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Climate Change- (Interview with Adrian Smith (R-Neb.)); Biofuels; Doha; H1N1; Food Safety; and CFTC Issues

Climate Change- (Interview with Adrian Smith (R-Neb.))

DTN Political Correspondent Jerry Hagstrom and DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., may have thought he was doing agriculture a favor last week when he said he would not support cap and trade climate-change legislation . But the National Farmers Union has asked him to reconsider, saying if Congress does not pass a bill the Environmental Protection Agency will end up regulating greenhouse-gas emissions.

“‘A purely regulatory approach to addressing greenhouse-gas emissions will bring all of the downside of increased energy inputs and none of the upside of carbon offset opportunities. Balancing environmental goals with consumer and economic impacts is a difficult task, yet it is imperative for Congress to act,’ NFU President Roger Johnson said in the letter. ‘Without a robust and flexible agriculture offset program, America’s farmers and ranchers will be unable to mitigate increased input costs that will occur as a result of a cap and trade program,’ Johnson added.

“Farmers have a chance to benefit from a cap-and-trade plan if the climate-change bill in the House Energy and Commerce Committee allows agricultural land to be considered for emission offsets. Under a cap-and-trade plan, businesses would lower greenhouse-gas emissions because of government-set caps on the amount of greenhouse gases companies may emit. Those operations emitting less than their allotted caps could trade excess carbon emission rights to other companies that are exceeding their quotas. Those emitting more greenhouse gases than their allotted caps would have to go out and buy credits on an open market.”

The DTN writers added that, “House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., is expected to unveil his climate-change bill soon. While agricultural lobbyists have been assured agriculture will remain excluded from the emissions cap, it is unclear whether agricultural land will be allowed for offsets. Several environmental groups have been trying to block farmland from playing a role in offsets.”

Meanwhile, an update posted yesterday at the Oklahoma Farm Report Online reported on public comments made on Monday by House Agriculture Committee Ranking Member Rep. Frank Lucas (R-Oklahoma) on the cap and trade issue. Yesterday’s report, which included an audio summary, noted that, [Rep. Lucas] “adds that there is little chance that agriculture will benefit from Cap and Trade- but rather will have more regulations and more cost piled on in virtually every farming or ranching activity they are involved in.”

To listen to an audio clip from Rep. Lucas on cap and trade from Monday, just click here (MP3-2:17).

Another member of the House Agriculture Committee, Rep. Adrian Smith (R-Nebraska) has also expressed reservations regarding cap and trade. In a phone conversation with FarmPolicy.com yesterday Rep. Smith noted that, “From what I can tell right now, and I will certainly be open to more information, but from what I can tell at this point, cap and trade would be a pretty big hit on agriculture.”

To listen to Rep. Smith’s full comments on cap and trade from yesterday, just click here (MP3-1:43) And to listen to the entire FarmPolicy.com interview with Rep. Smith, which also covered biofuels, animal agricultural production issues and other topics, just click here (MP3-10:00).

With respect to cost estimates of potential cap and trade legislation, Kate Galbraith reported yesterday at The Green Inc. Blog (The New York Times) that, “How much would electricity bills go up if the federal government approves a major climate bill in the House? Texas has an answer, and it ranges from around $17 to $27 a month.

“The study — carried out by the Electric Reliability Council of Texas, the grid operator, at the request of state regulators — looked at the potential impact in the state of the emissions-reductions required in the Waxman-Markey climate bill in the House.

“Under a ‘business as usual’ scenario — with natural gas prices hovering around $7 per million BTUs (roughly where the Energy Information Administration projects them to be in 2013) — the average household bill could increase by $27 in 2013, the study found.”

In legislative developments regarding cap and trade, a news release issued yesterday by the House Committee on Energy and Commerce stated that, “Rep. Henry A. Waxman, Rep. Edward J. Markey, Rep. Mike Doyle, and Rep. Jay Inslee released the details of an agreement on a major provision for the allocation of allowances to major energy-intensive, trade-exposed industries under the proposed terms of the American Clean Energy and Security Act of 2009.

Under this agreement, energy-intensive industries that compete in global markets will be provided incentives to improve their energy efficiency, as well as assistance to address the costs of transitioning to a clean energy economy. These incentives will be based on the amount of domestic production. Under the agreement: 15% of allowances in 2014 will be distributed to U.S. manufacturers that are in energy-intensive, trade-exposed industries; Manufacturers will receive allowances based on the average carbon emissions from the sector, scaled by the manufacturer’s U.S. production; [and], To provide adequate transition time, the industries will receive allowances through 2025, at which time the President will determine whether they are still needed.”

The House Energy and Commerce Committee also noted yesterday that the Committee would begin marking up the climate bill on Monday, May 18, at 1:00 p.m (Eastern).

And Jim Snyder reported yesterday at The Hill Online that, “House Majority Leader Steny Hoyer (D-Md.) said a climate change bill could be on the House floor this summer after Democrats announced agreements on a few critical issues holding the legislation up.”

The Hill article added that, “Disagreements have forced Democrats twice to delay a scheduled markup, but Hoyer said in a speech delivered at a U.S. Chamber Institute for 21st Century Energy event Wednesday that ‘significant action on energy is more likely this year than at any time in recent memory.’

“‘Major energy legislation is coming, and regulation combating global warming is coming as well,’ Hoyer said.

“Energy is increasingly viewed as a national security issue and climate change as a threat to economic development, which has brought new constituencies in a call for action, Hoyer said.”

Also on the climate change/ cap and trade issue, Lisa Lerer reported yesterday at Politico.com that, “A loose coalition of international aid organizations, religious groups, environmental advocates and some businesses are lobbying Congress to include billions for international aid in the forthcoming climate change bill.

The groups argue that helping developing countries cut greenhouse gases and protect against the effects of global warming is a key to success at the international climate talks scheduled for December in Copenhagen.

“‘The U.S. can’t go completely empty-handed to Copenhagen,’ said Oxfam America President Raymond Offenheiser.

“Existing problems of poverty and malnutrition in poorer countries have been exacerbated by climate change, experts say, as changing weather patterns and intensified storms hurt agricultural yields and infrastructure.”

Biofuels

Recall that yesterday’s FarmPolicy.com update included a reference to a recent item posted at Time.com on the issue of biofuels- the Time item took a negative tone with respect to some biofuels issues.

A response to the Time piece was posted yesterday at The GoodFuels Blog, the piece, entitled, “Time Flunks Ethanol Fact Test,” can be viewed by clicking here.

Doha

Reuters writer Jonathan Lynn reported yesterday that, “Big emerging countries like China, India, Brazil and South Africa must do more to open their markets to secure a new global trade deal, the U.S. trade chief said on Wednesday.

“U.S. Trade Representative Ron Kirk, who took up his job in March, was speaking after two days of intense talks with U.S. trade partners at the World Trade Organization (WTO), and said his reception could not have been better.

Kirk said both he and President Barack Obama were committed to reaching a deal in the WTO’s long-running Doha round.”

A transcript of a press briefing Ambassador Kirk had with reporters yesterdays can be viewed here.

And an AFP article from yesterday reported that, “Kirk, who was confirmed to the top trade post in March, on Wednesday reiterated that Washington remained ‘committed to a successful conclusion’ of the Round.

“‘We see it not only as a critical component of what the President believes will be an overall worldwide response to the economic crisis, but also critical to the sustenance of many of our least developed countries,’ said Kirk.

“However, he said a new approach may have to be taken in order to conclude the Round as ‘whatever vehicle we’ve all been loaded on to get to Doha hasn’t gotten us there.’”

H1N1

The Congressional Research Service (CRS) released a report on Tuesday entitled, “Potential Farm Sector Effects of 2009 H1N1 ‘Swine Flu’: Questions and Answers,” which was written by Renee Johnson.

In part, the CRS report noted that, “Some analysts have predicted that the U.S. pork industry could lose up to $400 million in the next few months, given lower market prices; others estimate that from 25% to 33% of U.S. hog producers may be adversely effected. The National Pork Producers Council (NPPC) has sent a letter to USDA to request assistance for the U.S. pork industry to address the hog sector losses it asserts have been caused by consumer fears in response to the 2009 H1N1 outbreak. Members of Congress from districts with important meat sectors are likely to pay close attention to developments during 2009.”

Food Safety

A Dow Jones news article from yesterday (posted at DTN, link requires subscription) reported that, “Obama administration officials promised a complete review of U.S. food safety policies with an eye towards making profound changes in the way the government tries to prevent and respond to foodborne illness.

“‘When we witness an outbreak we realize it makes all of us worry about whether the dinner that we’re eating or the lunch that’s in our child’s lunch box will do harm,’ U.S. Department of Agriculture Secretary Tom Vilsack said Wednesday.

“Vilsack, together with Health and Human Services Secretary Kathleen Sebelius, told non-government food safety advocates and industry representatives in a meeting that improvements to U.S. food safety policies need to be made, and asked for feedback. The Wednesday meeting was the first listening session hosted by the White House Food Safety Working Group.”

CFTC Issues

Reuters writers Charles Abbott and Kevin Drawbaugh reported today that, “The Obama administration moved on Wednesday to exert more control over the shadowy over-the-counter derivatives market, now closely linked to the global credit crisis.

“Federal regulators proposed subjecting all over-the-counter derivatives dealers — whose trades are not made through an exchange, making them hard to monitor — to ‘a robust regime of prudential supervision and regulation,’ including conservative capital, reporting and margin requirements.

“The plan, sketched out by Treasury Secretary Timothy Geithner and top regulators at a news conference, marks a big step in the administration’s push to rewrite rules for banks and financial markets in response to a credit crisis that has sent economies around the globe reeling.”

The Reuters article added that, “Officials did not make clear which agency would be in charge of the crackdown. They said they would work together to prevent ‘forum shopping’ for weak rules. Lawmakers disagree over which agency should oversee OTC derivatives clearing.

“Laws enforced by both the Securities and Exchange Commission and Commodity Futures Trading Commission would have to be amended by Congress to accommodate the administration’s plans.”

David Cho and Zachary A. Goldfarb
reported in today’s Washington Post that, “The administration’s proposal faces a complicated political landscape on Capitol Hill. While the crisis has convinced most lawmakers that regulation is needed, there is intense debate about how far it should go — and who should be in charge.

“The split is not just along party lines. Lawmakers representing agricultural and energy-producing states have a strong interest in ensuring that their committees and the Commodity Futures Trading Commission have authority over these new regulations.

“But the Securities and Exchange Commission, which has more experience in enforcement and is favored by lawmakers representing states with heavy financial industry presence, is also angling to regulate derivatives.”

Keith Good