Climate Change Bill Moves Forward
One of President Obama’s goals as he entered the U.S. presidency a few months ago was to address “global warming” and concerns over world climate change. The U.S. House Energy and Commerce Committee, chaired by Congressman Henry Waxman (D-CA), passed a somewhat controversial American Clean Energy and Security Act of 2009 (HR-2454) in late May. House Speaker Nancy Pelosi (D-CA) is encouraging other U.S. House Committees to review this legislation, offer suggested amendments, and to move it forward for passage in the next few weeks.

HR-2454, as it currently is written, would cap carbon emissions at 17% below 2005 levels by 2020, 42% below by 2030 and 83% below by 2050. The bill also creates a so-called cap and trade system, through which a company or business could purchase carbon allowances (credits) from other businesses and industries that reduced carbon emissions through their normal operations. The legislation also calls for 15% of electrical energy in the U.S. to come from renewable sources by 2020, including wind, solar, biomass and geothermal. There was very little mention of agriculture or the agriculture industry in the version of HR-2454 that is currently being debated in Congress. However, U.S. House Ag Committee Chair Collin Peterson (D-MN), and other Midwestern congressmen, would like to see the role of agriculture more clearly defined in the climate change legislation, before it brought to a vote in the U.S. House.

California Legislation
The California Environmental Protection Agency (EPA) is moving forward with their own legislation addressing the emission of greenhouse gases. At least 13 other states are considering similar legislation. Given the current fast-track approach that the federal EPA and the U.S. House are currently moving at regarding carbon credits and climate change legislation, the California legislation takes on added significance for agriculture and the biofuels industry if it is incorporated into HR-2454.

The California legislation to reduce greenhouse gas emissions seems to be counter to Energy Independence and Security Act (EISA) passed by Congress in 2007. EISA requires a gradual increase in the volume of various types of biofuels over the next several years, in order to allow time for research and technology development. EISA did not outline specific targets for carbon sequestration, or contain any discussion of indirect land-use impacts. The California legislation calls for more immediate reductions in carbon emissions, with a 10% reduction in emissions by 2010.

The California legislation also rates various fuel sources for the estimated amount of carbon emissions, compared to a baseline, which is crude-oil based gasoline. The California estimates for carbon emissions for fuel type include indirect land-use emissions in the calculation. As a result, all corn-based ethanol production has about a 30% higher rate of carbon emissions compared to the baseline when indirect land-use emissions are included, compared to non-inclusion. In fact, the proposed California calculations would list corn-based ethanol, produced under normal production methods, as having higher carbon emissions that traditional crude-oil-based gasoline. The California calculations are very favorable to future fuel development from energy resources such as natural gas, hydrogen and non-coal-based electricity. The California calculations are also very favorable to ethanol produced in Brazil, which is processed from sugar cane and could become a viable alternative to corn-based ethanol as a major source of biofuels in the future.

Agriculture and HR-2454
As mentioned earlier House Ag Chair Collin Peterson (D-MN) and other congressional leaders are pushing for a more defined role of the agriculture industry in climate change legislation. Most would also like to see indirect land-use emissions taken out of the equation for ethanol and other biofuels, until more research exists on the subject. Most major agriculture organizations and commodity groups are fairly unified in their proposals relative to potential federal climate change legislation. Following is a summary of recommendations from the various ag groups for HR-2454 and similar legislation:

  • Agriculture should have unlimited offsets via the proposed carbon cap and trade system.
  • Agriculture should be rewarded (paid) for carbon sequestration efforts.

(A recent study predicted that the value of one ton of carbon credit could be worth more than $28 by 2012.)

  • Payment should include practices that farmers and ranchers have already implemented.
  • Indirect foreign land use should not be considered for domestic carbon offsets (ethanol).
  • USDA should have a major role in agriculture carbon sequestration efforts.
  • Land should not be taken out of production to provide for carbon sequestration.
  • The market, not the government, should determine the value of carbon credits.
  • Poor and rural residents may need additional assistance to deal with higher energy costs.

Bottom Line
The bottom line is that the concern over global warming and greenhouses gases and the attention to carboncredits and other solutions is here – with the proposed climate change bill (HR-2454) in congress, as well as the California carbon legislation. These issues and potential legislation are likely to have a big impact on the agriculture industry in the coming years, so it is a good time to learn more about the issue and how it could affect your farm in the future. All of the major farm organizations and commodity groups, as well as several land-grant universities, are very active on these issues, and most have some excellent information available on these topics. Check out their Web sites for details.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.