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Climate Issues; Biofuels; Farm Bill; and Food Prices

Climate Issues: Cap and Trade

Lisa Lerer reported yesterday at Politico.com that, “Bruised by the health care debate and worried about what 2010 will bring, moderate Senate Democrats are urging the White House to give up now on any effort to pass a cap-and-trade bill next year.

“‘I am communicating that in every way I know how,’ says Sen. Mary Landrieu (D-La.), one of at least half a dozen Democrats who’ve told the White House or their own leaders that it’s time to jettison the centerpiece of their party’s plan to curb global warming.

“The creation of an economy-wide market for greenhouse gas emissions is as the heart of the climate bill that cleared the House earlier this year. But with the health care fight still raging and the economy still hurting, moderate Democrats have little appetite for another sweeping initiative — especially another one likely to pass with little or no Republican support.”

Yesterday’s article indicated that, “‘We need to deal with the phenomena of global warming, but I think it’s very difficult in the kind of economic circumstances we have right now,’ said Indiana Democratic Sen. Evan Bayh, who called passage of any economy-wide cap and trade ‘unlikely.’”

At a meeting about health care last month, moderates pushed to table climate legislation in favor of a jobs bill that would be an easier sell during the 2010 elections, according to Senate Democratic aides.”

In addition, Ms. Lerer included quotes on this development from the following Senators:

Sen. Ben Nelson (D-Neb.)- “I’d just as soon see that set aside until we work through the economy. What we don’t want to do is have anything get in the way of working to resolve the problems with the economy.”

Sen. Kent Conrad (D-N.D.)- “Climate change in an election year has very poor prospects. I’ve told that to the leadership.”

Sen. Mark Pryor (D-Ark.)- “I’d prefer to do energy, because I think you could get a really broad consensus on a lot of energy legislation.”

The Politico article added that, “Earlier this month, Sen. Susan Collins (R-Maine) and Sen. Maria Cantwell (D-Wash.) introduced a bill that would replace cap and trade with a system that would set a price on carbon dioxide emissions and return all the revenue to consumers, instead of industry.

“And Republican Sens. George Voinovich of Ohio and Richard Lugar of Indiana are examining proposals to cap greenhouse gas emissions only on power plants, coupled with energy efficiency programs for buildings and transportation.

After the tough health care fight, Democratic leadership believes a climate bill must pass with significant bipartisan support or risk leaving the party open to attack during the midterm elections.”

In a related article, Washington Post writer Juliet Eilperin reported on Saturday that, “By brokering a climate deal in Copenhagen a week ago, President Obama has committed himself to a more daunting task: pushing for comprehensive climate legislation in the Senate next year.

“Although many senators, especially key Republicans, have shown little appetite for backing yet another ambitious bill in the aftermath of the polarizing health-care debate, it is clear that enacting legislation to cap the U.S. carbon dioxide output and allow polluters to trade emission permits is essential to delivering on the pledges that Obama made to other world leaders.

“In an interview with The Washington Post last week, Obama said, ‘There is no doubt that energy legislation is going to be tough, but I feel very confident about making an argument to the American people that we should be a leader in clean energy technology — that that will be one of the key engines that drives economic growth for decades to come.’”

The Post article pointed out that, “Sen. Lisa Murkowski (Alaska), the top Republican on the Senate Committee on Energy and Natural Resources and another swing vote, called language in the Copenhagen deal allowing for verification of developing countries’ carbon cuts ‘a very small step forward.’

“‘Right now, the big question is whether the Senate, as a whole, can sit down and craft real bipartisan legislation that protects both the economy and the environment,’ Murkowski added. ‘We need to find ways to move forward in a bipartisan effort that makes sense for America, regardless of whether the rest of the world follows through or not.’

In the wake of the health-care debate, winning Republican support for such a bill is crucial, even if it might mean adding provisions favored by the nuclear and oil industries, or scaling back the legislation’s scope.”

More specifically with respect to agriculture, in an article from Thursday, DTN Ag Policy Editor Chris Clayton reported that, “The chairman of the Senate Agriculture Committee said Congress would have an easier time passing legislation to reduce carbon emissions by taking a more pragmatic approach of dropping the cap-and-trade program and focusing on a renewable- or alternative-energy portfolio.

“In an interview with DTN on Tuesday, Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., said her committee will work on green energy with the goal to ‘create jobs and put our economy back on the right track. That’s certainly going to be the focus on our committee is to create jobs in the days and months ahead,’ she said. ‘We’re going to be looking towards focusing on creating jobs in rural communities. That will probably be a big issue for us.’

“Lincoln has been a skeptic of climate legislation as passed in the House bill last June. She said in the phone interview with DTN that she thinks there is more support in the Senate for a bill that adopts a national renewable energy portfolio that would more quickly spur job growth.”

Last week’s DTN article noted that, “A bill in the Senate Energy & Commerce Committee was a bi-partisan energy bill, Lincoln said, that includes a renewable energy standard ‘that I think is practical and realistic.’ Senate Finance Committee Chairman Max Baucus, D-Mont., has indicated he would add a companion package of tax incentives for that bill as well, Lincoln said.

“‘And I think that’s something that actually would happen,’ Lincoln said. ‘It would not only create jobs, it would also take very good steps toward lessening our own dependence on foreign oil. It would do a tremendous job lowering our carbon output, and it would be a great bill for creating jobs. It would be a tremendous stimulus jobs bill.’”

Meanwhile, Edward Felker reported in Saturday’s Washington Times that, “Agriculture Secretary Tom Vilsack has ordered his staff to revise a computerized forecasting model that showed that climate legislation supported by President Obama would make planting trees more lucrative than producing food.

“The latest Agriculture Department economic impact study of the climate bill, which passed the House this summer, found that farmers would profit in the long haul from the legislation. But those profits would come mostly from higher prices for their crops caused by the legislation’s incentives to plant more forests and thus reduce the amount of land devoted to food-producing agriculture.

“According to the economic model used by the department and the Environmental Protection Agency, the legislation would incentivize landowners to convert up to 59 million acres of farmland into forest over the next 40 years. The reason: trees clean the air of heat-trapping gasses better than farming.”

Saturday’s article noted that, “A department spokesman declined to comment about how quickly the review would take place or if Mr. Vilsack would revise the department’s economic impact projections.”

And Mr. Felker also indicated that, “Senate Agriculture Committee Chairman Blanche Lincoln, an Arkansas Democrat, has said she will hold hearings on climate provisions but has not indicated when those will take place.”

In an opinion item regarding climate change, the Copenhagen talks and agriculture, Drake University Professor of Law Neil D. Hamilton noted in yesterday’s Des Moines Register that, “Food security and climate change are linked – sides of one coin. Each day we wake up we should be thankful for living here. No matter our circumstance, we are better off than most people. The 1 billion facing hunger and starvation and the second billion living on $2 a day represent a third of the world.

“The majority are farmers, mostly women and their children, already facing climate threats. Drought, spreading pests, increasing sea levels and changing monsoons drive their demands for global action. They are in the cross hairs – the kill zone – of climate change. Fortunately, our economy and farms are stronger, but our relative advantages shouldn’t delude us into thinking we are immune or without responsibility.

If climate change and food security are inexorably linked, then climate change and national security are as well.

“We must find solutions to the world’s food future. Our powerful economy and research system can help make agriculture a more resilient and powerful engine for progress. Iowa farmers will be part of the solution. The farmers I grew up with in Adams County know about doing the right thing – caring for their animals, tending their land, and trying to stay productive and profitable. Being part of the solution to climate change is doing the right thing. Agricultural leadership means embracing research on better farming practices to be more productive in a changing climate. Leadership also means constructive engagement in the processes our nation and world uses to shape the future. Copenhagen was just one step on a long, challenging journey we are taking together.”

Climate Issues: EPA Endangerment Finding

Dow Jones writer Ian Talley reported last week that, “Environmental lawyers say the Obama Administration is walking through a legal minefield as it plans to regulate greenhouse gases.

“But despite the possible explosion of court challenges, petitions and law suits, they say Obama’s Environmental Protection Agency still has a chance of charting a regulatory course that prevents critics’ worst fears of sustained economic damage.

“Politically, however, the EPA’s action may have put the president and his Democratic party in a very tight spot.”

The Dow Jones article explained that, “Under President Obama’s climate czar, Carol Browner, the EPA has officially declared greenhouse gases a public danger through the Clean Air Act, a necessary precursor for regulating such emissions. The agency is expected to finalize a new emission rule for light-duty vehicles by the end of March.

“Once that rule is approved and enforced, it automatically triggers regulations for emitters above a 100-ton to 250-ton-a-year threshold across the economy. Large bakeries, hospitals, dairy farms, churches, refiners, power stations, chemical plants, apartment buildings and any other facilities that emitted over those amounts would be subject to regulations under the Clean Air Act. The EPA said an estimated four million to six million facilities could become subject to regulation, permitting and cutting their emissions.

In an attempt to avoid the subsequent avalanche of permitting and the potential to harm the economy, the EPA proposed to ‘tailor’ the threshold in the first few years to emitters of more than 25,000 tons a year, covering only around 13,400 of the largest emitters. Political analysts say the EPA’s endangerment decision was meant to pressure Congress into crafting and passing a legislative solution to cutting greenhouse gases, especially after the Administration said it preferred legislation over regulation under the Clean Air Act. Though the House passed such a bill, efforts in the Senate have all but died, postponed to March-April at the earliest. Exacerbated by a weak, non-binding international climate agreement and by vulnerable Democrats heading into an election year, political analysts say passage of a climate bill by Congress is increasingly unlikely.”

And the article added that, “While legal experts say the courts are unlikely to block the endangerment finding during any legal challenge–calling it a heavy lift–the EPA’s other actions are potentially more vulnerable to challenge.

“‘The EPA is on a tightwire without a net with this tailoring rule,’ said Patrick Traylor, a partner at the Washington office of Hogan & Hartson. ‘There’s a very real risk a court could vacate the rule and a higher-than- normal risk they could stay it.’”

In other EPA developments with potential implications for the agricultural sector, Allison Winter of Greenwire reported on Thursday at The New York Times Online that, “The Fish and Wildlife Service is considering wide-ranging revisions to the 1973 Endangered Species Act, the agency director said in an interview last week.

“‘There is no question there are places we can make improvements in the way we do business,’ the service director, Sam Hamilton, said. ‘We are taking a hard look … to see regulatory-wise, administrative-wise, are there ways to improve?’

The regulatory revisions are a ‘work in progress’ that he said could provide new definitions for some key provisions, including those addressing critical habitat and consultations between service biologists and other agencies over projects that could harm protected animals and plants.”

Ms. Winter added that, “Hamilton said also wants to find new ways to encourage landowners to protect species, expanding on the new ‘safe harbor’ program that promotes private habitat protection while allowing normal land-use practices, like farming.

“‘We need more thinking like that … to encourage landowners,’ Hamilton said. ‘We are going to spend a lot of time with that.’”

Biofuels

Stephen Power reported on Thursday at The Wall Street Journal Online that, “Two groups representing ethanol producers asked a federal court on Thursday to strike down a California rule that calls for a reduction in the carbon content of fuels sold in that state, saying the measure violates the Constitution and jeopardizes the nationwide market for ethanol.

“The suit, filed in federal district court in Fresno, Calif., by Growth Energy and the Renewable Fuels Association, takes aim at California’s so-called low-carbon fuel standard. The rule, adopted by California’s Air Resources Board last spring but not due to take effect until early next year, calls for a 10% reduction in the carbon content of fuels sold in California by 2020.

“In a written statement, the two ethanol trade groups said the measure would erect ‘new regulatory obstacles’ to ethanol and frustrate a 2007 federal law that set targets for the U.S. to blend 36 billion gallons of biofuels a year into the U.S. fuel supply in 2022, up from 11.1 billion gallons in 2009. By frustrating the goals of the 2007 law, the groups said, the California measure violates the Supremacy Clause of the U.S. Constitution.”

Farm Bill

A news release issued on Thursday by the USDA stated that, “Agriculture Secretary Tom Vilsack today announced that USDA has implemented the new Supplemental Revenue Assistance Payments program (SURE) in accordance with the 2008 Farm Bill. Vilsack also encouraged producers to visit their USDA Farm Service Agency (FSA) county office beginning on January 4, 2010, to participate in the program if they suffered crop production losses during the 2008 crop year.

“‘This program is an important component of the farm safety net and will provide financial assistance to producers who have suffered crop losses due to natural disasters,’ said Vilsack. ‘Producers will receive payments beginning in January, in time to help them with planning for next year’s crop.’

“SURE provides crop disaster assistance payments to eligible producers on farms that have incurred crop production or crop quality losses. The program takes into consideration crop losses on all crops grown by a producer nationwide. SURE provides assistance in an amount equal to 60 percent of the difference between the SURE farm guarantee and total farm revenue. The farm guarantee is based on the amount of crop insurance and Non-insured Crop Disaster Assistance Program (NAP) coverage on the farm. Total farm revenue takes into account the actual value of production on the farm as well as insurance indemnities and certain farm program payments.”

Food Prices

Bloomberg writer Alan Bjerga reported on Thursday that, “Retail-food prices in the U.S. are set to advance 1.5 percent to 2.5 percent this year, restrained by declines in red meat and fresh produce, the U.S. Department of Agriculture said.

“The 2010 food inflation outlook, at 3 percent to 4 percent, was unchanged from a Nov. 25 forecast, the USDA said today in a report. An increase at the lower end of the latest forecast range would be the smallest gain since 2002. Weaker world economic growth this year slowed price increases, said Ephraim Leibtag, a USDA food economist, in a note with the report.

“‘Pressure on retail food prices has subsided,’ Leibtag said. The 2009 food-cost estimate was unchanged from last month.”

Keith Good