Waxman-Markey and Carbon Offsets- Background
Last Thursday, the House Energy and Commerce Committee passed the Waxman-Markey climate change bill.
One of the many concerns agricultural stakeholders have with the legislation is the lack of a defined role for farmers on the carbon sequestration issue. For example, National Corn Growers Pres. Bob Dickey indicated last week that, “After reviewing the legislation, we can see the bill does not clearly provide for a mechanism by which corn growers can sell carbon credits on the market.” Likewise, American Farm Bureau Federation Pres. Bob Stallman noted last week that, “We have consistently advocated that any cap-and-trade bill must: recognize and support the benefits agriculture can provide…”
Waxman-Markey and Carbon Offsets- Waxman Explains
On Thursday morning, before Waxman-Markey passed the Committee, Rep. Zack Space offered an amendment that identified specific types of agricultural activities and practices associated with carbon sequestration.
During the discussion (MP3-5:32) regarding this amendment, which was subsequently withdrawn by Rep. Space, Chairman Henry Waxman (D-CA), the co-sponsor of the underlying legislation, explained how the bill coped with the issue of carbon sequestration and agriculture.
Chairman Waxman stated that, “The agricultural and forestry sectors engage in many activities that sequester substantial amounts of carbon, these activities are expected to provide a significant source of low cost emission offsets under this bill and producing and selling such offsets could help provide farmers and timber interests [with] an important new source of income. I join your interest in ensuring that high quality agricultural offsets play a significant role in achieving the bill’s emissions reduction goals as cost effectively as possible.”
With respect to the Space amendment, Waxman said, “Just listing an activity doesn’t make it a source of offsets. Before offsets can be issued, EPA must develop a way to measure how much carbon each activity would sequester in the soil or in biomass. Then EPA can issue one offset for every ton of carbon sequestered. I think we need to make sure that EPA has the measurement methodologies in place before we give offset credits to specific activities and these methodologies involve highly technical scientific calculations that must be left to the expert agency. So I don’t think it makes sense to try to spell all this out before EPA and the Offsets Integrity Advisory Board established by this legislation have a chance to assess the carbon sequestered by each of these activities. But I agree that the EPA and the Offsets Integrity Advisory Board should consider each of these activities and should develop measurement methodologies for every source of high quality offsets.”
The Offsets Integrity Advisory Board
According to a draft of Waxman-Markey, which was posted at the Energy and Commerce Committee webpage, on page 452, at line 10, the draft legislation included the following heading: “SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD.”
Beginning on page 453, the draft bill indicated that, “The Advisory Board established pursuant to subsection (a) shall- ‘(1) provide recommendations, not later than 90 days after the Advisory Board’s establishment and periodically thereafter, to the Administrator regarding offset project types that should be considered for eligibility under section 733…”
Rep. Space’s amendment sought to change section 733 (“ELIGIBLE PROJECT TYPES,” at page 458 of the document) to include a detailed list of specific agricultural sequestration practices such as altering tillage practices and changing nitrogen fertilizer application processes.
Waxman-Markey: Jurisdictional Considerations
Waxman-Markey’s lack of specificity on the agricultural carbon offset issue, and the deference of determining what kind of sequestering projects could be approved under the bill to a yet to be established EPA Offsets Integrity Advisory Board, have resulted in fuzzy demarcation when it comes to the jurisdictional purview of other House Committees, including the House Agriculture Committee.
In a conversation with FarmPolicy.com on Friday (May 22), DTN Ag Policy Editor Chris Clayton provided a more detailed explanation of the potential jurisdictional allocations of the Waxman-Markey climate bill to other House Committees.
In part, Mr. Clayton explained that, “The way the [Waxman-Markey] bill was crafted in terms of excluding agriculture it also maybe takes jurisdiction out in certain areas. The carbon capture segment really doesn’t address agriculture at all. So if agriculture is not addressed in the bill, perhaps there is no jurisdictional issue. Now the issue- because the bill has energy derivatives- which could…[p]otentially open the door to allow agriculture to be a part of carbon trading- it would have to go over to the [House] Agriculture Committee- really though for just specifically dealing with the issues regarding the Commodity Futures Trading Commission (CFTC). So there is going to be some battles over just how much jurisdiction agriculture is going to be allowed to have on this bill. It may end up if you want to have more role for agriculture its going to have to come from an amendment on the floor, and whether that amendment will be allowed will be another matter- in terms of making this bill more beneficial for farmers, there is still a lot to play out.”
To listen to extended analysis of Mr. Clayton’s comments on this issue, just click here (MP3-3:40).
Meanwhile, Dan Looker reported on Friday that, “Waxman and others in the Democratic Party leadership of the House have assured farm lobbyists that agricultural offsets will be part of the cap and trade program but that the bill says nothing directly about it because his committee has no jurisdiction over agricultural issues.
“‘One could still make that argument based on the language in the bill,’ [Roger Johnson, president of the National Farmers Union] said. ‘But we don’t want to be in this never-never land of ‘are we in or are we out? And who’s in charge?’’
Mr. Looker added that, “Farmers Union and such major commodity groups as the National Association of Wheat Growers, American Soybean Association and National Corn Growers Association had wanted the USDA to be in charge of regulating carbon offsets purchased from farmers.
“‘That’s where all the expertise is,’ Johnson said.
“But that’s not what agriculture got in the bill. ‘EPA pretty much oversees everything here,’ Johnson said.”
Mr. Looker explained that, “Rod Snyder, director of public policy for the National Corn Growers Association, shares Johnson’s concerns.
“‘There’s been a lot of statements made by leaders in the House that the intention is for agriculture to be included,’ Snyder told Agriculture Online. And, although he’s not questioning their truthfulness, Snyder, knows that a lot of things can change when the EPA writes the rules to enforce Waxman’s bill, if it becomes law.”
Friday’s Agriculture Online article stated that, “As Waxman’s committee worked on the bill this week, Representative Zack Space (D-OH) introduced an amendment that would have spelled out a long list of farm practices eligible for carbon trading credits. The amendment was defeated, for technical reasons, Snyder said. But Space was able to get a second amendment approved that would allow the EPA to include some practices, no-till for example, going back to 2001.
“That was another important issue for NCGA, giving credit to farmers who have already started practices that capture carbon.
“Without Space’s amendment, carbon offsets that could be traded had a deadline of January 1, 2009.
“‘We don’t want to penalize people who’ve been doing the right thing for a number of years,’ Snyder said.”
Likewise, Jeremy P. Jacobs reported on Friday at The Hill Online that, “The [Waxman-Markey] legislation appears to be heading for more hurdles. The Hill reported Thursday that House Agriculture Committee Chairman Collin Peterson (D-Minn.) said he has enough votes to defeat Waxman’s proposal and has threatened to do so if his committee does not get a chance to mark up the bill. In response, Waxman said he would hold off moving the legislation straight to the House floor, giving other committees – including Peterson’s – jurisdiction over the matter.” [However, the article did not allude to the scope of this jurisdiction].
Darren Samuelsohn reported on Friday at The New York Times Online (ClimateWire) that, “Then there is House Agriculture Chairman Collin Peterson (D-Minn.), who again yesterday said he has between 40 and 45 Democrats who will oppose the climate bill if serious concessions are not made on several intertwining issues. Peterson’s list starts with U.S. EPA’s draft plan to consider greenhouse gas emissions from ‘indirect’ land-use changes spurred by biofuels production. He also wants a larger share of agricultural offsets factored into the bill, as well as more free allowance allocations to rural electric utilities.
“‘If they don’t want to change it, then they’ll have to find the votes some other place,’ Peterson said. ‘In my district, a ‘no’ vote would be a good vote.’
“Rep. Earl Pomeroy (D-N.D.), a member of the Agriculture Committee and the Blue Dogs, a group of moderate and conservative Democrats, said defections among committee members and Blue Dogs would make for ‘rough sledding’ on the floor for the climate bill given the widespread GOP opposition.
“‘I don’t think [Peterson] is bluffing,’ Pomeroy said. ‘He has got the support he says he has.’”
Lisa Lerer and Patrick O’Connor reported on Friday at Politico.com that, “In the House, Ways and Means Committee Chairman Charles Rangel is threatening to sit on the legislation until his panel approves health care reform, and Agriculture Committee Chairman Collin Peterson is leading a rebellion by rural Democrats who believe the bill would create enormous new burdens for farmers and ranchers.
“And the Senate is … well, the Senate.”
The Politico article noted that, “This latest round of criticism and doubts hasn’t ruffled Waxman; he assures reporters he plans to meet with other Democrats after the weeklong Memorial Day recess to address their concerns with the bill.
“Asked about Peterson’s threats to derail the bill, Waxman said, ‘We’ll have to talk through the concerns that he and others have.’”
Lerer and O’Connor explained that, “Peterson, who acknowledges his committee doesn’t have jurisdiction over some of the problematic passages, has mounted the most vocal campaign against the bill, threatening to bring it down on the floor if Waxman and the speaker don’t heed some of his concerns. He met with Pelosi on Wednesday and said she’s open to working with him.
“The independent Minnesota Democrat says he can produce more than 40 ‘no’ votes against the bill on his own side of the aisle, posing a very real threat to Waxman and the speaker because few, if any, Republicans are expected to support the legislation when it comes to the House floor.
“‘If they don’t want to change it, they’ll have to find some votes,’ Peterson said.”
The article pointed out that, “Rural Democrats have an extensive list of complaints with the bill.
“On a fundamental level, lawmakers from farm states argue the legislation will lead to higher oil and gas prices, making feed, fertilizer and fuel more expensive for farmers and ranchers. Peterson also has major reservations about establishing a carbon market, arguing it would give Wall Street traders disproportionate influence over energy prices.”
And the authors stated that, “But the agriculture chairman’s biggest problem isn’t directly with the bill itself; instead, he’s furious about a recent ruling by the Environmental Protection Agency that, he argues, will penalize farmers in the United States for land tilled in other countries. Peterson and others argue the ruling cripples the corn-based ethanol industry in this country. ‘You’re killing the industry,’ Peterson said.”
Friday’s Politico article concluded by saying, “For now, Peterson is keeping the door open for compromise, acknowledging that Waxman has had his hands full getting the bill through his own Energy and Commerce panel.
“‘You have enough problems dealing with your own committee without dealing with me,’ he said.”
Walter Alarkon reported on Saturday at The Hill Online that, “The energy legislation won the approval of the House Energy and Commerce Committee last week on a largely party-line vote. Three other House committees may take up the bill before it reaches the House floor, and Senate committees have yet to consider their version of cap-and-trade legislation this year.”
For more reporting on the climate bill and the Senate, Edward Luce reported on Friday at the Financial Times Online that, “The US Congress has taken its first big step towards passing a cap-and-trade bill to tackle global warning but it faces a tough fight to get the legislation passed by the Senate.”
The FT article added that, “A number of influential Democrats expressed doubts about the bill’s merits. ‘This stuff is going no place in the Senate,’ said Collin Peterson, the Democratic chairman of the House agriculture committee.
“‘They can do whatever they want with this, but I can tell you, there is no way this is going to pass.’”
To listen to comments regarding Senate action on climate change made to FarmPolicy.com on Friday by DTN Ag Policy Editor Chris Clayton, just click here (MP3- one minute).