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Climate Issues; Nutrition; Biofuels; Biotech; Ag Economy; and Trade

Climate Issues

Bloomberg writer Simon Lomax reported yesterday that, “President Barack Obama, who meets with lawmakers at the White House this week to discuss energy legislation, may have to abandon a pollution-reduction program for the whole U.S. economy and push instead for new laws that target the electricity-producing companies.

“A plan to cap carbon-dioxide emissions from nearly every sector, favored by Obama and many Democrats, is stalled in the Senate and there isn’t enough time this year to get it passed, Eileen Claussen, president of the Arlington, Virginia-based Pew Center on Global Climate Change, said in a telephone interview.”

Yesterday’s article noted that, “Obama plans to meet June 23 with a group of Senate Democrats and Republicans at the White House to discuss energy legislation. In an Oval Office address last week, he said the BP Plc oil spill in the Gulf of Mexico should spur new laws to ‘change how we produce and use energy.’ He didn’t insist that the Senate pass the House cap-and-trade bill and said he’s open to ‘other ideas.’

“Obama wants ‘to pass a comprehensive energy bill that reduces our dependence on foreign oil, makes key investments in the areas of alternative energy’ and ‘deals fundamentally with the environmental degradation that happens from carbon pollution,’ White House Chief of Staff Rahm Emanuel said yesterday on ABC’s ‘This Week.’”

The Bloomberg article noted that, “Scaling back [Sen. John] Kerry [D-Mass.] and [Joe] Lieberman’s [I-Conn.] economy-wide plan for pricing carbon to the power sector, which accounts for roughly one-third of U.S. greenhouse gas emissions, won’t help it pass Congress this year, Senator Lisa Murkowski, an Alaska Republican, said yesterday on CNN.

“‘It still puts you in the world of cap-and-trade,’ Murkowski said.”

The article pointed out that, “‘We need to set aside controversial and more far-reaching climate proposals and work right now on energy legislation that protects our economy,’ said [Sen. Jay] Rockefeller [D-West Virginia], who is pushing for a two-year delay of the EPA’s carbon dioxide regulations for industrial sources like power plants.

“Senate Majority Leader Harry Reid, a Nevada Democrat, wants to bring up energy legislation next month. Senate Democrats didn’t decide at a June 17 meeting whether the legislation should impose limits on carbon dioxide emissions or set a renewable electricity standard and Reid plans another set of talks this week.”

Darren Goode reported yesterday at NationalJournal Online that, “Senate Democrats will discuss an energy strategy as a caucus Thursday, one day after President Obama meets with a bipartisan group of senators on the matter, a spokesman for Senate Majority Leader Harry Reid said.

“The meeting will also come a week after presentations to the caucus made by senators advocating competing strategies that underscore a continuing rift among Democrats over the political and substantive validity of addressing climate change by putting a price on carbon emissions.

“White House chief of staff Rahm Emanuel several times last week publicly stated the administration would be open to the idea of just putting a price on carbon emissions stemming from the electric utility industry, as opposed to across the economy. Sen. Joe Lieberman, I/D-Conn. — who has a plan with Sen. John Kerry, D-Mass., to create a three-sector carbon pricing plan — also signaled openness to the idea.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “President Barack Obama will try to narrow divides that have stalled energy legislation on Capitol Hill when he meets with a bipartisan group of senators Wednesday at the White House, a spokesman said Monday.

“‘Obviously the House has passed a bill; proposals have made it through committees in the Senate. And the president is going to talk about the progress, talk about what we need to do to get a deal and actually move some legislation forward,’ said White House spokesman Bill Burton Monday.”

The Hill item stated that, “Obama is expected to meet with backers of several competing energy and climate plans. A White House aide said last week that lawmakers on the list include Sens. John Kerry (D-Mass.), Joe Lieberman (I-Conn.), Jeff Bingaman (D-N.M.), Barbara Boxer (D-Calif.), Lindsey Graham (R-S.C.), Susan Collins (R-Maine), and Lisa Murkowski (R-Alaska).

“Bingaman, who heads the Energy and Natural Resources Committee, shepherded a broad package focused on energy efficiency and renewable power through the committee last year. Sen. Richard Lugar (R-Ind.) has floated a plan to curb oil demand, while Kerry and Lieberman are trying to gain traction for limits on greenhouse gases.

“Sen. Maria Cantwell (D-Wash.) — who was also invited — and Collins are pushing a separate climate proposal.”

Darren Samuelsohn reported yesterday at Politico that, “The latest trial balloon for passing climate change legislation appears to be just as explosive as the others.

Electric utilities are divided over the prospect of a bill that caps their heat-trapping emissions while shunning mandatory limits on transportation and heavy domestic manufacturers, like pulp and paper mills and chemical plants.

“Environmentalists also are concerned about the prospect of a more limited global warming bill than what they first envisioned, fearful it won’t come anywhere close to tackling the climate problem while still forcing Senate Democrats to make painful compromises that allow higher levels of traditional air pollutants like smog, soot and mercury.”

Meanwhile, Darren Samuelsohn and Manu Raju reported yesterday at Politico that, “John Kerry has been the most aggressive advocate of climate change legislation in the Senate this year — so aggressive that it’s rubbed some of his colleagues the wrong way.

“The Massachusetts Democrat is making his pitch with an almost religious fervor, pushing a message that’s equal parts saving the planet, national security and the economy. Many of his colleagues have been impressed by Kerry’s expertise and his passion in trying to push through caps on carbon when others would prefer to move onto a more limited, energy-only bill.

Yet it’s that same zeal that is making some swing-vote Democrats cringe at the thought of negotiating with someone they fear is tone-deaf to the political realities of their respective states — particularly in a difficult midterm elections year.”

The article added that, “But [last] Thursday’s climate-focused Democratic Caucus meeting left some senators grumbling that Kerry talked too much and didn’t listen enough. Although Kerry opened his presentation with Sen. Joe Lieberman (I-Conn.) by apologizing for being so aggressive on the issue and explaining how important he thinks it is, he then went on to speak much longer than either New Mexico Sen. Jeff Bingaman or Washington Sen. Maria Cantwell, the two other presenters at the meeting.

“Senate Majority Leader Harry Reid (D-Nev.) had to postpone the discussion for another meeting this week.”

And Reuters writer Richard Cowan reported today that, “If Congress can’t manage to pass climate change legislation this year, next year could bring better results, even if Republicans make gains in the November elections.

That’s because the Environmental Protection Agency next year is expected to begin implementing mandatory carbon pollution controls. When the costs become reality, there could be renewed pressure on Congress to act.”

Nutrition

An update posted yesterday at CQPolitics reported that, “Advocates for a pair of Senate bills to strengthen the Food and Drug Administration’s food safety authority and fight child obesity are worried that the popular legislation might never reach the Senate floor — despite bipartisan support.

“‘We’re running out of time,’ said Margo Wootan, nutrition policy director at the Center for Science in the Public Interest.”

The CQ item added that, “Wootan is concerned about legislation to reauthorize child nutrition programs such as the popular National School Lunch Program. The programs expire Sept. 30. The Senate Agriculture, Nutrition and Forestry Committee approved its bill on March 24, while the House Education and Labor Committee introduced its bill on June 10.

Wootan said Congress is likely to approve a simple extension of the programs if lawmakers cannot finish a full reauthorization.

But supporters worry that several provisions would be lost if lawmakers merely extend the current authorization. Those include proposed gains in funding, establishment of higher nutrition standards and policy changes such as agreement among lawmakers, the food and beverage industry and advocacy groups to empower the Agriculture Department to regulate foods in school vending machines.”

Biofuels

A news release from USDA yesterday stated that, “USDA’s Chief Economist Joseph Glauber today announced the publication of a report by the Office of Energy Policy and New Uses that surveyed corn growers for the year 2005 and ethanol plants in 2008, which indicates the net energy gain from converting corn to ethanol is improving in efficiency. The survey asked ethanol producers to respond to questions about ethanol yield (undenatured) per bushel of corn and energy used in the plants. The 2008 updates presented in the report recorded the effects of current practices used by corn producers and ethanol processors.”

“According to the report, overall, ethanol has made the transition from an energy sink, to a moderate net energy gain in the 1990s, to a substantial net energy gain in the present. And there are still prospects for improvement. Ethanol yields have increased by about 10 percent in the last 20 years, so proportionately less corn is required. In addition to refinements in ethanol technology, corn yields have increased by 39 percent over the last 20 years, requiring less land to produce ethanol.”

In other developments, Todd Neeley reported yesterday at DTN (link requires subscription) that, “The Renewable Fuels Association won the first battle against California’s low-carbon fuel standard in the Eastern District Court of California last week.

“The court denied the California Air Resources Board’s motion to dismiss an RFA lawsuit that claims the state’s low-carbon fuel standard violates the commerce clause of the U.S. Constitution, according to court documents. In its lawsuit, RFA is trying to make the case that federal law should have precedence — in this case the Renewable Fuels Standard.

“The California regulation favors corn-based ethanol plants in California over similar plants in the Midwest, claiming that Midwest plants have higher greenhouse gas emissions. This could hurt ethanol producers and corn farmers who supply corn to ethanol plants by shutting off the estimated 1.5-billion-gallon California market.”

Mr. Neeley indicated that, “When it comes to the California ethanol market, the question is whether the U.S. ethanol industry will have to abide by the new federal RFS or the low-carbon fuel standard in California.

“Damien Schiff, a staff attorney with the Pacific Legal Foundation in Sacramento, Calif., said in a previous interview with DTN that the court will have to decide whether there is ‘a necessary conflict between state and federal laws, or if they can be harmonized.’

“The federal Renewable Fuels Standard does not make a distinction between the greenhouse gas performance of corn ethanol plants in the Midwest and plants in other regions like CARB’s regulation does.”

In a separate biofuels issue, Reuters writers Roberto Samora and Reese Ewing reported yesterday that, “U.S. automakers oppose raising the blend of ethanol in gasoline from the current 10 percent, saying cars won’t run as well on higher blends, but Brazil’s experience shows their arguments are weak.”

The article explained that, “The U.S. Environmental Protection Agency and Energy Department are studying the potential impact of an increase of ethanol in gasoline to 15 percent.

“U.S. ethanol producers say this would expand demand and improve the health of the industry, suffering from a glut of the biofuel typically made from corn in the United States.

“But the U.S. Alliance of Automobile Manufacturers has lobbied against raising the blend, saying it would affect vehicle emissions, performance and durability”

Yesterday’s article noted that, “But as for performance and durability, Brazilian engineers say local cars that run on E20-E25 gasoline are in no way inferior to their North American counterparts.

“‘From the technical point of view, this could be done without any difficulty (in the United States),’ former Brazil Chief Executive for Ford and current Director of the Center for Automotive Studies Luiz Carlos Mello said.

“He noted that U.S. automakers were instrumental in designing the 100 percent ethanol car that started rolling off Brazilian factory floors three decades ago.”

Biotech

Andrew Pollack reported in today’s New York Times that, “In its first-ever ruling on genetically modified crops, the Supreme Court on Monday overturned a lower court’s ban on the planting of alfalfa seeds engineered to resist Monsanto’s Roundup herbicide.

The decision was a victory for Monsanto and others in the agricultural biotechnology industry, with potential implications for other cases, like one involving genetically engineered sugar beets.”

The Times article explained that, “A federal district judge in San Francisco had ruled in 2007 that the Agriculture Department had approved the genetically engineered alfalfa for commercial planting without adequately considering the possible environment impact, as required by federal law. The judge vacated approval, known as deregulation of the crop, and also imposed a nationwide ban on planting those seeds. The ban was later upheld on appeal.

“But the Supreme Court, in a 7-to-1 decision, said the lower court judge had gone too far, ruling that the national ban prevented the Agriculture Department from considering a partial approval. That avenue, the court said, would have allowed some of the alfalfa to be grown under certain conditions; for example, isolating it from conventional alfalfa.”

Brent Kendall reported in today’s Wall Street Journal that, “The biggest impact of the court’s ruling could be felt in other Roundup Ready crops, particularly sugar beets, from which much of the nation’s sugar is made.

“A federal judge ruled in September that the Agriculture Department didn’t conduct an appropriate environmental impact study on Roundup Ready sugar beets. The judge hasn’t decided on how to remedy the violation, and a court hearing is scheduled for July. Monday’s ruling may make it less likely that the judge will issue a broad injunction that bars all planting of Roundup Ready sugar beets while a full environmental study is conducted.”

Ag Economy

Pat Hill reported yesterday at DTN (link requires subscription) that, “What will farmers around the world plant — and how many acres — in five or 10 years?

“Ag economists wrestle with the question to try to make longer-term forecasts.

The demand side (rising world population, more people eating better food, increased use of biofuels) is well known, but what will the world’s farmers need to do to produce enough food to meet that demand? Will yield improvements be sufficient? Will more acres need to come into production? Will agronomic practices need to be changed? How will any of these shifts affect the American farmer?

The DTN article noted that, “The current ample stocks-to-use ratios for wheat, corn and soybeans make this question seem less urgent than it was in 2008, when food prices spiked and some countries took steps to limit exports. But over the longer term, worldwide demand growth is exceeding productivity growth by 1 percent to 4 percent per year, according to studies by William Wilson, ag economist and distinguished professor at North Dakota State University.”

Ms. Hill pointed out that, “Wilson said he calculates annual productivity growth rates have been about 0.8 percent for wheat, 1.4 percent for corn and 1 percent for soybeans — numbers that imply a need for more crop acreage or more technological improvements.

“‘Prices have to stay high enough to bring in new technology, more land,’ Wilson said. ‘Biotech companies are talking of doubling production by 2030. … That translates to a 3.0 to 3.2 percent increase in productivity. If achieved, that would be adequate to serve the increased demands of the world.’

“That’s a big ‘if,’ however: There are a lot of variables to consider when making predictions about changes in world planted acres.

“Wilson pointed to the big loss of acres in the Black Sea countries (Russia, Ukraine and Kazakhstan) in the past 15 years. He said those acres could return to production in the next decade.”

Trade

A news release yesterday from Senate Ag Committee Chairman Blanche Lincoln (D-Arkansas) stated that, “U.S. Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln, (D-Ark.), Ranking Member Saxby Chambliss, (R-Ga.), Senator Amy Klobuchar (D-Minn.), and 22 other Senators today sent a letter to President Barack Obama urging him to address Russian trade barriers on U.S. poultry imports during his upcoming meeting with Russian President Dmitry Medvedev. The Senators emphasized that internationally recognized science methodology has proven U.S. poultry to be safe and that current restrictions are unwarranted.

“‘Our poultry producers are required by USDA to meet very stringent food safety standards, which help them produce a safe and high-quality product. The Russians have failed to supply a reasonable, scientific explanation for restricting their market to U.S. poultry and we believe that their citing of safety concerns as reason for their trade barriers is baseless. The current economic climate has left many producers struggling and a continued absence from the Russian market, which is worth $800 million annually to American producers, would only increase the economic uncertainty our poultry farmers already face. President Obama’s meeting with President Medvedev offers a crucial opportunity to address this issue with the seriousness it deserves,’ the Senators said.”

Keith Good