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EPA Proposed Rule: Indirect Land Use- Peer Reviewed; Climate Change; Organic Funding; and the Rural Economy

EPA Proposed Rule- Indirect Land Use- Peer Reviewed

Matthew L. Wald reported in today’s New York Times that, “The Obama administration on Tuesday proposed rules to limit emissions of climate-changing gases [complete details available here] from the manufacture of ethanol, a step that would probably curtail the expansion of corn ethanol production.

In its first major policy steps on ethanol, the administration said it would help producers of biofuels who could not get credit to refinance their operations, and assist them in selling their products through a growing network of retail fuel distributors and by encouraging the manufacture of vehicles to burn it.

It said it was forming a biofuels working group made up of the agriculture and energy departments and the Environmental Protection Agency to coordinate federal actions. A goal of the group is to quickly dispense money allocated in the federal stimulus package and two previous energy bills.”

The Times article added that, “The agency said it would factor in changes in land use, so that if more American-grown corn were used for ethanol, and as a result a farmer anywhere cut down trees to raise crops, the loss of that forestland, and the resulting increase in carbon dioxide, would count in ethanol’s ‘carbon footprint.’”

Steven Mufson and Juliet Eilperin flushed out more detail on the indirect land use/carbon footprint issue in today’s Washington Post: “The Environmental Protection Agency’s proposed regulations are designed to curtail greenhouse gas emissions blamed for climate change and to make sure that alternative fuels, such as ethanol or biodiesel, do not have indirect effects, such as deforestation in other countries, that could inadvertently increase levels of greenhouse gases in the atmosphere.

But the administration did not take a position on key regulatory issues, instead inviting comment from scientific experts and businesses on how to measure carbon emissions from the full lifecycle of biofuels, from land use to fertilizer to manufacturing process to delivery. EPA Administrator Lisa P. Jackson also said that existing corn ethanol distilleries or ones under construction would probably be ‘grandfathered,’ or exempt from the new regulations.

“Jackson’s statement blunted criticism, especially from corn-based ethanol producers that have been targeted for competing with food crops and for using substantial amounts of fertilizer in fields and fossil fuels in distilleries.

In a telephone call with reporters yesterday, Jackson said the administration wanted to make sure that its final rule on renewable fuels is ‘informed by the best science.’”

And Jim Tankersley, writing in today’s Los Angeles Times, explained the indirect land use issue this way with respect to yesterday’s executive branch actions on biofuels: “Although biofuels as a whole — including those made from grasses and even algae — are considered promising alternatives to petroleum, some researchers have begun challenging the use of corn for this purpose.

In particular, they point to the ‘indirect land-use’ effects of pulling corn out of the world food supply, which could force farmers in developing nations to clear rain forests — and release massive amounts of carbon dioxide in the process — in order to plant corn.

“Congress in 2007 mandated an increase in biofuel production, peaking at 36 billion gallons a year by 2022. It also called for corn ethanol to emit 20% fewer greenhouse gases than gasoline, and ethanol made from crops such as switchgrass or wood chips to release 60% less.”

The LA Times article noted that, “The EPA rules proposed Tuesday include indirect land-use calculations in tallying emission. Many crops grown specifically for biofuels, such as switchgrass, pass the test easily. In many cases, corn and soy-based biodiesel do not.

“The move comes on the heels of a California Air Resources Board decision last month to factor indirect land use into the state’s renewable fuels standard.

“Nathanael Greene, director of renewable energy policy for the Natural Resources Defense Council, said that the administration ‘looked at the science and decided they were going to do the best analysis they could on land-use impacts. . . . They stuck by it through a lot of political pressure.’

Industry groups seized on the EPA’s pledge to conduct ‘peer reviews’ of the science underlying indirect land-use analysis, which ethanol interests and many independent scientists say has too high an error margin to be used when calculating a fuel’s emissions.”

For more explanation on this issue, including analysis from Brian Jennings, the Executive Vice-President of the American Coalition for Ethanol, listen to this audio excerpt (MP3-3:11) from yesterday’s AgriTalk Radio Program with Mike Adams.

In addition to comments from Brian Jennings, the AgriTalk Radio clip also features a more detailed explanation of the “peer review” concept from EPA Administrator Jackson, which was provided in yesterday’s press briefing with reporters.

Ken Anderson, writing yesterday at Brownfield, also reported on the “peer review” issue as it relates to indirect land use and indicated that, “Agriculture Secretary Tom Vilsack says he is pleased with EPA’s approach to developing the proposed rule.

“‘As it relates to corn, let me say I am certainly pleased with the effort that EPA has undertaken to comply with the law and to do it in a way in which they seek assistance and review in terms of the evaluations and formulas,’ Vilsack says. ‘I think it’s a good sign that EPA is interested in listening. They want to get this right.’”

Yesterday’s Brownfield item also included an audio interview with Bob Dineen, President of the Renewable Fuels Association. To listen to an excerpt from this interview, which includes Mr. Dineen’s reaction to the “peer review” idea, just click here (MP3-1:16)

Meanwhile, Senator Charles Grassley (R-Iowa) held a tele-news conference with reporters yesterday in which the issue of indirect land use and carbon came up. To listen to Sen. Grassley’s perspective on the indirect land use issue, which was characterized in part by using the word “stupid,” just click here (MP3-1:45; transcript available here).

Also yesterday, Bloomberg writers Catherine Dodge and Tina Seeley reported that, “The EPA analysis takes into account aspects of biofuel production from clearing land for planting to transporting the fuel and burning the blended fuel in cars. The agency is seeking public and scientific comment on its proposal during the next 60 days.

“Rod Weinzerl, director of the Illinois Corn Growers Association in Bloomington, said he’s confident that corn ethanol will meet the requirement before the rule is made final.

“‘I feel pretty good where we are on the science side,’ he said. ‘Sixty days from now, we’ll be in a better position.’”

Other reaction to yesterday’s executive branch action regarding biofuels included the following.

* Bob Stallman, American Farm Bureau Federation (AFBF), President, 5.5- “In regard to the Environmental Protection Agency’s proposed rulemaking on the Renewable Fuels Standard that was issued today, AFBF believes the most accurate science and reasonable interpretation of that science should be used to measure indirect land use. Currently, RFS direct emission calculations show that all renewable fuels meet the EPA’s proposed requirement. The way indirect land use is measured in this proposed rule is controversial and new, which highlights the need for sound science, reasonableness and common sense when making policy decisions. We will work with EPA toward this effort.”

* Roger Johnson, National Farmers Union, President, 5.5- “There is currently no scientific agreement or certainty to quantify domestically produced ethanol impacts on land use change. I commend the President’s plan to have the U.S. Department of Agriculture, Department of Energy and Environmental Protection Agency work together in a comprehensive manner to guide the continuation and growth of the biofuels industry.”

* Sen. Tom Harkin (D-Iowa), Senate Agriculture Committee Chairman, 5.5- “As to the lifecycle greenhouse gas provision of the rule signed today, I am skeptical about the science around it and have previously urged the EPA to make sure that the science is sound before enacting such a provision. I am pleased that their announcement today recognizes the need for a thorough analysis and review of this issue prior to any final decision.”

* Sen. James Inhofe (R-Okla.), Ranking Member of the Senate Environment and Public Works Committee, 5.5- “Now we’re stuck with a proposed EPA rule that magnifies the [Energy] bill’s flaws. Notable among the bill’s many flaws is EPA’s requirement to measure the immeasurable – the increases in CO2 emissions from indirect land use changes due to bio-fuel mandates. A farmer plants a new acre of corn in Iowa? Well, EPA will somehow quantify the effect that has on increased carbon emissions in Uruguay, Malaysia, or maybe India.”

* Sen. John Thune (R-SD), 5.5- “While I am pleased the EPA issued a range of emissions for biofuels, the EPA’s new standards for measuring ethanol’s lifecycle carbon output in other countries could be a serious setback for our nation’s push for energy independence. The EPA is relying on unproven models that undermine our nation’s most readily available alternative to foreign oil. Ethanol creates American jobs and reduces our dependence on imported energy while reducing carbon emissions relative to gasoline.” (Note: “Senator Thune introduced a bill last week which directs the EPA to focus on direct lifecycle greenhouse gas emissions, which would level the playing field between ethanol and regular gasoline and bring more regulatory certainty to the ethanol industry. Additionally, the bill would require EPA to publish the model for measuring lifecycle greenhouse gas emissions before taking any regulatory action. The bill would also allow individual ethanol producers with a unique production method to apply to the EPA for a lower carbon score which would provide an incentive for ethanol companies to develop innovative ways to produce ethanol.”)

* Tom Buis, Growth Energy, CEO, 5.5- news release- “Buis also praised U.S. EPA administrator Lisa Jackson for soliciting peer-reviewed science on the life-cycle analysis of biofuels for purposes of the RFS II rulemaking. Buis said it was especially important to further study the controversial theory of indirect land use change before finalizing the greenhouse gas emissions scores for biofuels. ‘Indirect land use change theory uses speculative models and incorrect assumptions in an attempt to blame American farmers for deforestation in Brazil,’ Buis said. ‘As the European Union discovered while developing their biofuels regulations, the science on indirect land use is unsettled and the theory is not ready for regulatory usage.’”

* Bob Dickey, National Corn Growers Association (NCGA), President, 5.5- “In our conversations with the Environmental Protection Agency (EPA), we understand a great deal of work needs to be done on modeling and a great effort needs to be put into using current and correct data regarding indirect land use. NCGA will be working closely with the United States Department of Agriculture (USDA) and EPA to ensure scientific data is used.”

* Johnny Dodson, American Soybean Association, President, 5.5- “The life-cycle greenhouse gas emissions for soy biodiesel that EPA has proposed are derived from faulty indirect land use assumptions, flawed analysis and misplaced penalties. We look forward to submitting comments and hope that more appropriate analysis and some common sense will prevail during the rulemaking process.”

* Nathanael Greene, Director of Renewable Energy Policy at the Natural Resources Defense Council, 5.5- “The opportunity to review EPA’s proposal will help ensure that developing biofuels won’t mean using our most fragile forests for fuel and that biofuels provide real benefits. We plan to submit comments on what EPA has gotten right and what must be improved to make sure the outcome serves our environmental and energy needs.”

* Jeff Broin, Chief Executive Officer of POET, 5.5- “I am, however concerned about the preliminary rule issued by the U.S. EPA that included an indirect land use change penalty for corn ethanol. While many scientists have found significant flaws in the models used to calculate indirect land use change, I think the very concept is flawed and stems from a lack of understanding of ethanol and agriculture. Due to increasing efficiencies in our production facilities and the increased corn yields from the fields surrounding them, we don’t need new land to meet the Renewable Fuel Standard. That’s why we’re able to farm the same number of corn acres in this country that we farmed in 1976 and still meet all of the needs for food, feed and fuel. I am encouraged that the EPA Administrator has pledged to subject indirect land use change to peer-review because I don’t think the theory will hold up.”

Recall that the House Subcommittee on Conservation, Credit, Energy and Research will be holding a hearing today at 11:00 am Eastern, “To review the impact of the indirect land use and renewable biomass provisions in the renewable fuel standard.”

Among those testifying at today’s hearing is USDA Chief Economist Joe Glauber.

Climate Change

Sam Youngman reported yesterday at The Hill Online that, “Lawmakers on the House Energy and Commerce Committee met with Obama on Tuesday to discuss climate change legislation.

Asked if Obama was on board with the hard push for legislation this year, even with his healthcare plan on the table, Chairman Henry Waxman (D-Calif.) said the president did not try to dissuade the committee and House Democrats from moving forward.

“‘We said we’re moving it this year, and he didn’t object,’ Waxman said.

The timeframe could be difficult, given Capitol Hill’s busy agenda and a lack of consensus on the varying proposals in the energy plan. Rep. Chris Van Hollen (D-Md.) has said the House should proceed cautiously on climate change. In an interview last month with The Hill, Assistant to the Speaker Van Hollen suggested a vote might not take place this year.”

Meanwhile, the Senate Finance Committee will be holding a hearing tomorrow entitled, “Auctioning under Cap and Trade: Design, Participation and Distribution of Revenues.”

Organic Funding

Reuters writer Charles Abbott reported yesterday that, “Farmers will have three weeks to apply for $50 million in land stewardship funding to help pay the cost of converting to organic production, said the U.S. Agriculture Department on Tuesday.

“USDA said the special sign-up would run May 11-29 under the Environmental Quality Incentives Program. It will be open to growers switching to organic production or expanding their organic operations and certified organic farmers who want to expand stewardship work.”

Rural Economy

Nick Timiraos reported in yesterday’s Wall Street Journal that, “The home-foreclosure crisis, which began in cities and suburbs, has spread to rural America.

“When the mortgage mess erupted, some economists believed that rural America wouldn’t be heavily affected. Farms were prospering. The housing boom largely bypassed small rural towns. And exotic, new mortgages at first were seen as an urban and suburban phenomenon.

But rural homeowners, it turns out, were just as susceptible to subprime loans and easy lending as the rest of the country, often refinancing existing mortgages to take out cash or pay off debts.”

Yesterday’s Journal article added that, “Foreclosure rates remain higher in cities and suburbs than in rural areas, and the change in home values from boom to bust hasn’t been as severe. Since the peak, values have dropped 13% in rural areas and 23% in urban areas, according to Moody’s Economy.com, while from 2000-2006, home values appreciated 45% in rural areas compared with 84% in urban areas.

Still, defaults in rural counties are rising rapidly and setting off concerns that the population in these already sparsely populated towns will decline further. In Minnesota, where rural borrowers are much more likely to have a subprime loan than city homeowners, foreclosures outside of the Minneapolis-St. Paul region have increased 232% since 2005, according to the Greater Minnesota Housing Fund. Economists say foreclosures could erode rural economies faster than urban areas because when homeowners in small communities walk away from their homes, they often also abandon their towns.”

Keith Good