FarmPolicy

September 2, 2014

Biofuels; Climate Issues; Crop Insurance; Trade; and Senate Ag Committee Hearing

Biofuels

Reuters writers Tom Doggett and Ayesha Rascoe reported yesterday that, “The U.S. Environmental Protection Agency said on Tuesday it needs more time to decide whether to approve an industry request to boost the amount of ethanol blended into gasoline, but signaled that it believes newer American cars could safely handle the higher fuel mix.

“The EPA was supposed to decide by Dec. 1 on a petition from Growth Energy filed on behalf of 54 ethanol producers to let gasoline contain up to 15 percent ethanol.”

The Reuters article added that, “The EPA expects to have final testing data on the effects of higher-blended ethanol by mid-June, the agency said in a letter to Growth Energy.

“‘We want to make sure we have all necessary science to make the right decision,’ the EPA said.”

DTN writer Todd Neeley reported yesterday that, “Two major U.S. ethanol groups are putting different spins on an announcement Tuesday by the U.S. Environmental Protection Agency that it plans to delay until the middle of next year a decision on whether to raise the allowable ethanol blend in gasoline to 15 percent.”

The DTN article stated that, “During a press conference Tuesday, Growth Energy Co-Chairman Wesley Clark said the announcement was positive because EPA has confirmed that E15 could be used by vehicles built in 2001 and later.”

Renewable Fuels Association [RFA] President and CEO Bob Dinneen had a more negative view on EPA’s announcement [related RFA press release]. Speaking at the Canadian Renewable Fuels Association’s summit in Vancouver Tuesday, Dinneen said the EPA continues to send mixed signals about what it expects from the ethanol industry.

“Dinneen said he doesn’t understand how EPA can push forward on a low-carbon fuel standard that penalizes ethanol for so-called international indirect land-use change effects, based on theory, yet also push for additional studies on a proposed move to E15,” the DTN article said.

Mr. Neeley added that, “Poet LLC CEO Jeff Broin said in a statement, ‘We were pleased that the EPA’s letter shows a clear path to E15. Without increasing the base blend of ethanol to E15, it will be impossible to achieve the targets set in the Renewable Fuel Standard and there will be no market for cellulosic ethanol. Poet is spending tens of millions of dollars to commercialize the production of ethanol from harvest leftovers but needs E15 to be certain there will be a market for the product.’”

Secretary of Agriculture Tom Vilsack stated yesterday that, “We are very encouraged that the results of the tests of E15 in newer model cars have been positive. The Environmental Protection Agency’s (EPA) movement towards developing an effective labeling rule sends a strong signal about the future viability of the biofuels industry. Biofuels are a vital component of America’s energy future, helping to break our dependence on oil. This commitment reflects the Obama Administration’s support for a strong biofuels industry helping to increase income for farmers and jobs in rural America.”

National Corn Growers Association President Darrin Ihnen indicated yesterday that, “While we are disappointed the Environmental Protection Agency has chosen to postpone its decision on the higher ethanol blends, we are pleased the positive tone of their response shows an understanding of the importance of moving to higher blends in the very near future.”

Environmental Working Group Midwest vice-president Craig Cox noted yesterday that, “EPA should be congratulated for resisting efforts by the well-funded and politically well-connected ethanol lobby to short-circuit a science-based analysis of corn ethanol’s adverse impacts on engines, public health and the environment. Blending more ethanol into the gasoline supply without conducting a sound scientific analysis of its total impact only serves a narrow constituency of large corn growers and ethanol producers while ignoring the potential risks a blend increase poses to consumers. It’s time we recognize that ethanol has been unable to attain independent viability as a motor fuel despite lavish subsides and mandates, and even more important, that it has been unable to prove that its production and use are beneficial to the environment.”

Nebraska GOP Senator Mike Johanns stated that, “By raising the ethanol blend wall to 15 percent, we can provide a boost to corn growers and ethanol producers in Nebraska and across the country while decreasing our dependence on foreign oil. These continued delays are part of a troubling pattern that calls into question this administration’s commitment to our nation’s growing renewable fuels industry. I am further concerned with how EPA would implement such a change, if and when it goes into effect. Having multiple gasoline pumps for vehicles with different makes and from different years could lead to a cumbersome, confusing process at the pump.”

Senator Charles Grassley (R-Iowa) stated that, “There is ample evidence that demonstrates E15 should be approved. The EPA has had months to review the data and make an informed decision to approve higher blends of ethanol than are currently allowed. With this delay, the Obama administration is delaying the creation of thousands of new, green jobs, and creating even more uncertainty in an economy that needs some good news.”

Senator Byron Dorgan (D-ND) stated that, ““EPA needs to get a move on with this decision, and I’m going to keep pushing them to get to a positive conclusion.”

And Senator John Thune (R-SD) stated that, ““Without the timely approval of E15, we will not have the market for the next generation of cellulosic ethanol and the commercialization of advanced biofuels will be delayed.”

Climate Issues

Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “Senate Democrats resume their efforts this week to advance global warming legislation as President Obama readies for the international glare of U.N. climate negotiations next week in Copenhagen, Denmark.

Majority Leader Harry Reid (D-Nev.) plans to meet later this week with key Senate committee leaders for a pre-Copenhagen strategy session. Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) hosts a hearing [today] on policy options for dealing with climate change.

“And Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) are working on the rough outline of their bipartisan legislative proposal, though details may not be released until early next year.”

Mr. Sameulsohn explained that, “State Department deputy climate envoy Jonathan Pershing briefed about 40 Senate Democratic and GOP aides yesterday on the status of the [Copenhagen] talks, which last week got a boost when Obama pledged the United States to a roughly 17 percent emissions cut in 2020 so long as Congress also acts on the issue.

“Senate aides said Pershing predicted several major decisions to come out of the U.N. talks. Among other things, Copenhagen is expected to produce a political agreement on the schedule for when world leaders will sign off on a legally binding treaty that could replace the Kyoto Protocol.

“U.N. officials are considering either a final negotiation session in June or December 2010, a schedule that mirrors what Democratic leaders hope to follow on Capitol Hill.”

Reuters writer Richard Cowan reported yesterday that, “Two senators on Tuesday gave a boost to next week’s global environmental summit in Copenhagen, with a senior Democrat advocating more U.S. funding of climate change efforts by poor nations and a key Republican calling for quick action on a U.S. climate bill.

“Democratic Senator John Kerry, a leading advocate of climate control legislation in Congress, recommended that the Obama administration include $3 billion in next year’s budget to help fund efforts to address global warming. This year’s funding is about one third that amount.

“Senator Lindsey Graham, one of the few Republicans willing to negotiate with Democrats on a climate change bill, told Reuters, ‘I think we need to act by next spring’ to pass a bill limiting U.S. carbon dioxide emissions.”

In a separate article from yesterday, Reuters writer Richard Cowan indicated that, “The politics surrounding coal may be among the thorniest in the U.S. effort to craft climate change legislation, and the hurdles show why President Barack Obama will need to keep one eye on Charleston, the West Virginia capital, even as he travels to Copenhagen for international climate negotiations this month.”

The article noted that, “Throughout the Midwest and South of the United States, coal and coal-fired power plants are central to local energy production and to jobs.

“Paul Sracic, chairman of the political science department at Youngstown State University in Ohio, a coal state that also has suffered significant manufacturing job losses in recent decades, said, ‘While legislation aimed at combating global — emphasize global — warming might garner support in theory, it quickly loses its popularity if it is thought to cost local — emphasize local — jobs.’”

Agricultural issues and climate change will be discussed today as the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research holds a hearing to review the potential economic impacts of climate change on the farm sector.

USDA Chief Economist Joe Glauber and other agricultural economists will participate in today’s hearing, which is scheduled to begin at 10:00 am Eastern.

Chris Clayton noted yesterday at the DTN Ag Policy Blog that, “USDA is expected to provide more analysis for the impact climate legislation would have on agriculture as USDA officials testify before The House Agriculture Subcommittee on Conservation, Credit, Energy, and Research. USDA chief economist Joe Glauber will testify first on Wednesday. Before that, Secretary of Agriculture Tom Vilsack will hold a press briefing going over Glauber’s analysis.”

House Agriculture Committee Ranking Member Frank Lucas (R-Oklahoma) indicated in the Ag Minute Audio report (MP3) yesterday that, “We like to say that we have the safest, most abundant, most affordable food and fiber supply in the world. But this isn’t just a boastful expression, it is a reality. Our farmers and ranchers are responsible for feeding folks living in our country and throughout the world.

But, cap and tax legislation threatens that safe, abundant and affordable food and fiber supply. The agriculture industry, as we know it, will not survive under the heavy burdens of a cap and tax policy.”

In other news regarding agriculture and climate change, a news release issued yesterday by the UN’s Food and Agriculture Organization (FAO) stated that, “Farming practices that capture carbon and store it in agricultural soils offer some of the most promising options for early and cost-effective action on climate change in developing countries, while contributing to food security, FAO said in a policy brief prepared for the Copenhagen summit.

“Yet agriculture has been largely excluded from the main climate financing mechanisms under discussion in Denmark, the agency said.

“Agriculture not only suffers the impacts of climate change, it is also responsible for 14 percent of global greenhouse gas emissions. But agriculture has the potential to be an important part of the solution, through mitigation-reducing and/or removing a significant amount of global emissions. Some 70 percent of its potential for reducing emissions could be realized in developing countries, FAO said.”

As economists focus on the potential impacts of climate legislation on the agricultural sector today at the House Ag Committee hearing, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “The Congressional Budget Office apparently will not be able to offer much ammunition to either supporters or opponents of proposed climate-change legislation. According to a recent CBO report, the complexities built into proposals to reduce greenhouse-gas emissions make it difficult to accurately estimate possible economic effects of those proposals.”

From an international perspective on climate issues, Reuters writers John Acher and James Grubel reported yesterday that, “Most world leaders plan to attend a climate summit in Copenhagen this month, boosting chances that a new U.N. deal to fight climate change will be reached, host Denmark said on Tuesday.

“The number of leaders planning to come to the December 7-18 talks had risen to 98 out of the 192 members of the United Nations, Denmark said. The number was up from 65 in a first count after invitations were sent last month.”

The Reuters article noted that, “In Australia, a government plan to introduce carbon trading was headed for defeat in the Senate after the opposition picked a new leader hostile to the scheme, which would be the biggest economic policy change in modern Australian history.

The United States is watching Australia’s debate closely. A political agreement on carbon trading in Australia could help garner support for action from other countries.”

James Kanter reported in today’s New York Times that, “No political entity has pushed harder for the Copenhagen conference on climate change to succeed than the European Union.

“But just days before the opening of the United Nations-sponsored meeting, the Europeans have been largely pushed to the sidelines, watching as the world’s two largest emitters of greenhouse gases, China and the United States, seek to set the rules of the games.

“‘That’s of course the unfortunate situation for Copenhagen,’ said Jo Leinen, a German member of the European Parliament who is leading the chamber’s delegation to the conference that is intended to follow up on the soon-to-expire Kyoto Protocol. ‘It’s turning into a bit of a ping-pong match between China and the United States, with each just looking at the other,’ he said.”

However, Rama Lakshmi reported in today’s Washington Post that, “Recent announcements by the United States and China to cut carbon dioxide emissions are propelling India to make its own commitment to slow greenhouse gas emissions and go to the upcoming Copenhagen climate summit with a firm proposal on reductions.

“The move marks a significant shift for India, which until recently had insisted that wealthier nations should bear the brunt of carbon cuts rather than emerging nations, whose economies are less developed.”

Also on the climate debate, Washington Post writer Juliet Eilperin reported today that, “A scientist who is one of the central figures in the uproar over pirated e-mails from the University of East Anglia’s Climate Research Unit announced Tuesday that he is stepping down as the unit’s director while the university investigates the incident.”

Crop Insurance

A news release issued yesterday by the USDA’s Risk Management Agency (RMA) indicated that, “RMA released the findings of a study on Sep 23, 2009, regarding aggregate rates of return earned by approved insurance providers in the Federal crop insurance program for the past 20 years.

“‘Historical Rate of Return Analysis,’ dated Aug 18, 2009, covers the years 1989 through 2008, and was conducted by Milliman, Inc., on behalf of RMA.”

A separate RMA news item from yesterday stated that, “RMA has released 2010 crop year actuarial material reflecting certain Group Risk Program (GRP) and Group Risk Income Protection (GRIP) county crop program deletions for corn, grain sorghum, cotton, and peanuts for the 2010 crop year.”

Trade

An update posted yesterday at the International Centre for Trade and Sustainable Development reported that, “No single theme dominated the second day of discussions at the WTO Ministerial Conference in Geneva. The meeting’s main scheduled event, a ‘working session’ to review WTO activities including the Doha Round, saw ministers largely repeat well-rehearsed views.”

Meanwhile, an AFP article from yesterday reported that, “Africa cotton producers Tuesday warned that they may file a complaint at the World Trade Organization against the United States if the issue over subsidies paid to US cotton growers is unresolved.

“‘The C4 does not exclude using judicial tools at its disposal at the WTO in case a solution is not found,’ said Burkina Faso Commerce Minister Mamadou Sanou, referring to the so-called Cotton Four countries — Benin, Mali, Chad and Burkina Faso.”

Senate Agriculture Committee Hearing

The Senate Agriculture Committee will hold a hearing today to “examine the Administration’s proposed legislation on financial regulatory reform with Secretary of the Treasury Timothy Geithner testifying on behalf of the Administration. The Committee will examine the proposal from various perspectives, and will also address suggested alternatives. This will be the Committee’s second hearing on financial regulatory reform under Chairman Lincoln’s leadership.”

Keith Good

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