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Ag worries over 'cap and trade'

June 23, 2009
Kylie Saari — Sentinel Staff Writer

FAIRMONT - Carbon cap and trade - a legislative plan that will either spell the end of the environmental crisis or the beginning of an economic crisis - seems to hinge largely on the farming community.

Farm groups have come out in force to protest some of the implications of the bill, which proposes to reduce carbon emissions to 14 percent below 2005 levels by 2020, and 83 percent below by 2050.

The legislation, also known as the Waxman-Markey bill, works by capping the amount of carbon emissions a company can emit by requiring carbon credits for each ton of carbon emitted, while allowing companies that don't use all their credits to sell them to companies that can't meet the requirement.

This method is supposed to encourage green efficiencies in companies, while rewarding those who go above and beyond.

And while farmers are positioned to make a profit from carbon offsets - soil captures carbon out of the air - many are concerned about their own carbon use and the fact that the system essentially taxes fossil fuels, which could dramatically raise input costs on farms, something most farmers can hardly afford.

The American Farm Bureau has taken a solid stand against the plan, saying many changes must be made to the current wording to explicitly outline how agriculture will be affected.

"The (bill) is laden with so many policy prescriptions that its impact on the U.S. is almost impossible to measure and evaluate," said AFBF President Bob Stallman in a letter to the House Energy and Commerce Committee. "We can be certain of some things, however - it will increase our operating costs and reduce our competitiveness abroad."

The Heritage Foundation, a conservative public policy research group, conducted a study on the potential effects the bill would have of farmers if it were passed as written:

o Farm income (or the amount left over after paying all expenses) is expected to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28 percent, 60 percent and 94 percent, respectively.

o The average net income lost over the 2010-2035 timeline is $23 billion - a 57 percent decrease from the baseline.

o Construction costs of farm buildings will go up by 5.5 percent in 2025 and 10 percent by 2034 (from the baseline).

o By 2035, gasoline and diesel costs are expected to be 58 percent higher and electric rates 90 percent higher.

Changes farm groups are asking for include:

o Assuring that the agricultural sector is not capped;

o Ensuring comparable commitments from foreign countries;

o Assuring that USDA makes rules for and administers a robust agricultural offset;

o Assuring that the provisions of H.R. 2409, the Renewable Fuel Standard Improvement Act are incorporated in the legislation.

Farm groups want the Ag Department to oversee the bill.



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