- FarmPolicy - http://farmpolicy.com -

Climate Change- House, Senate Hearings; Biofuels (Indirect Land Use Link); and CFTC Issues

Climate Change- House- “Woody Biomass”

David A. Fahrenthold reported in today’s Washington Post that, “After lawmakers consumed all of Monday afternoon with opening statements, debate over a bill that would cap U.S. greenhouse gas emissions finally got underway in a House committee yesterday.

“But it has not gotten far.

The Energy and Commerce Committee spent its first eight hours yesterday considering six amendments to the mammoth bill, which would create a ‘cap-and-trade’ system that forces polluters to amass credits equal to their emissions.”

Today’s Post article indicated that, “Yesterday, the committee approved an amendment that would create a ‘Clean Energy Deployment Administration,’ to provide loans and loan guarantees to companies investing in renewable energy. The bill also mandates that a certain percentage of electricity come from renewable sources by 2020. The committee shot down a proposal to count wood taken from mature forests on federal land as a kind of ‘renewable biomass,’ an approved source of clean power.”

The amendment regarding woody biomass that failed to pass yesterday was offered by Rep. Greg Walden (R-Oregon) who indicated in a news release on Monday that, “Within the first 30 pages of the bill it became clear that woody biomass from federal land gets shortchanged by some tricky wording that would effectively prevent brush and debris from most of our forests from counting as renewable energy. I’ll offer amendments tomorrow in committee to fix this flaw.”

Libby Tucker provided a more detailed look at this issue yesterday at the Green Inc. Blog (The New York Times), where she stated that, “Up until last week, the climate and energy bill didn’t consider biomass collected from federal forestlands as a renewable feedstock under the proposed national renewable energy standard.

The definition of a renewable feedstock was carried over from the 2007 energy bill, which prevents biomass collected from federal land from being used in the renewable fuels mix — a nuance reflecting the concern among environmental groups that demand for biofuels could eventually trump sustainable forestry practices and further degrade national forests.

Greenwire reports, however, that the latest draft of the Waxman-Markey bill contains a compromise on the definition — one that would allow the use of some non-commercial biomass removed from federally managed forests only in order to prevent forest fires or restore ecosystem health.”

Nonetheless, yesterday’s Green Inc. update pointed out that, “The Waxman-Markey bill may not expand the market for forest biomass enough to dramatically grow the industry, however.”

“A few other proposals in Congress are aimed at further growing the market for biomass, however, including House and Senate versions of a policy that would amend the energy bill to allow biomass from federal lands to qualify as renewable feedstock for biofuels production,” the Green Inc. update said.

To listen to a FarmPolicy.com audio clip of the debate from yesterday’s Energy and Commerce Committee hearing regarding Rep. Walden’s amendment, just click here (MP3- 10:00).

During this debate, Rep. Edward Markey (D-Mass.), who opposed the Walden amendment, alluded to the compromise on the definition regarding renewable feedstocks that would allow some biomass to be removed from forests and indicated that, “We have come a long way on this issue… two years ago when we were debating this, biomass was not on the table. Now it is not only on the table, it is on the table in a very significant way…Eighty percent of what [Rep. Walden] was talking about a couple of years ago is now included.”

Ranking Member Joe Barton (R-Texas) who spoke in support of the Walden amendment, pointed out that the definition for renewable biomass included in the Waxman-Markey bill is different than the one used in the Farm Bill. Specifically, Rep. Barton noted that the definition contained in the Walden amendment was the one used in the Senate passed Farm Bill in December 2007 by a vote of 79-14.

In other action taken on the Waxman-Markey bill yesterday, Reuters writers Tom Doggett and Richard Cowan reported that, “In a party-line vote, the committee voted 36-23 against a Republican-sponsored amendment to end the U.S. cap-and-trade system if China and India did not adopt a greenhouse gas emissions reduction plan at least as strict as what the United States would have.”

Climate Change- House- Slow Pace

Jared Allen noted yesterday at The Hill Online that the pace of the Committee’s consideration of amendments was becoming an issue; reporting last night that, “The House Energy and Commerce Committee on Tuesday got off to what can only be described as a glacial pace in marking up the Democratic climate change bill.

“With as many as 400 Republican amendments up for introduction, the committee had fully considered only five amendments to the bill as of press time.”

The Hill article noted that, “Waxman said Tuesday he anticipates the amendment process to ‘speed up’ and stuck by his prediction that the committee will hold a vote to approve the bill and report it out of committee by Thursday.”

Ian Talley reported in today’s Wall Street Journal that, “It took the committee more than two hours Tuesday to debate and vote on the first proposed amendment. By the time Capitol Hill interns finally left for tacos and happy-hour drinks at the local Mexican restaurant, the panel had approved just three amendments. Among them was a proposal to give government subsidies to people who trade in old cars or trucks for new, more efficient ones.

“Mr. Waxman has said he still hopes to finish the bill by Thursday, meeting his goal of moving the climate bill out of committee by Memorial Day.

“‘He’s dreaming. It ain’t going to happen,’ said Texas Rep. Joe Barton, the panel’s ranking Republican. He added that Republicans ‘have 400 amendments that we could offer, but there are at least 75-80 that we almost have to offer.’”

The Committee continues its markup of the climate change legislation today at 10:00 Eastern.

Climate Change- House- Agriculture

In an update posted yesterday at his “Frankly Speaking Blog,” House Agriculture Committee Ranking Member Frank Lucas (R-Oklahoma) referenced the Waxman-Markey Bill being considered by the Energy and Commerce Committee and stated that, “As a lifelong rancher, as a student of Agriculture economics, and as the Ranking Member of the House Agriculture Committee, I have very serious concerns about cap and trade and its impact on rural economies.”

Rep. Lucas added that, “Those who will be hit the hardest will be people living in rural areas. Unlike Chairman Waxman’s Hollywood constituents, rural Americans have different lifestyles and challenges. They must travel farther for routine errands—25 percent more miles than urban households according to the most recent Federal Highway data. And, rural households spend 58% more on fuel than urban residents as a percentage of their income. Power providers in rural America face a unique challenge of providing affordable electricity to larger, less densely populated areas. Rural Electric Cooperatives serve 40 million Americans averaging around seven consumers per mile, while other utilities average 35 customers per mile.”

And a news release issued yesterday by the Rural America Solutions Group, a new task force of House GOP lawmakers created to address issues facing rural America, stated that, “Today, the Rural America Solutions Group held a press conference on Capitol Hill to highlight the negative impacts of the Democrats’ national energy tax legislation on rural America. This national energy tax, under consideration this week by the Energy and Commerce Committee, would disproportionately spike rural American energy bills, harm agriculture production and threaten small businesses.”

Footage from the group’s press conference yesterday can be viewed at this YouTube webpage.

Meanwhile, Marcia Zarley Taylor indicated yesterday at the DTN “Minding Ag’s Business Blog,” that, “If you’re despairing that climate change policies in Congress might impose big taxes on farmers without benefits, Agricultural Research Service scientist Jerry Hatfield might give you hope. The director of the National Soil Tilth Lab in Ames, Iowa, thinks his lab’s carbon research on Midwest soils could actually increase farmland values, separate from any payments for carbon credits. It’s where the big money will reward carbon saving.

“‘Increasing organic matter in soils stores carbon,’ the he told me during a lengthy interview at the World Agricultural Forum in St. Louis yesterday. A 1 percent to 2 percent increase in organic matter increases water storing capacity by 10 to 15 percent, boosting corn yields on those same soils 50 to 75 bu. per acre. Most Iowa soils contain only 1.5 percent to 4 percent organic matter after decades of cultivation.

“‘You can collect $2 per ton of carbon per acre in credits, but the real value of carbon is priceless,’ he says.”

Climate Change- Senate- Strategy and Chances for Passage

With respect to climate change legislative activity in the Senate, Erika Lovley and Lisa Lerer reported yesterday at Politico.com that, “Senate Republicans have come up with a novel way to fight the climate change bill working its way through the House: Tee off on Big Business, and tie it around the neck of the Democrats.

“In a strategy memo obtained by POLITICO, Republican staffers for the Senate Committee on Environment and Public Works say Republicans should argue that Democrats are embracing ‘Wall Street traders,’ ‘polluters’ and ‘others in corporate America’ who are ‘guilty of manipulating national climate policy to increase profits on the backs of consumers.’

“The Republican role-reversal may be counterintuitive — GOP candidates routinely describe themselves as ‘pro-business’ — but Republicans say it reflects their party’s new reality.”

The Senate Committee on Environment and Public Works also held a full committee hearing yesterday on climate change, entitled, “Business Opportunities and Climate Policy.”

During the course of this hearing, Ranking Member James Inhofe (R-Oklahoma) indicated that, “It is interesting that we are having this hearing right now. I have no doubt in my mind Madam Chairman that the House is going to pass a bill and it will come over here and it won’t pass here. There are not the votes right now for cap and trade in the United States Senate- its not even close.”

In a brief response to this observation, Committee Chairman Sen. Barbara Boxer (D-California) noted that “I thought I had seen it all, but now the Republicans are criticizing Democrats for being pro business…Sen. Inhofe, before he has even seen what we produce out of this Committee is predicting that the Senate will vote no…I just think the people of America expect more of us than to predict the failure of a bill that we haven’t even worked on.”

To listen to both Sen. Inhofe and Boxer’s remarks in their own words, see this FarmPolicy.com audio clip from yesterday’s Senate hearing (MP3-1:16).

Climate Change- Biofuels (Indirect Land Use Link)

Reuters writer Charles Abbott reported yesterday that, “Democratic leaders in the U.S. House of Representatives must change existing biofuel rules if they want to pass a bill to regulate greenhouse gas emissions, the House Agriculture Committee chairman said on Tuesday.

“Rep. Collin Peterson, chairman of the panel, along with nearly four dozen other farm-state lawmakers, has sponsored a bill to amend the 2007 Energy law so indirect land use change will not factor into calculating greenhouse gas emissions from production of advanced biofuels.”

Mr. Abbott noted that, “For instance, the 2007 law penalizes makers of advanced biofuels such as biodiesel and cellulosic ethanol if farmers clear forest or grasslands for food crops to replace the crops devoted to biofuels.

Peterson and the bill’s cosponsors say this unfairly makes it hard for ethanol and biodiesel makers to qualify as advanced biofuels under a federal mandate. Their bill also would make more land eligible to produce biomass for advanced biofuels.

“‘These are things we need fixed before we vote on climate change,’ said Peterson during a telephone interview.”

The Reuters article added that, “‘What it comes down to is, if they want the (climate change) bill passed, I think they better deal with us,’ said Peterson, referring to House Democratic leaders and Rep. Henry Waxman, chairman of the Energy and Commerce Committee.”

CFTC Issues

Bloomberg writer Tina Seeley reported yesterday that, “The Senate approved Gary Gensler’s nomination as chairman of the U.S. Commodity Futures Trading Commission, which oversees $5 trillion in daily trading on products ranging from orange juice futures to currencies.

“The Senate voted 88-6 today after a five-month delay amid questions by lawmakers about Gensler’s role in legislation in 2000 that exempted derivatives from government oversight.

“Gensler, 51, takes over an agency that oversees futures and options in oil, agricultural and other markets at the center of the Obama administration’s pursuit of a stronger regulatory presence. The CFTC has been criticized by Congress for failing to curb speculators after crude oil futures prices on markets it regulates reached a record $147.27 a barrel last year.”

The Bloomberg article added that, “A former Goldman Sachs Group Inc. managing director, Gensler served at the Treasury Department during the Clinton administration when legislation exempting derivatives from regulation was passed, a decision some lawmakers say contributed to today’s financial crisis.

“[Senator Bernie Sanders, a Vermont independent], along with Senator Maria Cantwell, a Washington Democrat, took procedural steps that had kept the Senate from voting on Gensler. They dropped their holds on the nomination last week after the Obama administration proposed expanding regulation of over-the-counter derivatives.”

And Ms. Seeley indicated that, “Senate Agriculture Committee Chairman Tom Harkin, whose panel oversees the CFTC, said he initially had ‘reservations’ about Gensler. Citing Gensler’s pro-regulatory statements before the committee earlier this year, Harkin said he is ‘prepared to trust the very momentous decisions of Mr. Gensler.’

“Gensler told the committee at a Feb. 25 hearing that his positions on tougher regulation have ‘evolved.’”

A statement released yesterday by Chairman Harkin on this issue is available here.

And the AP reported yesterday that, “The Senate voted Tuesday to put Gary Gensler in charge of helping the Obama administration clamp down on financial firms that make risky bets in the derivatives market, less than a decade after he opposed doing so.”

The AP article explained that, “Under a new plan announced by the Treasury Department this week, the CFTC is expected to take a lead role in enforcing new rules for the buying and selling of credit-default swaps and financial derivatives.

“Credit default swaps, a form of insurance against loan defaults, are largely exempt from government oversight and figured prominently in the credit crisis.

“Sens. Maria Cantwell, D-Wash., and Bernard Sanders, I-Vt., initially opposed a vote on Gensler’s nomination.”

Keith Good