Opinion:
Cap and Trade still a mystery to many
by Sami Jo Freeman, posted Dec. 9, 2009
One piece of legislature that may rock the agricultural world is found within the long-standing “cap and trade” debate. One problem with this piece of legislature is that there may be too much information for an individual to synthesize and make decisions on. In fact, this topic may leave you burning up hours at your computer trying to make your search engine answer your questions, with no answers to be found, according to Jeff Windett, executive vice president of the Missouri Cattlemen’s Association.
“Cap and Trade is a very confusing piece of legislation,” Windett said. “We at Missouri Cattlemen’s think it’s just ludicrous. It’s going to hurt agriculture big time, Missouri agriculture in particular. The very people they are trying to help, they will end up hurting.”
Rep. Henry Waxman (D-Ca.) and Rep. Edward Markey (D-Mass.) introduced The American Clean Energy and Security Act of 2009 or H.R. 2454. Cap and Trade is explained in a section that lies within the thick bill and will affect everyone in the United States. The U.S. House of Representatives passed H.R. 2454 earlier this year.
In short, Cap and Trade is intended to systematically reduce greenhouse gas (GHG) emissions by 2050. It will achieve this through a program that will regulate, or “cap” the amount of GHG certain companies can emit. “Capped entities” will be limited and must apply for emission permits for every ton of CO2 emitted. The limits will become stricter over time, until the 2050 goals are met, according to the Center for American Progress.
However, there are “non-capped entities” that may also participate in the program: agriculture being one of these entities. It is a realistic assumption that some bigger companies may not be able to meet their GHG limit in the beginning years. The companies who do go above and beyond by reducing their GHG emissions can sell extra permits, since they didn’t reach their projected limits. Companies can sell those extra credits to companies who couldn’t meet their regulated goal. This will reward the energy efficient businesses and still allow bigger companies to comply with regulations.
Also according to the Center for American Progress, the government will take extra permits and auction them off to bigger businesses that need a little more room to work. The federal government will also consider GHG emission history and give away these extra permits if they see little room for a business to find emission reductions.
Cap and Trade holds a lot of weight with consumers because it will affect everyone in the United States. The Congressional Budget Office projects that Cap and Trade could generate $50 billion per year, and could reach up to $300 billion. Within 20 years, it is projected that the U.S. will see $300 billion to $6 trillion from this program. That money will go toward offsetting industries negatively affected, subsidizing low-and-middle-class (maybe?) Americans and investing in energy efficient technology.
Agricultural implications
So, what does this mean for agriculture? Keeping in mind that agriculture falls under the “non-capped” sector of this legislation, there are plenty of things we can do to capitalize as an industry. On the other hand, this will leave small farmers with a lot of questions. Windett said farmers will be ultimately hurt by the rise in feed, fuel and fertilizer costs.
As an industry, agriculture emits 7 percent of U.S. GHG emissions from many non-point sources, according to Princeton University. Carbon dioxide, nitrogen and methane are to blame for our contribution to global warming. Between livestock, regular cultivation and fertilizers, those numbers are almost inevitable. In fact, the Environmental Protection Agency estimates the US cattle industry emits about 20 percent of all methane emissions. It seems like just one more occupational hazard facing farmers today.
Some suggestions to reduce GHG aimed at the agricultural industry by the EPA include no-till farming, switching to organic and sustainable production, crop rotation, range land management and changes in cattle diet. In fact, most attribute a lot of merit to these ideas. Sustainable agriculture will involve less energy usage due to lower processing, storage and transportation measures. Something ignored by the EPA, however, is the fact that fertilizers and other practices are a must when attempting to produce the volume of food that we need to achieve.
If agriculture can find ways to reduce GHG emissions or sequester GHG, then we can take advantage of such legislation. However, none of the suggestions coming from the government seem likely to producers. Most technologies that will help the situation are too expensive for an average producer to factor in to his or her yearly budget. These obstacles will keep small family farms from taking part in this program; and the larger corporate farms will be gaining another upper hand on the more sustainable competition. Some believe that this may lead to the complete deterioration of family farms because they can’t afford to buy into Cap and Trade.
Larger agricultural companies are still finding a way to make their mark by buying into exchange programs like the Chicago Climate Exchange. CCX mediates the exchange of carbon credits between farmers and companies like Cargill, Monsanto and Safeway foods. However, most individual farmers agree programs like these cost too much to buy into—nearly $50,000.
The biggest concern left to cross the minds of legislators is the amount Cap and Trade will increase production costs through a trickle-down effect.
Farmers are already struggling in a tough economy, and another input cost hike won’t help. As the higher production cost trickles down the economy, it will inevitably strike the smaller farmers in a big way.
“All it will do is increase feed, fuel and fertilizing costs, which will increase the cost of any agricultural operation,” Windett said. “Missouri is a cow-calf state with no way to sequester gasses. Therefore, producers will be limited in their ability to even participate in the program.”
What can aggies do to participate?
One unexpected tip for farmers to manage their dairy cattle is adding a garlic derivative to their drinking water. According to a news article published by CNN, “Mootral” is an additive that was originally taken from garlic and is now being added to reduce and control the inefficiencies in cattle. It is proven that methane emissions are in fact an energy loss to the animal and will directly affect the productivity that producers see in cattle. This additive will also help reduce the production of methane in the cow’s first stomach.
Farmers should see their cattle belch less with this additive. This has not yet been approved for dairy cattle because it may contaminate milk products.
Along with conforming to sustainable, organic and no-till agriculture, the EPA also suggests improving grazing management, supplementing cattle diets with extra nutrients, developing a uniform herd health program, providing adequate water sources, improving overall genetics and reproductive efficiency and testing soil for necessary amendments.
These practices are seen by the federal government as ways to reduce GHG emissions and may qualify farmers for emission credits to sell on the market. However, it is less than hopeful that small farmers will find a way to ever capitalize on these investments in the future.
Pure debate
Even though Cap and Trade has made many moves throughout politics, it is still being held up in internal debate. After its debut in the U.S. House of Representatives, the comprehensive clean energy legislation has gone through some very recent remolding. Keeping in mind it was narrowly passed out of the House of Representatives this summer, U.S. Senator Barbara Boxer (D-Ca.) then sponsored legislation in the senate to complement what the House of Representatives accomplished.
Its current title has also changed with new language attached. It is known now as The Clean Energy Jobs and American Power Act (S. 1733). It was recently passed out of the Senate Committee on Environment and Public Works, which is under the command of Sen. Boxer who chairs the committee.
The committee went into the Oct. 27 hearing fully prepared and Sen. Boxer promised to move quickly after the new bill gained committee approval. Late last week, the committee met and passed the revised bill into full consideration by the senate.
“Agriculture and the National Cattlemen’s Beef Association are very involved in the debate,” Windett said. “We need safeguards for small producers to make sure they can stay in a profitable mode, so they don’t incur extra costs and eventually go out of business. It is my opinion that this piece of legislation will be detrimental if, in its current form, it becomes law.”
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