On June 26th, H.R. 2454 (Waxman-Markey) passed the U.S. House of Representatives by a narrow 219-212 vote. The bill will establish a combined efficiency and renewable electricity standard that requires utilities to supply an increasing percentage of their demand from a combination of energy efficiency savings and renewable energy. The day before voting, U.S. House Agriculture Committee Chairman Collin Peterson and Reps. Henry Waxman and Edward Markey, sponsors of the proposed cap-and-trade bill, hammered out an agreement addressing several issues of interest to agriculture, but still leaving us with a number of other major concerns.
The Peterson amendment includes provisions for agricultural offset programs in Waxman-Markey. In other words, farmers may qualify for carbon payments for practices like no-till. In addition, USDA will administer agricultural offset programs. Peterson and the bill sponsors also negotiated a solution to the problem of including indirect land use changes in calculating the lifecycle carbon emissions for corn-based ethanol and soy-based biodiesel.
However, significant concerns regarding the bill linger. A recent action request from the Illinois Farm Bureau states the following:
- The American Farm Bureau Federation's (AFBF) best-case economic analysis shows that Waxman-Markey will result in a $5 billion annual hit to U.S. agricultural income beginning in 2020.
- AFBF economists say it will cost corn producers another $33 per acre and soybean producers another $8 per acre in 2020, with most of the increase attributable to increases in fertilizer prices. Higher grain prices will be absorbed by the livestock industry.
- Without any allowances to cover even their direct costs, the remaining U.S. fertilizer manufacturers are at risk of being driven out of business with anhydrous production shifting overseas.
- According to an analysis of a Congressional Budget Office report, gasoline will increase 77 cents per gallon over the next decade.
- Food prices will go up $6 billion in 2020.
- The bill creates an "energy deficit" for the United States by curtailing and reducing our use of fossil fuels without supplying any realistic alternative to make up the lost energy. H.R. 2454 is based on an extremely optimistic timetable of when fossil fuels will be replaced with cleaner sources of energy. For example, the bill anticipates that carbon capture and sequestration technology (FutureGen) will be producing electricity by 2015 and that the U.S. will soon begin constructing a number of nuclear reactors, both of which are highly unlikely. Any delays in developing cleaner sources of energy will increase demand for natural gas, causing a spike in prices.
- The bill will put farmers and manufacturers at a competitive disadvantage in the international marketplace if China and India do not cap carbon emissions.
- The bill calls for a shift in wealth from the United States to other countries. International carbon offsets account for half of the two billion tons in offsets. Based on Congressional Budget Office estimates of $15 per ton of carbon in 2011, it would mean that the U.S. would be paying other countries $15 billion to either plant trees or to not cut them down.
- 85 percent of the carbon allowances in the bill for electrical generation and industry will be free into the 2020s. Between 2020 and 2030, the U.S. government will begin auctioning off those free allowances. We believe there must be further analysis to determine how that transition will impact energy prices and the U.S. economy.
These increased costs will just be passed along until they reach the consumer. As we currently receive over half of our electricity from coal, we cannot afford to cut our use of fossil fuels without a replacement. With this bill looming on the horizon, we may soon be unable to afford a standard of life we once had, while the GHG emissions still exist. iBi
