25’x 25’ has released a comprehensive study conducted by the University of Tennessee’s Bio-Based Energy Analysis Group that finds a well-constructed cap-and-trade program can provide financial benefits to farmers of most major crops. The study is called The Analysis of the Implications of Climate Change and Energy Legislation to the Agricultural Sector. However, the 25’ x 25’ press release does note that the study shows “that if carbon emissions are regulated by EPA as prescribed under a 2007 Supreme Court ruling, net farm income is projected to fall below baseline projections.”For a cap-and-trade program to be successful, according to the study, it must be operationally efficient and allow for multiple offsets. The offsets would need to include bioenergy crop production, “while restricting the removal of crop residues to acceptable, environmentally beneficial levels, offers positive net returns for eight of the nine major crops analyzed.” Rice seems to be the odd crop out, and would only see marginal benefits.
The study says that if the program is properly constructed no shifts in cropland, say to forest lands, would be needed. This requires that the carbon price per metric ton of carbon dioxide be “meaningful but moderate [.]” The EPA’s projected price level of $27 per metric ton of carbon dioxide should be sufficient, according to the study. Energy crop production is expected to increase due to pasture conversion, though the study says crop and beef prices are not disrupted. “And biomass feedstock production would offer the environmental benefits of significant direct and indirect reductions in greenhouse gas (GHG) emissions.”
Essentially, for the cap and trade program to be beneficial to American agriculture, it will all come down to how the program is constructed. As study co-author Daniel de la Torre Ugarte states in the press release on the study, “ . . . a well-constructed cap-and-trade program that allows multiple offsets for agriculture, including bioenergy crop production and manages residue removal to be carbon neutral, can generate positive net returns to agriculture and yield significant carbon benefits[.]"
‘"The study has found that income from offsets and from market revenues is higher than any potential increase in input cost, including energy and fertilizer, if cap-and-trade is done right,’ says Bart Ruth, policy chairman for 25'x25, an alliance advocating the role of agriculture and forestry in providing energy and climate solutions from the land.”
The study compared four scenarios against USDA baseline projections and found that EPA regulation combined with offsets that reward forestation will cause farm income to drop and roughly sixty million acres of croplands will be converted to forests and grasslands. ‘"The study provides clear evidence that EPA regulation, as dictated by the Supreme Court, could subject agriculture to higher input costs,’ Ruth says. ‘And there will be no opportunity for farmers, ranchers and forestland owners to be compensated for the greenhouse gas reduction services they provide. Furthermore, the impacts of EPA regulation on beef production are uncertain."’
While cap-and-trade programs will likely cause energy prices to rise, a point that the opposition to the program often makes, if the program is properly constructed to take full advantage of all agriculture can do to reduce GHG emissions farm income could grow by the billions. Past president of the National Corn Growers Association Fred Yoder offered this assessment in the press release, ‘"This study indicates higher commodity prices, and it also shows farmers will have the opportunity to get paid for growing bioenergy crops, reducing their emissions by managing fertilizers and manure, and sequestering carbon in the soil,’ Yoder said.”
Roger Johnson, president of the National Farmers Union welcomed the report’s findings and emphasized the need for legislation to be passed so producers are not subject to Environmental Protection Agency (EPA) regulations.
To read the study by the University of Tennessee’s Bio-based Energy Analysis Group click here. To read an executive summary click here.
For key findings click here.
To read the press release click here.
Posted: 11/12/09
