposed by U.S. biofuel producers and commodity groups.
The Senate bill doesn't include Peterson's amendment.
"At least the House bill would have slowed EPA down," Krause said. Farm Bureau will try to get improvements for agriculture into the bill, he said.
Dennis Nuxoll of American Farmland Trust, a group that sees more opportunities for farmers in cap and trade than does Farm Bureau, agrees with Krause that it would have been better for agriculture if the Senate's starting point included Peterson's amendment.
Nuxoll doesn't think many farmers will participate in any carbon trading program if EPA runs it, and the bill calls for capturing two billion tons of carbon a year, in the U.S. and through credits sold to developing countries.
To get to that level, "that's tens of thousands of producers signing up," Nuxoll says.
Many environmental groups trust EPA to run the program more than USDA. But Nuxoll says the EPA doesn't have the scientific background on capturing carbon that USDA has.
WHO CAN DO SOIL SCIENCE?
"For a hundred years USDA has been doing soil science. They don't call it carbon science," Nuxoll said.
If the right changes are made, Nuxoll's group might support the legislation. Nuxoll sees three opportunities that a well-written Senate bill could offer farmers to help counter increased fuel and fertilizers costs. Some farmers will be able to participate in carbon trading and get paid for those practices. Others who can't, for example, a Vermont dairy farm that's too small to put in a methane digester, might be able to be compensated through allowances. In the House bill, much of the allowances will go to coal-fired utilities and to consumers but small portion goes to agriculture. The Senate bill has not yet divided up the allowances. A third way farmers and ranchers who own land could benefit is through the cap and trade bills' requirement that utilities buy more of their electricity from renewable sources like wind generators. Rent from wind generation is another potential source of income that will counter higher fuel costs, he said.
Fred Yoder, a past president of the National Corn Growers Association who has worked on carbon trading issues for several years, says the NCGA hasn't yet take a position of cap and trade legislation. The group has hired Informa Economics to analyze potential effects and its report will be out soon, Yoder told Agriculture Online.
"I don't think it's going to be nearly as costly as some people think," Yoder said of cap and trade. "And I don't think it's going to be the panacea some people think, either."
Yoder, who farms near Plain City, Ohio, hasn't given up on improving the Senate's bill.
"There are a lot of blanks to be filled in," he told Agriculture Online. "I look at it as a chance to make the House Bill even better."
Yoder wants to see the list of farm practices that could qualify to be much broader than methane capture and no-till, which won't increase carbon content much in sandy soils.
"You're going to have to make a list of ag offset projects broad enough that everyone can participate," Yoder said.
Some members of Congress have criticized both the House and Senate bills for paying carbon offsets to landowners in developing countries, but Yoder sees several benefits.
First, if landowners in Brazil are paid to keep land in tropical forest, for example, that means less competition to U.S. corn and soybean farmers, he says.
Then there's the issue of what other nations might do to fight global warming.
AN UNFAIR DISADVANTAGE?
Farm Bureau's Krause argues that cap and trade will put U.S. farmers at an unfair disadvantage the U.S. is along in passing climate change legislation, leaving only U.S. farmers with higher fuel and fertilizer costs.
"That's the issue. We can reduce all of our emissions all we want, but if China and India don't, then we haven't gained anything," he said. And EPA's own estimate of how much the House bill would slow global warming is only two-tenths of a degree by the year 2100, he adds.
But Yoder sees international carbon credits as another way to deal with that problem.
"This is the mechanism we're going to give other countries to do their fair share," Yoder said.
Some authorities on climate change legislation worry that the opposition of some agriculture groups to cap and trade legislation will backfire and hurt farmers with even more draconian regulations from the EPA.
Sara Hessenflow Harper is a former staffer to Senator Sam Brownback (R-KS) who is now a partner in a consulting firm, The Clark Group. She has worked with farmers interested in the cap and trade issue, including Fred Yoder and others in the Agricultural Carbon Market Working Group.
Harper said Friday that people are making too much of the Boxer-Kerry bill's language on agriculture.
When the Senate finally votes on the bill, which may not happen this year, "it's not what's going to be there," Harper said. "It's a place holder."
Both the Senate Finance Committee, headed Senator Max Baucus (D-MT) and the Senate Agriculture Committee, now headed by Senator Blanche Lincoln (D-AR) will make changes in the bill, she said.
Harper said she's disappointed that Farm Bureau mainly opposing the legislation, rather than bargaining harder for changes that will benefit farmers. Large companies, and major fossil fuel industries like coal worked to get better treatment in the House bill, she said. The natural gas industry didn't but decided to participate more in lobbying the Senate. The result is that Boxer s bill is more favorable to natural gas.
A BIG GAMBLE
"If the Farm Bureau thinks they know more than all these people, okay, but that's a pretty big gamble," Harper said.
Harper said she doesn't like big government any more than most Farm Bureau members, but opposing cap and trade legislation, if it succeeds, could just give farmers more regulation by the EPA, which is moving ahead to regulate greenhouse gases on its own.
"We're talking about a cap and trade system, which is a market. The alternative is a government takeove--by the EPA," she said.
If agriculture isn't involved in writing the legislation, she added, "the environmentalists define what the offset should be."
Krause isn't convinced. So far, the Senate bill would set up a cap and trade system, but it wouldn't prevent EPA from regulating greenhouse gases separately.
"Under the Senate bill, you get both, which would be the worst of all possible bills," he said.
Agricultural interests may not be happy with Boxer's bill. But there's little doubt that in the coming months, all of them will be weighing in on potential changes.
Already, the head of the Senate Ag Committee is showing her own skepticism about the Boxer bill.
"I am carefully reviewing the Boxer/Kerry legislation and particularly the draft language for agriculture," the committee's chairman, Senator Blanche Lincoln said in an e-mail message from her staff on Friday. "Though an offsets program may provide some opportunities to farmers, I fear that it will not outweigh the costs."
Lincoln added, "I have expressed my serious reservations about a cap and trade system, and its potential impact on the cost of fuel, feed and fertilizer, as well as food for consumers. As Chairman of the Senate Agriculture, Nutrition, and Forestry Committee, I am interested in holding more oversight hearings on climate change and will continue working with my Committee members, Senate colleagues, and stakeholders."