[Senate Hearing 111-1204]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1204
ECONOMIC OPPORTUNITIES FOR AGRICULTURE, FORESTRY COMMUNITIES, AND
OTHERS IN REDUCING GLOBAL WARMING POLLUTION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JULY 14, 2009
__________
Printed for the use of the Committee on Environment and Public Works
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys
__________
U.S. GOVERNMENT PUBLISHING OFFICE
95-162 PDF WASHINGTON : 2016
__________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office
Internet: bookstore.gpo.gov. Phone: toll free (866) 512-1800; DC area (202)512-1800
Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont MIKE CRAPO, Idaho
AMY KLOBUCHAR, Minnesota CHRISTOPHER S. BOND, Missouri
SHELDON WHITEHOUSE, Rhode Island LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico
JEFF MERKLEY, Oregon
KIRSTEN GILLIBRAND, New York
ARLEN SPECTER, Pennsylvania
Bettina Poirier, Staff Director
Ruth Van Mark, Minority Staff Director
C O N T E N T S
----------
Page
JULY 14, 2009
OPENING STATEMENTS
Boxer, Hon. Barbara, U.S. Senator from the State of California... 1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 6
Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee.. 71
Bond, Hon. Christopher S., U.S. Senator from the State of
Missouri....................................................... 72
Barrasso, Hon. John, U.S. Senator from the State of Wyoming...... 74
Crapo, Hon. Mike, U.S. Senator from the State of Idaho........... 75
Sanders, Hon. Bernard, U.S. Senator from the State of Vermont.... 94
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........ 95
Gillibrand, Hon. Kirsten, U.S. Senator from the State of New York 118
Udall, Hon. Tom, U.S. Senator from the State of New Mexico....... 172
Cardin, Hon. Benjamin L., U.S. Senator from the State of
Maryland, prepared statement................................... 184
Vitter, Hon. David, U.S. Senator from the State of Louisiana,
prepared statement............................................. 185
WITNESSES
Hopkins, Jeffrey W., Principal Adviser, Energy and Climate
Policy, Rio Tinto.............................................. 85
Prepared statement........................................... 87
Response to an additional question from Senator Crapo........ 93
Hohenstein, Bill, Director, Global Climate Change Program, U.S.
Department of Agriculture...................................... 96
Prepared statement........................................... 98
Responses to additional questions from:
Senator Baucus........................................... 103
Senator Cardin........................................... 106
Response to an additional question from Senator Klobuchar.... 107
Responses to additional questions from:
Senator Inhofe........................................... 108
Senator Crapo............................................ 114
Krupp, Fred, President, Environmental Defense Fund............... 119
Prepared statement........................................... 121
Response to an additional question from:
Senator Cardin........................................... 134
Senator Klobuchar........................................ 136
Responses to additional questions from Senator Inhofe........ 137
Response to an additional question from Senator Crapo........ 144
Stallman, Bob, President, American Farm Bureau Federation........ 145
Prepared statement........................................... 147
Response to an additional question from Senator Klobuchar.... 160
Responses to additional questions from:
Senator Inhofe........................................... 162
Senator Crapo............................................ 164
ADDITIONAL MATERIAL
``Fool Me Twice, Shame on Me,'' article from the Center for
American Progress.............................................. 187
ECONOMIC OPPORTUNITIES FOR AGRICULTURE, FORESTRY COMMUNITIES, AND
OTHERS IN REDUCING GLOBAL WARMING POLLUTION
----------
TUESDAY, JULY 14, 2009
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The full committee met, pursuant to notice, at 10 a.m. in
room 406, Dirksen Senate Office Building, Hon. Barbara Boxer
(chairman of the full committee) presiding.
Present: Senators Boxer, Inhofe, Alexander, Barrasso, Bond,
Cardin, Crapo, Gillibrand, Merkley, Sanders, and Udall.
OPENING STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM THE STATE OF CALIFORNIA
Senator Boxer. Our hearing will come to order. I want to
welcome everyone on the panel. We will be addressing
opportunities for businesses and sectors like ag and forestry
in the fight against global warming. Each member can have 4
minutes to open.
This is the first of three hearings scheduled for this week
to address vital aspects of our plan for legislation that will
avoid the ravages of unchecked global warming, create clean
energy jobs here in America, and reduce our dependence on
foreign oil.
Agricultural and forestry businesses have opportunities to
play an important role in efforts to reduce global warming.
Changes in land use, reforestation and other activities can
make significant reductions in global warming pollution. As an
example, a farmer can capture the methane that is emitted by
waste ponds or change to no-till or low-till land management or
take other steps to increase the amount of carbon absorbed in
soils and forests. Then that farmer can sell those documented
reductions in emissions as an offset on an open market where it
can be purchased.
The farmer is paid, and the regulated entity receives
credit toward cutting its global warming pollution. By
providing regulated industries with a low-cost way to meet some
of their pollution reduction requirements, offsets can be an
important part of cutting our global warming emissions, and
lowered costs for industry mean lower costs for family as we
transition to a clean energy economy.
Groups working in the farm sector have voiced their support
for Waxman-Markey legislation, including the National
Association of Wheat Growers, the American Farmland Trust, and
the National Farmers Union, and I ask unanimous consent that
their letters be placed in the record.
[The referenced documents follow.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. At the same time, it is essential that
offsets in fact reduce emissions and that they can be monitored
and verified. Making sure that offsets have integrity so that
our clean energy jobs bill reduces pollution as it is designed
to do is an important part of the work of this committee.
I want to thank all of our witnesses for being here today
to address this important subject. I think this is a very
exciting opportunity out there posed in the form of a
challenge. And I look ahead and I see if we do this right, I
see new jobs. I see new opportunities for agriculture and
forestry. And I believe if we do the right thing, we will not
only meet the challenge of global warming and avoid the ravages
of global warming, which have been laid out by the Bush
administration and now the Obama administration, but will
create millions and millions of jobs.
The last point on that, in my home State of California,
where we are taking the lead on this, the only real growth
sector in the last 10 years has been alternative energy,
125,000 new jobs and 1,000 new solar companies. So we can prove
the fact that even in this very tough recession, that is the
bright spot in my home State. So I look forward to hearing the
testimony today.
At this time, I call on Senator Inhofe.
OPENING STATEMENT OF HON. JAMES M. INHOFE,
U.S. SENATOR FROM THE STATE OF OKLAHOMA
Senator Inhofe. Thank you, Madam Chairman.
Let's face it, as anyone familiar with agriculture knows,
farming is energy-intensive business, so when the price of
diesel, electricity or natural gas goes up, farmers know about
it, and they don't like it, and they tell us about it.
Farming is a business of high costs and low profit margins,
so it is not surprising that a significant portion of the
agriculture community opposes cap-and-trade, the purpose of
which is to raise prices on the energy that farmers use.
Now, if cap-and-trade achieved its intended effect, that
is, to prevent the global climate catastrophe, then farmers
would be the first to sign up to help. In my view, the farmers
are practical people. When they see a problem, they want to fix
it, and case closed.
But if you are asking them to assume an enormous economic
burden for a meaningless exercise, one that subsidizes big
cities at the expense of the heartland; one that sends American
jobs and taxpayers to India and China; one that puts American
farmers at the disadvantage in the global marketplace, all for
no impact whatsoever on global warming, then you will get an
earful.
What do I mean here? Well, the EPA Administrator, Lisa
Jackson, stated to this committee just last week, if the U.S.
chooses to enact cap-and-trade unilaterally without China,
India and other developing nations which emit a significant
portion of the world's greenhouse gases, then farmers will be
forced to pay for a solution that doesn't work. Farmers
understand what this means. It is all pain and no climate gain.
Now, one thing I will note about farmers: they are great
stewards of the land. Farmers have partnered with the Federal
Government to improve and protect thousands of acres of
agricultural land. But they are rightly leery of cap-and-trade
because they suppose the environmental benefits its supporters
claim it will create are illusory.
Farmers are also skeptical of cap-and-trade's alleged
economic benefits. Over the last several months, cap-and-
traders--in a desperate attempt to reverse the inexorable
decline in public support for the Waxman-Markey bill--have
claimed cap-and-trade will create economic opportunities for
farmers. They say that farmers can make hefty profits by taking
advantage of so-called offsets. These projects allow farmers to
undertake certain agricultural practices such as no-till
farming to keep CO2 in the ground and to get paid
for it. But as farmers have discovered, these projects won't
defray the increased energy costs and the devastating impacts
caused by cap-and-trade.
According to the Heritage Foundation, farm income would
drop $8 billion under cap-and-trade, and offsets would make up
less than 10 percent of the lost income. And many of the
farmers, like fruit, vegetable, rice and cotton farmers, won't
be able to participate in an offset program because their crops
are simply not suitable for no-till or other practices to
sequester CO2 in the soil. They will simply be stuck
with significantly higher energy costs.
Also, consider a report by the Congressional Research
Service which recently confirmed that new EPA estimates of the
potential for agricultural soil sequestration and no-till and
other practices are significantly lower than the EPA 2005
estimates. In plain English, this means that the most viable
tool for producing offsets with soil sequestration won't be
available for farmers in the amounts promised.
This is not just a small adjustment. This was a major
change by about 10-fold. I learned a good deal of this in
letters sent by 120 agriculture groups opposing the House
Waxman-Markey bill. This opposition, I should note, runs the
gamut of agricultural sector, including the Farm Bureau, the
American Farm Bureau, the Pork Producers Council, the U.S. Rice
Federation, the National Cattlemen's and Beef Association, the
National Chicken Council, the Council for Farmer Cooperatives,
the American Meat Institute, and the North American Millers
Association. And I ask that all these be made a part of the
record.
Senator Boxer. Without objection.
[The referenced letters follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe,
U.S. Senator from the State of Oklahoma
Let's face it: as anyone familiar with agriculture knows,
farming is an energy-intensive business with high costs and low
profit margins. So when the price of diesel, electricity, or
natural gas goes up, farmers really feel the pinch. So it's not
surprising that a significant portion of the agricultural
community opposes cap-and-trade, the purpose of which is to
raise prices on the energy that farmers use.
Now if cap-and-trade achieved its intended effect--that is,
to prevent a global climate catastrophe--then farmers would be
the first to sign up and help. Farmers are practical people;
when they see a problem, they want to fix it, case closed.
But if you're asking them to assume an enormous economic
burden for a meaningless exercise, one that subsidizes the
coasts at the expense of the heartland; one that sends American
jobs and taxpayer dollars to India and China; one that puts
American farmers at a disadvantage in the global marketplace--
all for no impact whatsoever on global warming, then you'll get
an earful. And rightly so.
What do I mean here? Well, as EPA Administrator Lisa
Jackson admitted to me last week, if the U.S. chooses to enact
cap-and-trade unilaterally, without China, India, and other
developing nations, which emit a significant portion of the
world's greenhouse gases, then farmers would be forced to pay
for a solution that doesn't work. Farmers understand what this
means: it's all pain for no climate gain.
Now one thing I'll note about farmers: they are great
stewards of the land. Farmers have partnered with the Federal
Government to improve and protect thousands of acres of
agricultural lands. But they are rightly leery of cap-and-trade
because the supposed environmental benefits its supporters
claim it will create are an illusion.
They are also skeptical of cap-and-trade's alleged economic
benefits. Over the last several months, cap-and-traders, in a
desperate attempt to reverse the inexorable decline in public
support for the Waxman-Markey bill, have claimed that cap-and-
trade will create economic opportunities for farmers.
They say that farmers can make a hefty profit by taking
advantage of so-called ``offsets.'' These projects allow
farmers to undertake certain agricultural practices, such as
no-till farming, to keep CO2 in the ground, and get
paid for them. But as farmers have discovered these projects
won't fully defray the increased energy costs and the
devastating macroeconomic impacts caused by cap-and-trade.
According to the Heritage Foundation, farm income could
drop by $8 billion under cap-and-trade--and offsets will make
up less than 10 percent of this lost income. And many farmers,
like fruit, vegetable, rice and cotton farmers, will not be
able to participate in an offset program because their crops
are simply not suitable for no-till or other practices to
sequester CO2 in soil. They will simply be stuck
with significantly higher energy costs.
Also consider a report by the Congressional Research
Service, which recently confirmed that new EPA estimates of the
potential for agricultural soil sequestration (no-till or other
practices) are ``significantly lower than EPA 2005 estimates.''
In plain English, this means that the most viable tool for
producing offsets--soil sequestration--won't be available for
farmers in the amounts promised by cap-and-trade supporters.
I learned a good deal of this from the letters sent by 120
agricultural groups opposing the Waxman-Markey bill. The
opposition, I should note, runs the gamut of the agricultural
sector, including: the Farm Bureau, the Pork Producers Council,
the USA Rice Federation, the National Cattlemen's Beef
Association, the National Chicken Council, the Council of
Farmer Cooperatives, American Meat Institute, and the North
American Millers Association. I could go on and on but reading
the list could take up the entire hearing. So I ask that these
letters be added into the record.
What's clear to farmers is that cap-and-trade is bad for
business and meaningless for the environment. It raises prices,
destroys jobs, and hits farm economies in the heartland. What
farmers need, and what the Nation needs, is an energy policy
that makes energy clean, affordable, and reliable, and one that
increases the energy we can produce right here at home.
Senator Boxer. Thank you, Senator.
Let me see, my list here, by order of arrival, next would
be Senator Alexander.
OPENING STATEMENT OF HON. LAMAR ALEXANDER,
U.S. SENATOR FROM THE STATE OF TENNESSEE
Senator Alexander. Thank you, Madam Chairman.
Welcome to our witnesses.
A lot of the prosperity of the United States of America has
depended on two things: cheap energy and cheap food. That has
helped us have a high standard of living, create jobs, and have
the most productive agriculture operations in the world.
We are here over the next several days to have hearings,
and I appreciate the Chairman having these on the effects of
climate change and global warming. I am one Senator who
believes climate change is a problem and that humans are
causing it, and that we need to deal with it.
I think the House-passed bill, though is exactly wrong. It
is a $100 billion job killing national energy tax that will add
another utility bill to every American family, and no American
families need, I mean, farmers are the first people who don't
need another utility bill because, as Senator Inhofe said,
farming is one of the most energy-intensive operations we have.
And every time you add utility bills or costs to existing
utility bills, prices go up.
I mean, when the price of gasoline goes up, so does the
price of seed and feed, and operating all the machines on the
farm. And the cap-and-trade program deliberately raises the
price of gasoline. Its purpose is to raise the price of energy.
If the price of electricity goes up, a lot of the machines
that go on the farm cost more to operate. If the price of
natural gas goes up, and we saw it just about 4 years ago go
up, farmers all over America felt the pain of the high
fertilizer costs, and that increased the costs of their
operations.
And of course, all that increases the cost of food to all
of Americans. Setting aside land makes land more scarce, which
is a part of this plan. And that raises the cost of food. When
gasoline goes up, it costs more to haul the food to the
wholesaler, and then to the retailer. Sara Lee, a big food
processing operation in Tennessee that employs 2,000 people
said if this House-passed bill passes, that they will delay
their expansions because the cost of food is up.
So I think we need to stop and think about whether it is
really the wisest price and policy to try to attack climate
change by deliberately raising the price of energy, especially
this cap-and-trade that came from the House is like if you have
a fly swatter right in front of you, and there is a fly and you
use a noodle to try to get it. The cap-and-trade effect on fuel
is about the most inefficient way you could deal with fuel
because it deliberately raises the price of gasoline, for
example, without reducing the carbon.
We have had that testimony before this committee. A better
way to deal with carbon from fuel would be a low carbon fuel
standard as people switch to electric cars or to biofuels or
other things, not deliberately raise the price of gasoline.
So there is a better way to do all this. Yesterday, I
offered a blueprint for 100 new nuclear power plants in the
next 20 years. Republican Senators have proposed 100 new
nuclear power plants in the next 20 years. That is the cheap
energy solution. I mean, high cost energy such as that from
Waxman-Markey would send jobs and food producers overseas in
looking for cheap energy to create products and to create food.
So 100 new nuclear power plants, support for electric cars,
offshore exploration, and doubling energy R&D for renewable
energy, that is the low cost plan to deal with climate change
instead of a new utility bill for every American family.
Thank you, Madam Chairman.
Senator Boxer. Thank you very much, Senator.
Our next speaker is Senator Bond.
OPENING STATEMENT OF HON. CHRISTOPHER S. BOND,
U.S. SENATOR FROM THE STATE OF MISSOURI
Senator Bond. Thank you very much, Madam Chair, and thanks
to the witnesses for coming today. It is a timely hearing
because just yesterday I received a disturbing report that the
proposed cap-and-trade legislation will cost the average
Missouri farmer up to $30,000 per year.
Now, we have long suspected that higher energy prices from
cap-and-trade will hurt farmers with higher production costs.
In President Obama's own words, electricity prices will
necessarily skyrocket under cap-and-trade.
As has been said, farmers use energy in just about
everything they do. Diesel fuel powers tractors and combines.
Natural gas is the key ingredient to making fertilizer and
drying grain. Farm equipment uses energy also for irrigation
pumps, as well as transportation.
A new report by the Food and Agricultural Policy Research
Institute at the University of Missouri--Columbia, along with
the Iowa State University details how there would be tens of
thousands of dollars of cost, and I ask, Madam Chair, that this
be included as a part of the record.
Senator Boxer. Sure. Will do.
[The referenced report was not received at time of print.]
Senator Bond. After examining farm production costs at
representative farms across the State, we found that Waxman-
Markey would drastically increase farmer costs. A
representative farm in Missouri, a 1,900-acre feed grain,
soybean farm in Lafayette County east of Kansas City, would
face $11,649 in higher energy costs in 2020, rising to $30,152
in 2050. There would be higher costs for seed, fertilizer,
chemicals, custom hire and rental, machinery, fuel, drying and
irrigation energy, machinery repairs and operating interests.
I can only tell my colleagues here on the committee, many
of whom come from the coast and may not be familiar with farm
costs, that $11,000 rising to $30,000 per farm is a jaw
dropping number for farmers. Forcing farmers to pay this amount
for cap-and-trade would be a bit more than the postage stamp we
were told earlier. It would be unconscionable.
Some say that cap-and-trade is an opportunity that will
benefit farmers, but those claims are popping as quickly as
they are made. The Des Moines Register said plans to cut
greenhouse gas emissions have been sold to farmer groups as a
potential cash cow for growers, but new government estimates
suggest farmers would make a lot less money than previously
believed.
And as the Ranking Member pointed out, the CRS said a
particular concern to many in U.S. agriculture is EPA's current
estimates of the mitigation potential from agricultural soil
activities such as conservation and no-till are shockingly low,
only about 10 percent of EPA's estimates.
Some suggest that big carbon gains are to be had from
planting trees. Now, I am a big fan of planting trees. I have
planted over 10,000 trees by hand on some land in Mexico,
Missouri, including about 200 Asian-American chestnuts. And as
a side note, if anybody wants to fight global warming, I will
give you some information on where you can acquire my trademark
seedlings and make a little cash on the side.
But I can tell you, as a commercial proposition, a Missouri
nursery quoted us a price of $1,200 per acre to plant eastern
cottonwood trees, ideal for the Lafayette County farm we talked
about. But planting the trees would cost over $2 million.
Farmers would then earn, assuming a 2.6 ton per acre
sequestration rate, at $28 a ton of carbon, only $75 in
sequestration revenues for the $1,200 per acre cost.
Now, otherwise a farm would make $750 per acre. So no
farmer will figure that that pencils out to lose $675 for what
they could get.
So I will, Madam Chair, I will submit the rest of my
statement for the record, but I can tell you that this cash cow
is really a pig in a poke.
More details later.
[The prepared statement of Senator Bond was not received at
time of print.]
Senator Boxer. Senator, I look forward to those details
because you were so unclear on where you stand.
[Laughter.]
Senator Boxer. I just want to place in the record at this
time a document that shows the top four agriculture States.
They are California, Texas, Iowa and Nebraska. I just want to
place that in the record to clear up something that was said
about the coast.
[The referenced document was not received at time of
print.]
Senator Boxer. All right.
Senator Bond. You can plant trees, you can plant chestnuts
in----
Senator Boxer. Well, actually, Senator, if you want to go
over the details of this, California sells 11.4 percent of all
the agricultural production. That is well over Texas, which is
second at 7.1 percent. So if you want to come to California,
come with me and visit my farmland and visit. We have
everything from dairy farmers to, you know, 200, 300 different
specialty crops.
I think it is important that the facts be clear that the
No. 1 agricultural production State is California, a State I
know well and love very much.
Senator Barrasso.
Senator Bond. I agree with you. I am just sorry. I don't
want to see your agriculture crippled.
Senator Boxer. Well, I think our agricultural people will
speak for themselves through Senator Feinstein and myself, and
the 52 or 53 other Representatives they have. But thank you for
offering to speak for them.
Senator Barrasso.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM THE STATE OF WYOMING
Senator Barrasso. Thank you very much, Madam Chairman.
The Waxman-Markey bill may create green jobs. It may even
create green jobs in the agriculture sector. If it does, great.
We need green jobs in my State. Wyoming welcomes the
possibility of them.
But this Waxman-Markey bill also costs jobs, and Americans
want all jobs, not just some. They don't want to lose the jobs
they have with the promise that they may get a green job in
exchange in the future.
The Administration says the Waxman-Markey bill will create
millions of new jobs. This Administration also promised that
after we passed the economic stimulus package, we would create
or save 3.5 million jobs. Well, since the passage of that bill,
unemployment has reached 9.5 percent. Last month, 467,000
people lost their jobs.
The Administration's economic expert said that the
unemployment would not exceed 8 percent. It has by a lot. Were
they wrong? You bet. Vice President Biden acknowledged
Administration officials were too optimistic earlier this year
when they predicted the unemployment rate would peak at 8
percent. Vice President Biden said the Administration ``misread
the economy.''
Well, is it possible that the Administration is also
misreading the economic predictions of millions of new jobs
being created in this bill? The Administration failed to make
the grade on the $787 billion stimulus package. It is a fact
that this legislation will cost jobs in our economy. That is
why there is language in the bill to retrain workers who lose
their jobs. Where will those job losses come from?
Well, according to Robert Murray, who is Chairman,
President and CEO of Cleveland-based Murray Energy Corporation,
all Americans in the Midwest, South and Rocky Mountain regions
will be the most dramatically affected because the climate
change legislation will destroy the Nation's coal industry, and
low-cost electricity is what provided for these regions for
generations. He goes on to say wealth will be transferred away
from almost every State to the West Coast and New England.
I believe that Waxman-Markey will create some jobs and will
destroy many others. There won't be a net job creation in my
State and many rural States with economies tied to the mineral
industry and dependent on fossil fuels such as coal and natural
gas. Jobs will be lost under this legislation, jobs in my
State, jobs in other rural States dependent on fossil fuels.
And we need more jobs in all 50 States. We need to keep the
ones we have. Americans want all of these jobs and more. We
need them all.
Thank you, Madam Chairman.
Senator Boxer. Thank you very much.
Senator Crapo.
OPENING STATEMENT OF HON. MIKE CRAPO,
U.S. SENATOR FROM THE STATE OF IDAHO
Senator Crapo. Thank you very much, Madam Chairman. And I
appreciate the opportunity to be here today to discuss these
critical issues.
I share the concerns of my colleagues about the impact of
the cap-and-trade legislation on agriculture and forestry.
Although it is very clear that there are offsets that can be
achieved and utilized--and I want to talk about those in just a
moment--but I think it is important that we not let this
legislation and its implementation turn into a mechanism to
force certain planting or operating decisions that may not be
beneficial to particular agricultural or forestry operations.
As I indicated, as we study this bill, I have become
increasingly concerned that the costs of cap-and-trade will
outweigh the benefits to foresters and farmers. Agriculture is
an extensive energy industry, and for some crops energy inputs
account for as much as 70 percent of the cost of production.
And my concerns are that these input costs under the cap-and-
trade such as gasoline, diesel and electricity will increase
and surpass the uncertain monetary benefits from the offsets.
Additionally, increases in the cost of natural gas will
result in higher fertilizer prices. And to put it in
perspective, in 2008 farmers and ranchers spent $60 billion on
fuel, electricity, fertilizer and chemicals.
I look forward to the testimony that is going to be
provided today. I am very focused this morning on issues
relating to the forestry piece of this issue, as well as the
agriculture side of it. Responsibly managed domestic forests
have a golden opportunity in this legislation to participate in
reduction of greenhouse gases. And although I indicated I have
very big problems with the legislation, I think we have to look
at the issues of projects like afforestation and reforestation
and avoid the deforestation of forests across America.
And additionally, wood products that harness carbon should
be eligible for participation in the offsets market.
Madam Chairman, because domestic forests are ideal
participants in reducing global warming pollution, I am a
little disappointed that today don't have a witness from the
forestry industry to explain the benefits and the challenges of
domestic participation in this emerging market.
I do have some comments that have been provided by the
Alliance of Forest Owners, the National Alliance of Forest
Owners, and would ask if the Chairman would allow me to submit
their comments for the record so the committee can have the
benefit of their input on this issue.
Senator Boxer. Absolutely. Without objection.
Senator Crapo. Thank you very much.
[The referenced document follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Crapo. Madam Chairman, again I look forward to the
witnesses' testimony and to the information we will be provided
today. I do have the strong concerns that I indicated about
whether this legislation will, in the end, result in a higher
cost, rather than a benefit to the agriculture and forestry
industries, but I am willing to listen to the witnesses and see
if we can find a way to create a win-win situation for
everyone.
Thank you, Madam Chairman.
[The prepared statement of Senator Crapo follows:]
Statement of Hon. Mike Crapo,
U.S. Senator from the State of Idaho
Madam Chairwoman, thank you for the opportunity to share a
few words. I would also like to thank the witnesses for being
here with us today to share your testimony on including
agriculture and forestry in reducing emissions.
For many in agriculture and forestry, carbon offsets
represent opportunities to obtain more value out of the land
and new land management technologies in addition to the
possibilities of reducing the costs of a cap-and-trade program.
Agriculture and forestry offsets are already contributing
financially to some farms and private forestry operations
through no-till, anaerobic digesters and other carbon
sequestration techniques. Estimates from EPA indicate that 20
percent of all greenhouse gas emissions in the U.S. can be
sequestered in agriculture and forest lands.
In the 2008 Farm Bill, Congress recognized the potential
for farms and forests to participate in providing ecological
services to society through the creation of the Office of
Ecosystem Services and Markets at USDA. OESM is working to
establish technical guidelines for the measuring, reporting and
registration of the environmental services provided through
various land management practices. I understand USDA's
testimony today will touch upon these issues, and I look
forward to hearing this testimony.
Responsibly managed domestic forests have a golden
opportunity to participate in the reduction of greenhouse
gases. Through projects like afforestation, reforestation, and
avoided deforestation, forests across America can participate
in offsets markets. States like Idaho, with unnaturally large
fuel loads, are ideal locations for carbon sequestration
through forest health projects that result in net carbon
sequestration. Additionally, wood products that harness carbon
should be eligible for participation in the offsets market.
Because domestic forests are ideal participants in reducing
global warming pollution, I must express my disappointment in
not having a witness today from the forest industry to explain
the benefits and challenges of domestic participation in this
emerging market. This hearing would have provided a perfect
opportunity for this committee to learn more about the
opportunities that we have here in the U.S. to care for our
forests and to improve our air quality. In lieu of a witness, I
would like to ask unanimous consent to include the National
Alliance of Forest Owners' (NAFO's) testimony in the record so
that the committee has the opportunity to more thoroughly
review this issue from the perspective of domestic forestry.
While offsets can potentially benefit our farmers and
foresters, I have some major concerns with the overall effect
of cap-and-trade legislation on these industries. For example,
it is important that legislation and implementation do not turn
into a mechanism to force certain planting or operating
decisions that may not be beneficial to a particular
agriculture or forestry operation.
Lately, I have become increasingly concerned that the costs
of cap-and-trade will outweigh the benefits to farmers and
foresters. For example, I have heard that some crops like
potatoes and certain specialty crops are not suitable for no-
till or other farming practices that sequester carbon in the
soil. I also worry that livestock producers will be unable to
feasibly purchase and utilize anaerobic digesters, which carry
a price tag of $2 million-$3 million.
Agriculture is an energy intensive industry. For some
crops, energy inputs account for 70 percent of production
costs. I have major concerns that input costs under cap-and-
trade such as gasoline, diesel, and electricity will increase
and surpass uncertain monetary benefits from offsets.
Additionally, increases in the cost of natural gas will result
in higher fertilizer prices. To put it in perspective, in 2008,
farmers and ranchers spent $60 billion on fuel, electricity,
fertilizer and chemicals.
I look forward to the testimony outlining the benefits to
farmers and foresters of cap-and-trade, but I also would like
to ensure this committee engages in a well rounded discussion
of the costs associated with cap-and-trade as well. We all know
that for farmers and foresters to be able to assist with
reducing emissions, they must be able to remain on the land.
Senator Boxer. Yes. We are going to start hearing from the
witnesses, and if any colleagues on either side of the aisle
come to this hearing, we will give them 3 minutes to make a
statement.
We are going to first hear from Jeffrey Hopkins, Principal
Adviser, Energy and Climate Policy, Rio Tinto. And for those
people who don't know, Rio Tinto is one of the world's largest
mining companies, and it has operations in the following
States: Colorado, Wyoming, Montana, Utah, Michigan, Arizona,
California, Vermont, Kentucky.
And from what we understand, they have had a corporate
climate policy since 1998. So all these predictions of gloom
and doom, we are glad you are here, and we would love to know
how you are doing these past years as you have implemented such
a policy.
And welcome, sir.
STATEMENT OF JEFFREY W. HOPKINS, PRINCIPAL ADVISER, ENERGY AND
CLIMATE POLICY, RIO TINTO
Mr. Hopkins. Thank you.
Madam Chair and members of the committee, Rio Tinto greatly
appreciates the opportunity to testify today. My name is Jeff
Hopkins, and I am Principal Adviser on Climate and Energy
Policy for Rio Tinto, the largest diversified mining company in
the U.S. and one of the largest diversified mining companies in
the world.
Our U.S. assets include coal holdings in Colorado, Wyoming
and Montana; copper in Utah; copper projects in Michigan and
Arizona; borates in California; and talc in Montana and in
Vermont; as well as an aluminum smelter in Kentucky; with over
15,000 U.S. employees, all told.
Our objective is to be the resource developer of choice
from the mineral exploration phase to mine closure and beyond.
Rio Tinto's climate position recognizes and accepts the
conclusions of the Intergovernmental Panel on Climate Change.
Emissions of greenhouse gases resulting from human activities
are contributing to climate change, and reducing these
emissions is an important international goal.
At all levels of our company, we carry out a three-part
strategy for achieving this goal. First, we encourage all
governments to take action to reduce emissions. In the U.S.,
this is exemplified by our participation in the U.S. Climate
Action Partnership, or USCAP, a group of 25 businesses and five
NGOs that released its Blueprint for Legislative Action last
January.
Second, we take a proactive stance at our own operations to
reduce greenhouse gas emissions.
Third, we develop low-emission pathways for our products,
which include many commodities with positive greenhouse gas
reduction benefits in use, but which are energy and greenhouse
gas intensive in production.
Offsets, the subject of today's hearing, play an important
role in this strategy. I will be happy to tell you how. But
first, what is an offset? An offset is a reduction in
greenhouse gas emissions from an unregulated--that is to say an
uncapped--entity, which can be marketed to a regulated entity.
That is what an offset is.
Offsets are potentially sold by regulated entities such as
entities with farm or forest land use emissions to regulated
entities, such as Rio Tinto, that have an obligation to
purchase and submit an allowance for each ton of greenhouse gas
emissions.
For some perspective, the recently passed House bill
proposed to regulate about 85 percent of U.S. emissions,
leaving 15 percent of emissions unregulated and potentially
available to supply offsets, including reductions from
agriculture and forestry land use emissions.
Because climate change is mitigated equally by reductions
from regulated or unregulated sectors, the contribution of
offsets from unregulated sectors is in all senses equivalent to
reductions in greenhouse gas emissions from regulated sectors.
Offsets bring several additional economic advantages as
well. First, reductions in unregulated sectors could come at a
much lowered cost in the immediate term than reductions from
regulated sectors, resulting in some very narrow direct
benefits and some very broad indirect benefits. Entities using
cost-efficient offsets will directly benefit by reducing their
own emissions and their overall compliance costs. And the
entities selling the offset, including agriculture and forest
communities, will directly benefit as they harvest the market
value of that reduction.
Those who are on the sidelines to this transaction will
indirectly benefit as well because entities choosing to
substitute offsets for allowances bring down the price of
allowances for everybody. As a result, allowing entities in the
CAP sector to pursue lower cost reductions wherever they exist
will enable us to progress farther and faster toward
stabilizing global GHG concentrations.
The recently passed House bill would allow up to 2 billion
tons of domestic and international offsets to enter into the
system each year, with up to 1 billion tons of offsets from
domestic sources and up to 1 billion tons from international
sources.
U.S. EPA analysis of this bill showed that the impact of
the 1 billion tons of international allowances alone works to
reduce the prevailing cost of allowances by 89 percent. This
demonstrates why Rio Tinto and USCAP call for ample offsets to
contain the costs of climate regulation.
Additional benefits include that international offsets
create a funding mechanism for emission reductions in countries
without carbon regulation.
Senator Boxer. I am going to ask you to summarize.
Mr. Hopkins. OK.
We do not plan to meet our emission reductions solely
through the use of offsets, and we will first look toward our
own abatement opportunities. We will never be a carbon neutral
business due to our energy-intensive nature, supplying
essential minerals and metals that meet societal needs and
which contribute to improvement in living standards globally.
We are determined to deliver shareholder value. Offsets and the
cost containment they bring are a crucial part of this overall
strategy.
Thank you.
[The prepared statement of Mr. Hopkins follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. Thank you. That summed it up well, I think.
We are going to hear from Senator Sanders, followed by
Senator Merkley. Both these Senators are running back and forth
to the Health Committee, so we really appreciate their taking
the time.
Three minutes each, gentlemen, if you can.
OPENING STATEMENT OF HON. BERNARD SANDERS,
U.S. SENATOR FROM THE STATE OF VERMONT
Senator Sanders. Madam Chairman, thank you very much.
And that is exactly right. We are doing the markup on
health care right now, so I am preoccupied there.
Let me just read a brief statement and thank all of our
panelists for being here.
Vermont is a unique State in many ways and benefits from
being 75 percent forested, with more than 4.6 million acres of
forests. Vermont also benefits from having a strong
agricultural sector representing more than 1 in 10 jobs in our
rural economy. Perhaps, then, it is no surprise that whether
you measure per capita or on total carbon output, Vermont is
also the State with the lowest carbon footprint in the United
States.
We need to ensure that the lessons learned from States like
Vermont that have been leaders in early action on energy
efficiency and environmental preservation are applied to global
warming legislation. One way to achieve greenhouse gas
emissions reductions is through our lands and our farms, and
that is especially true when so many family farmers around this
country are facing very serious economic problems. We can and
should provide flexible incentive programs to landowners and
farmers to achieve tangible greenhouse gas emissions reductions
through recognized practices.
We know that preserving forests or reforesting can
sequester carbon dioxide emissions. We also know that there are
ways to capture farm emissions. In Vermont, our farmers are
working to capture methane emissions from cows by using farm
waste to generate electricity. That is just a very, very
exciting technology. I was at a farm last year in Addison
County, and seeing the methane gas being produced from manure
providing electricity for hundreds of homes, just a very
exciting technology.
While offsets will offer an opportunity to engage the
forestry and agricultural sectors in emissions reductions, we
should provide funding for targeted incentive programs that
help small farmers and landowners who may not be engaged in
carbon trading but can play a valuable role in helping our
Nation meet and exceed our greenhouse gas emissions reduction
targets.
I look forward to working with my colleagues to make this
happen. The bottom line is: let's not forget about family based
agriculture in America. They can and should play a major role
as we combat global warming.
Thank you very much, Madam Chair.
[The prepared statement of Senator Sanders follows:]
Statement of Hon. Bernard Sanders,
U.S. Senator from the State of Vermont
Vermont is a unique State in many ways and benefits from
being 75 percent forested with more than 4.6 million acres of
forests. Vermont also benefits from having a strong
agricultural sector representing more than 1 in 10 jobs in our
economy. Perhaps then it is no surprise that whether you
measure per capita or on total carbon output, Vermont is also
the State with the lowest carbon footprint in the Nation.
We need to ensure that the lessons learned from States like
Vermont--that have been leaders in early action on energy
efficiency and environmental preservation--are applied to
global warming legislation. One way to achieve greenhouse gas
emissions reductions is through our lands and farms. We can and
should provide flexible incentive programs to landowners and
farmers who achieve tangible greenhouse gas emissions
reductions through recognized practices.
We know that preserving forests, or reforesting, can
sequester carbon dioxide emissions. We also know there are ways
to capture farm emissions. In Vermont, our farmers are working
to capture methane emissions from cows by using farm waste to
generate electricity.
While offsets will offer an opportunity to engage the
forestry and agricultural sectors in emission reductions, we
should provide funding for targeted incentive programs that
help small farmers and landowners who may not be engaged in
carbon trading but can play a valuable role in helping our
Nation meet and exceed our greenhouse gas emission reduction
targets. I look forward to working with my colleagues to make
this happen.
Senator Boxer. Senator, thank you so much for coming over.
Senator Merkley.
OPENING STATEMENT OF HON. JEFF MERKLEY,
U.S. SENATOR FROM THE STATE OF OREGON
Senator Merkley. Thank you very much, Madam Chair.
I think the title for today's hearing is very appropriate,
Opportunities for Agriculture and Forest Communities, because
there are substantial opportunities here as they relate to
offsets and the practices employed in both sectors.
Certainly, I wanted to focus a little bit on the forestry
sector. At a recent event, our Majority Leader, Senator Harry
Reid, called Nevada ``the Saudi Arabia of solar power,'' and
then Senator Dorgan stood up and said, well, North Dakota is
the Saudi Arabia of wind power. And if I was to continue that
analogy, Oregon would be the Saudi Arabia of forest biomass.
And indeed, we have a tremendous amount of carbon
sequestering potential, and the management of our forest lands
currently may be one of the worst possible practices in which
we have millions of acres of second growth overgrown in a
fashion which results in a lower level of carbon being captured
in terms of the growth rate, but also a very high propensity to
burn down, which puts all that carbon back in the atmosphere.
So I want to make sure that we have through this bill the
opportunity to recognize that those practices can be modified
in ways that could be very, very helpful. But to have it work
in the long term, and this applies to the agricultural world as
well, we have to have a high level of integrity in the models
that we are using for calculating the impact on carbon dioxide
with a long-term view. And we have to have some type of
insurance structure that maintains that if, in fact, we modify
these practices and then this unit of forest, if you will,
burns in a forest fire, that we capture those effects in the
course of it.
So I really want to emphasize this, because if we are
really looking at a world where industrialization has been
fueled by geological carbon being converted into atmospheric
carbon dioxide, one way of interrupting that is to capture that
atmospheric carbon dioxide through forests and reutilize it in
a renewable energy system. And certainly, forest biomass both
has a potential role in producing heat and electrical energy
through co-generation and certainly has a potential role as
research proceeds on cellulosic ethanol, biodiesel, biobutanol,
and so forth.
So if we get this right, we have quite a potential. If we
get it wrong, we'll simply have a loophole that will make this
whole bill irrelevant and ineffective. So I certainly
appreciate your expertise being brought to bear on this issue,
and I thank very much the Chair for the opportunity to come and
speak.
Senator Boxer. Senator, thank you. I know how busy
everybody is. We appreciate it.
Our next witness is Bill Hohenstein, Director, Global
Climate Change Program, USDA.
STATEMENT OF BILL HOHENSTEIN, DIRECTOR, GLOBAL CLIMATE CHANGE
PROGRAM, U.S. DEPARTMENT OF AGRICULTURE
Mr. Hohenstein. Thank you, Madam Chair.
Madam Chair, Ranking Member Inhofe and members of the
committee, thank you for the opportunity to discuss the
economic opportunities for agriculture, forestry communities
and others in reducing global warming, focusing specifically on
offsets.
We recognize that the development of an offset market will
require full partnership of relevant Federal agencies,
including EPA, the Department of Interior, the Department of
Energy, and others. Indeed, we are already working with other
agencies on a variety of issues related to climate change.
Climate change legislation presents both opportunities and
costs for agriculture and forestry. USDA believes that the
opportunities from climate legislation will likely outweigh the
costs. The climate change legislation recently passed by the
House of Representatives caps over 80 percent of U.S.
greenhouse gas emissions. While direct agricultural emissions
are not under the required cap in the House bill, the
agriculture sector will face higher energy and input costs due
to a reliance on the products that are included under the cap.
A well designed cap-and-trade system that includes a robust
carbon offset program and that promotes renewable energy could
provide significant economic opportunities for landowners and
rural communities. To be effective in addressing climate
change, the offset actions need to be real, verifiable,
additional, long lasting, and implemented on a broad scale.
To give some sense of context on scale, H.R. 2454 sets a 1
billion ton cap, a limit on the use of domestic offsets. USDA
estimates suggest that this is roughly equivalent to 170
million acres of trees or switching to no-till farming on 1.5
billion acres of cropland.
Now, farmers and landowners have many other options to
reduce emissions and increase sequestration and do not need to
rely solely on tree planting or changes in tillage. These
options include nutrient management, installing anaerobic
digesters, composting manure, improving ruminant feeds to
reduce the generation of methane, and reducing fire risks and
lengthening forest rotations to store greater amounts of
carbon.
Taken together, these practices and others have the
potential to transform agriculture and land management within
the United States and can provide additional environmental
benefits as well. A number of important issues need to be
addressed in the context of the greenhouse gas offsets program
to ensure environmental integrity. The main considerations
include permanence, leakage, additionality, and verifiability.
The issue of permanence refers to the potential
reversibility of carbon sequestration. To be effective, the
carbon that is removed from the atmosphere and stored in plants
and trees needs to remain out of the atmosphere, or there must
be mechanisms in place to track and replace carbon offsets when
reversals occur. There are a number of mechanisms for
addressing permanence that ensure that responsibility for
sequestered carbon is maintained over time.
Leakage refers to shifting emissions from one place to
another. There are several types of leakage, and leakage can
occur within an entity. It can also occur at broad regional,
national and international scales as well as markets respond to
changes in production driven by the implementation of
conservation practices. The extent to which market leakage is
an issue will depend largely on whether the mitigation activity
has an impact on production. There are a number of offset
activities that will very likely have low leakage. For others,
efforts can be made to measure or quantify the extent of
leakage and account for it in awarding offset credits.
To ensure the offsets are real and provide real atmospheric
benefits, they must be additional. That is, offset credits must
not be awarded for actions that would have happened in the
absence of the offset policy. Given the difficulty in
projecting a business as usual scenario for offset activities,
measurements against a base year reference may be more
practical to implement and less subjecting to gaming, fraud or
interpretation.
However, relying on a base year does not account for trends
that would independently lead to increases or decreases in
rates of emissions or sequestration. Projected baselines are
uncertain but allow the reference to reflect such trends.
H.R. 2454 as passed by the House provides approaches to
address each of these considerations and in some cases provides
more than one option. These approaches provide a useful
starting point for the Senate's deliberation on the role of
offsets.
USDA has a number of assets which could be helpful in
carrying out an offsets program. A summary of them is included
in my written testimony. Whatever role USDA is asked to play as
part of an offset program, we would look to partner with EPA,
DOI, DOE and other agencies to ensure that the program has
environmental integrity and provides landowners with
opportunities to contribute to addressing climate change.
Thank you for the opportunity to discuss these issues here
this morning, and this concludes my prepared remarks.
[The prepared statement of Mr. Hohenstein follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. Thank you very much.
I see we have been joined by Senator Gillibrand of New
York. We welcome her, and you have 3 minutes to make an opening
statement.
OPENING STATEMENT OF HON. KIRSTEN GILLIBRAND,
U.S. SENATOR FROM THE STATE OF NEW YORK
Senator Gillibrand. Thank you, Madam Chairwoman.
I just want to thank you for calling this hearing. I am
very appreciative.
I want to thank our witnesses.
I serve on the Environment and Public Works Committee, but
I also serve on the Agriculture Committee. And so I thought
this hearing was particularly of importance to see how our
farmers, our original green economy, can be part of the energy
solutions that we are talking about.
We have so many opportunities in New York in the
agricultural sector and in the energy market sector, and there
is a large area of confluence that I hope that we can take
advantage of. I think some of your testimony on the cap-and-
trade policy and how we can play a role in offsets is going to
be very important. I also am very excited about opportunities
for secondary revenue streams for our farmers through
cellulosic ethanol, other biofuels, methane digesters. There
are a lot of opportunities for growth in that sector because of
alternative energy.
I also am interested in the role of forestry. I think that
New York, one doesn't typically think of forests, but actually
more than 62 percent of the State is forested. We have the
Adirondacks and the Catskill Mountains. We have forestry all
through western New York as well. The State's forest industry
employs more than 60,000 New Yorkers and contributes nearly
$4.6 billion to our economy every year.
So as we move toward climate change legislation, I hope
that we will also look at the roles that forests also provide.
I know that there are technologies that are very interesting,
particularly in cellulosic ethanol production using wood pulp
not used in paper-making. So I want to make sure that we look
at those when we define what alternative crops can be, not to
exclude inadvertently forests, which don't have necessarily the
same characteristics of a crop.
So I look forward to this testimony. I am very grateful for
your time and attention. And I am very grateful to the Chairman
and the Ranking Member for their interest.
Senator Boxer. Senator, thank you very much for coming
over. And I know we will continue to work one on one on some of
your concerns about New York's agriculture and how they can
benefit from our climate change efforts.
And so now we are going to turn to our next witness, Fred
Krupp, President of the Environmental Defense Fund. And I think
it is important to know that the organization has been
participating in on the ground carbon offsets projects since
the mid-1990s. So we really welcome you here.
STATEMENT OF FRED KRUPP, PRESIDENT, ENVIRONMENTAL DEFENSE FUND
Mr. Krupp. Thank you, Chairman Boxer and members of the
committee. Thank you for inviting me to speak to you today.
I am honored to appear before you as you begin your work on
this historic piece of legislation.
I would like to begin my remarks by making one point.
Environmental Defense Fund believes that an effective climate
solution must include agricultural offsets. American farmers,
foresters and landowners can provide creditable emissions
reductions while earning a new income stream, and we must give
them that opportunity.
Smart policies in this area, together with policies
designed to reduce emissions from international deforestation
and forest degradation, will provide substantial environmental
benefits and tremendous cost savings for U.S. companies
operating under an emissions cap.
Now, my written testimony is quite detailed and the time
for your right now is short. So I would like to impress this
upon you: I know the topic of carbon offsets can be
controversial, and advocates all around have strong feelings
about various aspects of the program. But as we move forward,
we cannot lose sight of the fact that we all have an enormous
stake in achieving a strong and successful offsets program.
The environmental reasons for this are obvious. But it
should be equally obvious that the core elements of the offset
program are critical benchmarks for the market that will
ultimately put a price, a monetary value, on these tons, and a
strong offset program means better returns for the landowners
that participate in it.
EDF has long advocated the use of offsets in a carbon cap-
and-trade system as a cost-effective means for regulated
companies to meet their compliance obligations. Cost-effective
compliance options like high-quality offsets will help get us
where we need to go with respect to the atmosphere.
Now, turning to the House bill, ACES, it embraces this
point of view, relying on offsets as a key cost containment
strategy. It allows banking of offsets credits, which increase
opportunities for companies to build up reserves of low-cost
compliance options that can buffer against higher or volatile
allowance prices in the future.
The bill also has very generous offset limits, which can be
increased overall or shifted between international and domestic
supplies depending on need. Separately from the offsets
program, the ACES bill allows unlimited compliance use of
allowances from comparably capped trading systems in other
countries.
These aren't just important cost management devices. These
are vital. EPA's analysis of the ACES bill concluded that
allowing domestic offsets to trade one for one, rather than
five to four, as was the case in the original draft of the
bill, lowers allowance prices by about 7 percent each year.
International offsets are also crucial. EPA analysis shows that
by eliminating international offsets, the cost would increase
by about 89 percent.
Additionally, EDF's own modeling shows that the
introduction of offset credits for reduced deforestation lowers
allowance prices by an estimated 22 percent based on the cost
estimates used in the EPA analysis. The potential price
reductions grow to more than 40 percent of the program and
include all sources of international forest carbon and are not
limited to deforestation reductions.
Now, I am not going to tell you the ACES bill is perfect.
In fact, I don't think anyone at this table would say so. In my
written testimony, I have outlined some important areas for the
committee to consider to improve, with respect to the role of
science in the program, credit for past activities,
accountability at the oversight agency, and the use of
reductions in tropical deforestation. I hope we can cover some
of this ground during the Q and A.
In conclusion, I just want to restate that all of us--
farmers, ranchers, landowners, emitting companies and the
average citizen--have a stake in establishing a good, science-
based offsets program. Carbon offsets must represent real,
measurable, verifiable benefits to the atmosphere, and the
program itself must stand up to public scrutiny. If the program
isn't considered credible, all of our efforts in this process
will be for naught, and we very well may push the atmosphere
past the point of recovery. We cannot afford to fail in this
area.
Thank you for this opportunity to speak today.
[The prepared statement of Mr. Krupp follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. Thank you very much.
And our last witness is the minority witness, the American
Farm Bureau Federation.
Sir, we welcome you. Mr. Stallman, Bob Stallman.
STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU
FEDERATION
Mr. Stallman. Thank you, Madam Chair, members of the
committee. I am here today representing the American Farm
Bureau Federation.
How you deal with the issue before you is critical to
farmers and ranchers. There is no question it will affect our
bottom line. Under our best estimates of the legislation passed
by the House using EPA assumptions, it will take $5 billion out
of farmers' pockets. Using the same rosy EPA scenario, but
imposing the 2050 costs as if they occurred in 2012 gives a
reduction in farm income of $13 billion. Most likely, the
reality would be worse.
So we care a great deal about what legislation you approve
and what the agricultural offsets will be. With that in mind, I
would like to respectfully challenge all members of the
committee to ask a few questions. Your answers will tell you a
lot about what kind of bill that you produce.
No. 1, what do we want to accomplish? If we really want to
change what the world's climate will be in 40 or 100 years,
then the House-passed bill is not the answer. I believe
Administrator Jackson said as much last week when she testified
before this committee.
Two, do we want to keep U.S. products competitive
internationally while living up to our WTO obligations? If so,
then the House bill is not the answer. It could spur trade
retaliation and promote leakage of carbon emissions. And with
that leakage, you will see economic activity and jobs leaving
our country.
Three, is this about energy independence for America?
Again, the House-passed bill doesn't measure up. It spells out
what we can't do. It doesn't really say how we will make up for
lost energy sources. The best way to have an honest productive
debate is for everyone to lay their cards on the table. If we
do, one thing becomes pretty clear: this debate isn't about the
climate. It is about fossil fuels. Everyone knows it, so let's
deal with that reality.
If the proponents honestly want to revamp our energy so the
use of fossil fuels is minimized, then they have an obligation
to tell us their alternative. Arbitrary percentages about
efficiencies, mandates for emissions limitations, promotion of
international offsets are simply roundabout ways of saying that
they don't have an energy plan. While emission caps will be
written into law, the market and power generation structures
implied in EPA's current analysis are just a set of
assumptions.
From an agricultural perspective, there are several changes
we believe must be incorporated in the bill. One, the
legislation must, at a minimum, include the provisions
negotiated by Chairman Peterson of the House Ag Committee. We
are encouraged by statements of Senator Harkin that say he
wants to do that and will seek to strengthen them. Even with
such changes, you need to remember not all agricultural
producers will be able to avail themselves of offsets.
Two, other nations must be a part of the solution, or U.S.
competitiveness will be sacrificed and climate reduction goals
will fail to be achieved. Absent global commitments, we will be
engaging in the economic equivalent of unilateral disarmament.
And three, Congress must not create a hole in America's
energy supply. If fossil fuels are taken out, something else
must be substituted. We must plug the hole created by the bill
or run the risk of congressionally mandated shortages that will
create spikes in energy prices. The agricultural sector, in
particular, is poorly equipped to absorb or pass on such costs.
It is very reasonable to estimate that costs that we
currently project to occur in 2030 or 2040 might well shift
forward to 2015 or 2020. Acreage shifts might be more drastic
than envisioned, and they could well involve greater shifts
from crop acres to forestry as well as acreage currently
dedicated to forage production shifting into forestry.
And once again, some agricultural producers will never
benefit from the legislation under any scenario, yet these same
producers will incur the increased fuel, fertilizer and energy
costs that their counterparts do.
We are very open to the idea of including an off ramp in
the legislation. Such an approach could kick in due to job
loss, a lack of an international agreement, an inability to
sufficiently commercialize renewable technologies, or a lack of
alternative energy sources. Without some mechanism to protect
agriculture, we are greatly concerned about the potential
adverse impacts on farmers and ranchers.
Some say agriculture will benefit. If EPA has their way, we
will only be allowed to plant trees. Any other benefits will
depend to a large degree on where the producer is located, what
he or she grows, and how his or her business model can take
advantage of any provisions in the legislation.
Not every dairy farmer can afford to capture methane. It is
a capital-intensive endeavor. Not every farmer lives in a
region where wind turbines are an option. Not every farmer can
take advantage of no-till. Not every farmer has the land to set
aside to plant trees. Yet every farmer has production costs to
meet.
Nearly all of us rely on fertilizer and we all drive
tractors. We all use energy in our production. We know our
costs will rise, and frankly we are very concerned about the
impact of this legislation on our livelihood. And I urge the
committee to consider these factors as you take up legislation.
Thank you again for the invitation to testify, and I look
forward to questions.
[The prepared statement of Mr. Stallman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boxer. Thank you, sir.
Let me just say that the members of the National
Association of Wheat Growers have a very different view than
you, Mr. Stallman. And they say they have worked for a number
of years to ensure that agriculture has a place in any climate
change legislation and that producers are able to reap
benefits, rather than except costs. And I think that is our job
is to work with you, to show you that this change could well
prove to be a boon for agriculture. A lot of people do believe
it.
As I said, the Farmland Trust and others, the National
Farmers Union, and I understand we have work to do.
I also want to point out and place in the record, and this
is important, I think, for those who are naysayers to
understand that the idea of cap-and-trade was created right
here in this room years ago when we were fighting the problem
with acid rain and what was happening. And we set up this cap-
and-trade system, our predecessors did, and there was a
prediction of the projected costs. And there was a prediction
of emissions reductions. And it turned out that there were far
more emissions reductions than were predicted and the costs,
the actual costs, were five times lower than they were
projected to be.
The opportunity of this mechanism allowing a price to be
set--in this case on sulfur dioxide--in the private market
really worked as a boon and surpassed our dreams for the
program.
So you will be hearing more about that because people will
make up stuff when it has to do with cap-and-trade, when we
already have had the experience of cap-and-trade.
I want to talk about this nuclear plant issue, and Mr.
Krupp, I think you more than anyone else there have worked with
this bill in a broader sense because Senator Alexander has put
out his plan, which he hopes the Republicans will adopt, on
their solution to this problem. And it is 100 nuclear power
plants by 2030, built by and paid for by the rate payers with
no tax credits going to them at all.
He also has another part of his plan that deals with using
future revenues from offshore oil drilling for battery
research, and he would take that funding away from our parks
and away from deficit reduction for use there. And he has a
third piece which is $8 billion for research from the
taxpayers.
I want to hone in on the nuclear power plant issue. My
understanding of the modeling by the EPA of the Waxman-Markey
bill is that instead of 100 power plants being built by 2030,
they show--the models--261 plants being built by 2050, with tax
credits going to the rate payers.
So isn't it true to say that the Waxman-Markey bill, which
will be the base of our bill, we are going to have some tweaks
to it, would result in the building of more nuclear power
plants and help to the rate payers?
Mr. Krupp. Chairman Boxer, thank you for the question.
There is no question that nuclear energy now being produced
is one of the zero-carbon alternatives. And as the head of
General Electric's Nuclear Division said a few years ago, the
best thing you could do for nuclear energy is put a cap on
carbon.
My understanding is the EPA did not specify a particular
number of plants, but I think you are right. The number that
would be built would be in the range of what Senator Alexander
has called for, certainly by 2050. The way I read the EPA
modeling, it would be perhaps as many as 95 plants, new nuclear
plants by 2050, and 35 extra plants by 2030.
Senator Boxer. OK. Well, just for the record, we called the
modeler over at EPA, and they told us 261 new nuclear plants
under the Waxman-Markey bill by 2050.
Mr. Krupp. I think is depends on what size. They clearly
specified how many kilowatts and I think the discrepancy----
Senator Boxer. This is 1,000 megawatts.
Mr. Krupp. Yes.
Senator Boxer. One thousand megawatts.
In any event, I think it is very important that we
understand that in the approach we are taking, we don't pick
any winners or losers. We just say when there is a price on
carbon, nuclear power plants will compete, solar, wind,
geothermal, any other way that is clean in terms of carbon. And
the beauty of that is it winds up you have more nuclear power
plants, if this is your goal. And there are a lot of people in
the Senate who support that goal.
I have a more reserved attitude about it, but the fact is I
am not going to pick the winners and losers. The marketplace is
going to do it. What I am going to work for is the ultimate
safety of these plants and all those other things, but that is
the fact.
So I want to ask Mr. Hopkins and Mr. Stallman a question.
We will start with you, Mr. Stallman.
Will farmers benefit from a climate policy that increases
efficiency in renewable energy and reduces fossil fuel
consumption? And will those types of policies help protect you
as farmers from higher prices, given the volatility in the
fossil fuel market?
Mr. Stallman. Well, the answer to that, Madam Chair, is, it
depends. I mean, what are the alternative sources going to
cost? And in terms of volatility, producers are pretty good at
dealing with volatility whether it is weather, whether it is
prices, whether it is spikes in costs. But it really boils down
to economics.
The energy we use on average in this country, 20.4 percent
of our input costs are related to electricity. As an example,
for the agricultural sector in California, has $5 billion worth
of energy-related cost. If the energy costs go up, if they go
up 20 percent, that is an extra $1 billion of expenses put on
producers. If the energy costs go down, then obviously that
reduces those input costs. So it depends on what the cost
structure is.
Senator Boxer. Surely. But the one thing I hope, Mr.
Stallman, you will think about is the fact that we import so
much foreign oil, and we are at the mercy of a lot of people
that don't like us. And there is proof positive that many of
those countries turn around and use that income from our tax
dollars, yours and your industry, to fight us, to fight us, not
economically, but to physically fight us. There has been proof
of that.
So I would just like you to think about in the long term
what a better situation it would be if you could choose from
other options.
I would ask Mr. Hopkins.
Mr. Hopkins. Well, Rio Tinto is very interested in the
future of coal. We are the second largest coal miner in the
U.S. We are a foundation member of the FutureGen Alliance.
Carbon capture and storage with coal is, I think, going to be
the technology that brings us our long-term abatement goals. In
the near term, the immediate term, that technology isn't going
to be ready and we are going to have to take advantage of
offsets. But in the meantime, we are going to become more
efficient.
We are going to use renewable energy. In addition to
supplying the coal that generates 6 percent of the electricity
in the U.S., we supply the uranium that generates an additional
3 percent of the electricity in the U.S. So we are very
interested in maintaining baseload power in the future. We
think offsets are going to be a key component in keeping
allowance prices down.
Senator Boxer. Thank you.
Senator Inhofe.
Senator Inhofe. Thank you, Madam Chairman.
Let me first of all, Mr. Hohenstein, I read portions of
your statement, and then you repeated that just a few minutes
ago, the suggestion that the 1 billion ton limit on domestic
greenhouse gas offsets that are in the Waxman bill is roughly
equivalent to sequestration potential of planting 170 million
acres of trees. And according to the USDA Economic Research
Service, in 2007 there were 310 million acres of harvested
cropland in the United States. Now, if you do your math, that
would be 55 percent would be taken out of production.
Now, I would like to ask if the USDA has done an analysis
of how many acres of food production we would lose on that
potential shift, and also how that would affect livestock
prices. Have they already done it, an analysis?
[The referenced information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Hohenstein. Yes. Thank you for the question.
And that number in my testimony was an attempt to provide
some sense of the scale at which activities----
Senator Inhofe. OK. We are going to run out of time.
Mr. Hohenstein. With regard to analysis, USDA is in the
process of evaluating the implications of higher energy prices
on the agricultural sector due to H.R. 2454.
Senator Inhofe. OK.
Mr. Hohenstein. We are also looking at the implications of
offsets as well.
Senator Inhofe. OK. Very good.
Mr. Stallman, I talked to some of the Oklahoma Farm Bureau
people this last week, and they are very emotional about this
whole thing. You heard what Senator Bond said, he was using the
2,000-acre farm. We don't have that many 2,000-acre farms, but
I am sure you can scale it down a little bit. Do you agree with
his figures in Missouri, and that was taken from the Ag Policy
Research Institute, of up to $30,000 per farm?
Mr. Stallman. That report just came out. We see no reason
to dispute that. Obviously, they used probably slightly
different assumptions than we did in calculating our aggregate
net loss numbers for agriculture, but those seem very
reasonable in terms of what you could expect at the producer
level.
Senator Inhofe. I went over and met with the Farmers Coop
regional group on Friday. They were meeting over in Arkansas.
And one of the things that concerns him the most is, we haven't
talked about the specifics, but how intensive it is in terms of
agriculture in fuel, electricity, fertilizer, chemicals. In
corn, it is 71 percent of the operating costs are fuel,
electricity or fertilizer; soybeans, 50 percent; wheat, 72
percent; barley, 69 percent.
I assume that we have communicated this to your membership.
They recognize the magnitude of this thing.
Mr. Stallman. Oh, absolutely. And that is what generates
the basic concern we have about the whole bill with respect to
what it does to energy costs because, on average across the
country, 20 percent of our input costs have some relationship
to energy, and we are concerned. Even though we are a strong
renewable energy supplier in this country, which is positive,
we still have to deal with the impacts of any future increase
in energy costs.
Senator Inhofe. Yes. Well, let me ask you this question.
The Chairman talked about the National Wheat Growers
Association, and I don't understand how they could be
supporting this when all of the large wheat States, or many of
them, are on the other side of this issue, the North Dakota
Wheat Commission, the Oklahoma Wheat Growers Association, the
Texas Wheat Producers Association.
I wonder why they don't get together with their national
association. Any ideas?
Mr. Stallman. Well, I hesitate to speak for other groups,
Senator. I know the National Association's position. I also
know the concern that has been expressed to me personally by
our members who are large wheat growers. So I do not know where
the disconnect lies. I do know that from an economic
perspective, we can show no analysis that indicates that even
with the liberal offsets policy, that the income from that
would offset the increased cost.
Senator Inhofe. I see. And has it ever occurred to you to
ask the question, what are we doing here, after last week when
the Director of the EPA in response to my question as to what
effect would it have if we unilaterally here in the United
States have a cap-and-trade, pass the bill such as we used as
an example the Markey-Waxman bill. What effect would that have
on the overall worldwide reduction in CO2, and her
response was it wouldn't have.
Now, if that is the case, and I agree with her, I don't
agree with everything that she says; I certainly agree with
that. And if we have statements such as we do have from the
leaders in China and India and other countries saying under no
circumstances are they going to accept any kind of mandatory
reduction, what are we doing here?
Mr. Stallman. Well, that is a question we also raised. When
we were over on the House side working on the bill and the
legislative process, the rationale that was given, well, the
U.S. has to show leadership by passing national legislation
before we go into the Copenhagen talks. Well, I have been
involved in international trade negotiations. Leadership
usually means that the U.S. is supposed to give up something in
favor of other countries. But there is no reason to have to
have a bill passed by this Congress to go over to negotiate.
You can do that without having legislation passed, as most
countries are doing.
Senator Inhofe. Yes, there are a lot of people who believe
the concept, and we heard this of course from Senator
Alexander. I don't agree with him in this case, but that
anthropogenic gases cause global warming. But there are a lot
of them who actually believe that and still think that this is
a disaster. And I am using the words of James Hansen, Dr.
Hansen, he is Mr. Greenhouse Gas, I guess you could call him.
He said, ``The fact that the climate course set by Waxman-
Markey is a disaster course. Their bill is an astoundingly
inefficient way to get a tiny reduction of emissions. It is
less than worthless because it would delay by at least a decade
starting on a path that is fundamentally sound from the
standpoint of both economics and climate preservation.'' Now,
here is the guy who is on the other side, the leader on the
other side, and he was here I guess it was yesterday, in
Washington.
So I don't know. You look at these things, and I look at
them from an Oklahoma perspective and wonder if it is not going
to make any change and if the countries are, in spite of what
they say about leadership, if the leaders are saying under no
circumstances are we going to do it, period. Anyway.
Thank you, Madam Chairman.
Senator Boxer. Thank you.
I am going to ask Senator Udall if he would like to make a
3-minute statement and ask a question to the panel.
OPENING STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM THE STATE OF NEW MEXICO
Senator Udall. Thank you, thank you very much, Madam Chair.
And I will give just a brief opening statement.
Farmers and ranchers and foresters face, I think, dire
threats from global warming. For example, in my State of New
Mexico, one of our agricultural centers in seven of our
counties have been struck with persistent drought. And we know
that part of the overlay there has to do with global warming.
Our New Mexico delegation has written a letter to the USDA
on a disaster declaration for these counties, and I am afraid
that this disaster could turn into a catastrophe while we wait
for that response.
The U.S. Climate Impact Report also found that drought
frequency and severity are projected to increase in the future
over much of the United States, particularly under higher
emissions scenarios. Increased drought will be occurring at a
time when crop water requirements will be increasing due to
rising temperatures.
As we debate the impacts of a cap-and-trade on agriculture
and forestry, do not forget why we are having this debate. We
must protect American farms, ranches and forests from global
warming before the time runs out.
Now, Mr. Hohenstein, will you urge the USDA to respond
quickly and effectively to New Mexico's drought disaster
declaration request?
Mr. Hohenstein. Yes, I certainly will take that back to the
department.
Senator Udall. Thank you. Thank you.
Your testimony finds that the opportunities from climate
legislation will likely outweigh the costs for agriculture and
forestry. Your testimony did not directly address costs to
farms and forests from climate change itself, however. You did
serve on the USDA's or were the USDA's representative for the
recent multi-agency U.S. Climate Change Impacts Report, and
that report found just what I talked about earlier.
Could you comment on that report and where you see things
headed? Should farmers and ranchers also consider the avoided
costs from warming that the legislation is designed to prevent,
in concert with a global agreement?
Mr. Hohenstein. Sure. No, thank you for the opportunity to
talk about that report.
That report was coordinated by our office and produced last
May, and looked at the effects of climate change on
agriculture, land and water resources, and biodiversity. The
effects of climate change on agriculture can be profound, but
they are complex. They involve the effects of longer growing
season and enhanced CO2 fertilization, combined with
the effects of higher temperature and water stress. The effects
are not uniform across the United States and are regional. In
fact, some areas, in particular the intermountain region, will
be affected by water stress and water availability.
Areas in the south will increasingly be affected by higher
temperatures that can affect grain set and pollination. So the
effects are complex, and they are going to be felt increasingly
throughout the United States over the next century.
Senator Udall. And specifically when you talk about the
west, most of the models talk about temperatures being twice as
high as other parts of the country. And so, you are well aware,
I think, being a part of the USDA, that if you have much higher
temperatures, you impact snowpack, which has the ability and
capacity to grow the groundwater and recharge the groundwater.
If that disappears, you realign the whole water situation.
So it is something that is very worrisome to a lot of us,
and we hope that your department will be out front in terms of
speaking of what the consequences are going to be. We know
there are going to be winners and losers in certain cases, but
the losers are the ones that I am really worried about, and the
intermountain west I think is one of those regions where it is
going to be pretty severe.
Thank you, Madam Chair. Thank you very much. Sorry for
running over.
Senator Boxer. I totally understand. No problem.
Senator Alexander.
Senator Alexander. Thanks, Madam Chair, for holding the
hearing and for bringing such talented witnesses.
Mr. Krupp, we have had testimony before this committee by
scientists that a low carbon fuel standard is a more efficient
way to reduce carbon in fuel than an economy-wide cap-and-
trade. Do you agree with that?
Mr. Krupp. Senator Alexander, I am glad that you have asked
because it is absolutely essential that we figure out ways to--
--
Senator Alexander. Well, I mean, I don't have a lot of
time. Is it true or not true?
Mr. Krupp. No, I don't believe that is true.
Senator Alexander. You disagree with that?
Mr. Krupp. Yes.
Senator Alexander. Now, the testimony was that--how much do
you think the economy-wide cap-and-trade will raise the price
of a gallon of gasoline, the Waxman-Markey bill?
Mr. Krupp. About 2 cents a year.
Senator Alexander. 2 cents a year?
Mr. Krupp. Yes.
Senator Alexander. You think that will change behavior in
terms of lowering the amount that people will drive their cars?
Mr. Krupp. I think the carbon cap will. You see, Senator
Alexander----
Senator Alexander. No, no. Just a moment. It is economy-
wide, how much of the carbon in this country comes from fuel,
what percent?
Mr. Krupp. It is roughly about a third.
Senator Alexander. It is about a third. And you have said
that the Waxman-Markey bill would only add 2 cents per gallon
of gas. So do you think anybody is going to change their
driving habits based on that?
Mr. Krupp. Senator Alexander, you had it wrong in your
opening statement because----
Senator Alexander. No. I am asking you the questions. Do
you think anyone will change their driving habits based on a 2
cent increase in the gallon of gasoline?
Mr. Krupp. I think they will buy more fuel-efficient cars.
Senator Alexander. On a 2 cent increase?
Mr. Krupp. Carbon content of fuel will be lower.
Senator Alexander. A 2 cent increase? You are one of the
most experienced environmental persons in the city, and you're
actually telling me that a 2 cent increase in a gallon of
gasoline will change driving habits.
Mr. Krupp. It is 2 cents per year, Senator.
Senator Alexander. Well, how about per gallon?
Mr. Krupp. Well, 2 cents per gallon per year.
Senator Alexander. So that will change driving? You are
saying that if it goes from $2.25 to $2.27 that I am going to
change my driving habits, or you are?
Mr. Krupp. We should talk about it the way a cap-and-trade
system works, Senator, because the cap is a mandatory system
that will reduce the amount of carbon that can go into the
atmosphere. So either it will reduce driving or people will get
more fuel-efficient automobiles, or industries producing
gasoline will have the option of paying your farmers in
Tennessee to sequester carbon. I don't care whether it happens
from reduced driving. I care that the carbon goes down.
Senator Alexander. Well, then, if you care if the carbon
goes down, you must----
[Applause.]
Senator Alexander. Are we at a pep rally or a hearing,
Madam Chair?
Senator Boxer. Well, just a minute. Please, can you just
halt for a minute and freeze the clock?
In this committee and in all the committees, we really do
not have expressions of support or opposition. I understand
that there is a lot of feelings on both sides, but I am asking
everyone to please withhold, and if you don't, then we have to
escort you out of the room, and I don't want to start with
that, because I am glad you are here.
So let's continue and show respect to our Senator and all
of our panelists.
Go ahead, Senator.
Senator Alexander. Thanks, Madam Chair. I appreciate that
very much.
Mr. Krupp, you understand that I believe climate change is
a problem, that I have introduced legislation to cap carbon
from coal plants; that I authored a low carbon fuel standard
here. And I think we ought to do something about it.
But I think the idea that you would apply an economy-wide
fuel standard to try to reduce fuel from gasoline simply
doesn't work. All it would do is raise the price of gasoline to
farmers such as those we are talking about but not do the job
of lowering carbon.
Why wouldn't we instead build 100 new nuclear power plants
over the next 20 years? Nuclear produces 70 percent of our
carbon-free electricity today. Double our number of electric
cars and trucks. Explore offshore for natural gas, which is low
carbon. And double energy research and development to make
renewable energies cost-effective.
By my calculations, that would get us to within the Kyoto
Protocol limits by 2030 with a low cost, instead of a high
cost. And why are we deliberately raising the cost of energy
when energy is so important to keeping jobs here, to growing
food, and to helping poor people heat and cool themselves?
Mr. Krupp. Senator, first of all, I appreciate your
leadership on this issue and the bills that you have sponsored
in the past, including the 4P issue. And I appreciate your
desire to have a low-cost solution. As you yourself recognize,
2 cents a gallon is a pretty low cost, and that is the beauty
of the cap-and-trade system. It delivers the goods that you and
I want, reducing carbon from fuel use as well as the rest of
the economy, at a low cost. It opens up the option----
Senator Alexander. But do you support building 100 nuclear
power plants in the next 20 years?
Mr. Krupp. Actually, when you were out of the room, I
predicted that is what will happen under the Waxman-Markey bill
if you pass it.
Senator Alexander. So you do support it? Well, why would it
be necessary to raise the price of energy if we could build
nuclear power plants, electrify the cars, and do R&D for
renewable energy? Why do we also have to increase our costs?
Mr. Krupp. Senator, I would love to partner with you to
figure out how to make sure that this legislation keeps prices
at an absolute minimum while doing the job. I would welcome
that challenge.
Senator Alexander. Thank you very much, Madam Chair.
Senator Boxer. Yes, Senator, when you were gone, I talked
about your plan, and we called the EPA and they have said that
under Waxman you would have 261 nuclear power plants by 2050.
These are 1,000 megawatts. And the difference between your plan
and this on the surface is you have stated that rate payers
would pay the full cost of those, which means they are going to
have to pay higher electricity bills.
So I don't understand how you can--and I would like to ask
you this question--you don't seem to mind them paying higher
bills to build nuclear plants, but you, without any tax credit,
which we have in the Waxman-Markey bill. We would have tax
credits. You have no tax credits to help folks. You would make
them carry the whole burden, which is $700 billion, and then
keep saying it is cheap energy. I am confused on that point.
Senator Alexander. Thank you.
Senator Boxer. Could you respond?
Senator Alexander. I would be delighted.
Senator Boxer. Yes, yes.
Senator Alexander. Thank you. I would be delighted to do
that. Let me use an example, if I may. California has no
nuclear, very little nuclear power.
Senator Boxer. Oh, no. We do have some. Oh, yes, we do.
Senator Alexander. But I read a report just this past week
that your renewable energy mandates, which are even higher than
those in the Waxman-Markey bill, are concerning your State
officials and they are afraid that you may even, and this is
the quote, ``be tight on electric power as soon as 2011''
because you are not producing enough clean electricity from
renewable energy.
Tennessee has among the lowest electric rates. We are about
33 percent nuclear. We are going to 40 percent. TVA is the only
utility that is now opening new nuclear plants. They have just
restarted Browns Ferry at a cost of $1.8 billion, and they
thought it would take 10 years to pay off the construction loan
and it only took 3. So now all of those profits from that
Browns Ferry plant are going to keep rates low.
So my argument would be that over time, nuclear power paid
by rate payers is cheap electricity and that renewable mandates
such as requiring us in the Southeast to build huge wind
turbines, defacing our landscape where the wind doesn't blow,
is expensive electricity.
So that is my answer. I would compare California and
Tennessee electric rates.
Senator Boxer. Well, it did not answer the question that I
posed to you, so I will just leave it----
Senator Alexander. No, I tried to. I mean, well, but I
would like to answer your question out of respect.
Senator Boxer. I know. You did, from your perspective. You
didn't from my perspective, so I want to just restate my
disagreement with your answer, bringing up California into this
when we are doing fine, and we are a State that does believe,
as you do, that the ravages of global warming is going to
affect us----
Senator Alexander. But your rates are high----
Senator Boxer. I didn't interrupt you, sir.
Senator Alexander. All right.
Senator Boxer. So here is the point. In your plan, you are
recommending instead of doing a cap-and-trade system in a
climate change bill, which as part of it allows offsets so the
folks in agriculture can participate, which will give many free
allowances, which will create many jobs, you are suggesting a
command and control--we order you to build 100 nuclear power
plants, a $700 billion cost to the rate payers, no tax credits
for them whatsoever. And you come up with other ideas, some of
which I support, but costly to taxpayers.
All I am saying is it is our belief that if we do this
right, we are going to have those plants built, more plants
than you want, and believe me, I am not the biggest fan of
nuclear energy. I believe it has to be part of the solution.
You are going to have more nuclear plants built, and you are
going to have tax credits going to consumers, including if I
might, farmers who purchase electricity.
So I just feel the difference between us is you are coming
forward with a command and control system. You are picking a
winner and attacking other forms of renewable clean energy such
as wind, which you have always attacked. And I am saying I
think the marketplace should work through a cap-and-trade
system, and the private sector putting a price on carbon will
result in more nuclear power than you would plan.
The other thing I went through when you were gone is to
show you, is to show everybody that the same predictions about
power rates were stated in the acid rain debate. And if I can
have those papers again, because I only have the second one.
And it is just exactly the same rhetoric. And I will hold that
until I get another turn.
Senator Alexander. Madam Chairman.
Senator Boxer. Yes.
Senator Alexander. May I give a short comment on what you
just said?
Senator Boxer. Yes.
Senator Alexander. I mean, the difference is----
Senator Boxer. Go ahead.
Senator Alexander [continuing]. In 1990 and 1991 when we
put a, not I, but a cap-and-trade was put on acid rain, there
was a clear technological feasible way to deal with that called
the scrubber. If you put on a low carbon fuel standard today,
on fuel, you deal with 30 percent of carbon without this whole
contraption of taxes and mandates, and you gradually lower it,
and you shift people to what is probably a lower fuel cost,
which is electric cars or maybe biofuels.
The problem with coal is that we haven't built a new
nuclear plant in 30 years because the Government has resisted
it, and we don't have a commercially viable way to recapture
the carbon. All we are suggesting is Presidential leadership of
the kind, the President said in his inaugural address, let's
make energy from the sun, the wind and the earth. That is
great. That is a lot more expensive, a lot less reliable and it
is maybe 7 or 8 or 9 or 10 percent.
What are we going to use to run the country? I would like
for the President to be half as interested in 100 nuclear power
plants as he is in windmills, and then he could say to his
Administration, please bring me a plan that will help us make
sure we have at least 100 nuclear power plants.
I believe if he does that, the private sector will build
them. The plants are very profitable. The Connecticut Attorney
General was going to put a windfall profits on them last year
during the oil crisis, and that, plus electric cars, plus
energy R&D, which that we agree on, electric cars we agree on,
would get us where we want to go without this big contraption
that Mr. Hansen has described accurately.
Thank you for the time.
Senator Boxer. Thank you very much.
I am just going to put something in the record here and
quote from it, and then we will go--then I am going to call
on--I forget who's next. We go to Senator Barrasso, and then
Senator Udall.
But this is important, and I am very happy that you are
here, Senator, because President Obama says that the Waxman-
Markey bill is a great start for us, and it will result in more
nuclear power plants being built than you want. So therefore,
it is very clear that he doesn't have to support your proposal.
His proposal results in more nuclear power plants being built,
plus the rate payers will get relief, whereas under your plan
they don't.
Now, I also want to place in the record this very important
fact and myth situation here. I think this is important for
colleagues. There are always people who say no, no, no. And the
history has them on the record. Thank God we keep a
congressional record--no, no, no. We can't--we cannot do this.
And let's go back to the cap-and-trade system that was
designed by our predecessors sitting in this room for sulfur
dioxide. Here is the thing, rhetoric, this is one of the
electric utilities: ``We estimate that the acid rain provisions
alone could cost electric utility rate payers $5.5 billion
annually between enactment in the year 2000 and increasing to
$7.1 billion from 2000 to 2010. Therefore, the total cost to
consumers from enactment of this cap-and-trade system to 2010
could reach $120 billion.''
Well, guess what? History has proven these people wrong,
wrong, wrong. This is what happened. The exact opposite
happened. Instead of rising, consumer electricity rates
declined by an average of 19 percent from 1990 to 2006.
Adjusting for inflation, they were still 5 percent lower than
when the Clean Air Act amendments were passed. And coal State
residents saw rate decreases averaging 35 percent over that
period.
Then it goes on. The 1990 Clean Air Act amendments will
cost America's business upwards of $50 billion. The truth is
the benefits of the program exceeded the cost by 40 to 1,
resulting in more than $70 billion in human health benefits
annually. That is what happens when you take pollution out of
the air.
And then the other rhetoric. This is by Chemical Week:
Clean Air Act amendments may cost America 4 million jobs.
Reality? America created more than 20 million jobs in that
period. The economy grew by 64 percent.
I have lived my adult life, I have been privileged to see
that when you address environmental issues, the economy gets
stronger and stronger and stronger. The basic premise there is
if you can't breathe, you can't work. And if you want to know
this, if you look at what is going to happen if we have
unchecked global warming--by the way, I know Senator Alexander
doesn't want that to happen, and I respect him so much. He is
very clear on that.
But if we do nothing and we argue over this to the point of
stalling everything, the fact is I would predict that the
farmers in my State will be so desperate as they see more
droughts, more floods, more infestations, the kinds of things
that the Bush administration predicted in the work that led to
this Administration's endangerment finding.
So there are so many facts out there that get obscured. But
I would say this, since Senator Alexander is urging President
Obama to abandon a more comprehensive approach to this and pick
one winner, nuclear power, and turn his back on all the other
potentials, I would urge him not to do it because it is a huge
mistake. Let the free market determine--once we put a price on
carbon that will be set by the free market--what makes the most
sense for us.
And at the end of the day we will create the jobs. We will
fight global warming. And as Thomas Friedman says, we will lead
the world in all of these new technologies. It is a rare time
when you have the confluence of two great challenges that we
face: this recession that is deep and global, and this issue of
climate change, which we need to address, and to find a
solution that really lifts this economy up and makes sure that
our grandkids don't have to face the ravages of global warming.
It is an exceptional opportunity here that I hope we will
get over our fear-mongering and go back to history, take a look
at what was said by the naysayers.
And you have another one today that the press has asked me
to respond to, and that is Sarah Palin wrote this naysaying op-
ed piece on why we shouldn't move forward with Waxman-Markey,
which I am going to be rebutting later.
So I would just tell the American people to take a look at
history. Every single time we have moved forward to go after
pollution, the naysayers have been wrong about their
predictions, wrong about their gloom and doom, and we have in
fact led the world.
This is our turn, and I know it is not easy to step forward
and work for change, but I hope, colleagues, that we can do it.
I won't get everything I want. Senator Udall is not going to
get everything that he wants. He will get some things that he
likes. We are not going to get everything, because I could
write a bill that would get far fewer votes than I need to be
able to produce. I am going to have to walk away from some
things that I believe should be in the bill, and so will
Senator Udall. We all have to do that.
And at the end of the day, we will have taken a step
forward. And we will reap the benefits of that step.
So now, for another side of the coin, Senator Barrasso.
Senator Barrasso. Thank you very much, Madam Chairman.
Mr. Stallman, if I could--in your testimony you said that
any climate change legislation will also impose additional
costs on all sectors of the economy, will result in higher
fuel, higher fertilizer, higher energy costs to farmers and
ranchers across the country. And you also quote EPA
Administrator Lisa Jackson saying that U.S. action alone will
not impact CO2 levels.
What are farmers and ranchers across the country supposed
to think of this logic? I mean, if passing a bill doesn't solve
climate change yet dramatically increases their cost of doing
business, does the ag community think Washington is out of
touch with what is happening? When I go back home and talk to
ranchers, talk to farmers in Wyoming, they are very concerned.
What are you hearing from the farmers and ranchers across
the country?
Mr. Stallman. Well, I am hearing that concern specifically
about the Waxman-Markey bill, about the potential for costs
without any return. Do a cost benefit analysis, the costs are
clearly there, with mandated restrictions on the use of carbon
in a carbon economy, and the benefits, nothing will happen with
regard to climate change. Administrator Jackson has indicated
that.
We actually do have a solution in our policy, and it is a
voluntary cap-and-trade. It is a true market solution. It is
not a market where Government mandates restrictions and then
lets the marketplace work. A voluntary cap-and-trade would
allow companies to do what they would with carbon reductions,
and then the consumers and our citizens would pay with their
dollars. If that is what they desire to have happen, our
consumers and citizens would pay with their dollars to support
those companies who reduce carbon emissions.
That would be an indication of the will of the people, and
it would also be a true market solution, and our policy
supports that.
Senator Barrasso. Senator Udall mentioned the concept of
the winners and losers in the ag community in the Rocky
Mountain West and then people across the country under this
Waxman-Markey bill. I mean, I worry about western ranchers
whose operations are heavily dependent on the use of Federal
lands for livestock, as well as very limited opportunity for
offsets, as you talk about.
These ranchers are constrained in the types of grazing
practices they can employ on Federal lands. The Federal lands
themselves don't qualify for offset opportunities. The majority
of the West is Federal land. I can't see how the agriculture
community in the intermountain west States could possibly
survive under this bill, given your testimony today.
Are these the intended consequences or the unintended
consequences, do you think, of this bill in terms of the impact
on our ranchers and Federal land?
Mr. Stallman. Well, I don't believe anyone set out to have
those consequences, so they are unintended consequences, but
they are very real. And the few agricultural organizations that
support the Waxman-Markey bill, they gloss over the fact that
the benefits of the agricultural offsets program included in
there is varied across the country. And your example of what
happens to ranchers who are on Federal lands, they have no
opportunities for real offsets, and yet they have to eat up the
additional or absorb the additional energy costs that will be
created.
And so that is what we are facing. We are facing with only
a few instances of agricultural producers being able to
participate in offsets, which according to our analysis will
not offset their increased energy costs anyway. It just makes
it better than it would have been. But then some producers, as
those you have indicated, fruit and vegetable producers and
others, aren't going to have any real opportunity to
participate in the offset markets, and that makes it even worse
for them.
Senator Barrasso. Do you think this bill can be perfected
to the point where energy and input costs would be beneficial
to farmers and ranchers? Or do you think that there is no way
to do that?
Mr. Stallman. Under the current structure and what it
portends for cost increases in the energy sector, I think it
will be very difficult. I think we will continue to work to
find provisions, and working with Senator Harkin over here on
the Senate side to improve the bill on behalf of agriculture.
And there are things that can be done overall, as I talked
about earlier, about having more specific ways of plugging that
energy hole.
The number of nuclear reactors that are proposed, that will
occur under the Waxman-Markey bill are basically on the
assumption that carbon costs get high enough to cause those to
be cost-effective and that they will be built. We could maybe
have a different model where we support a different regulatory
structure for siting and approving nuclear reactors that would
perhaps make the process quicker so we could plug that energy
gap.
So there are some things that can be done that are missing,
we think, in the Waxman-Markey bill. We still have to worry
about this international competitiveness issue for farmers and
ranchers. Those ranchers that you are talking about are
competing in the international marketplace, and if their costs
are higher and those costs are solely imposed in the United
States, and our competitors overseas don't have those same
restrictions because those governments refuse to accept
mandates, which many have said that they will, then that just
puts us in an international competitiveness nightmare in us
being able to sell our products overseas. So that is another
clear concern that we hope we can address in the Senate
version.
Senator Barrasso. Thank you, Mr. Stallman.
Thank you, Madam Chairman.
Senator Boxer. Thank you. And I hope you know we will look
forward to working with you on those issues.
Senator Udall.
Senator Udall. Thank you, Madam Chair.
When we talk about this issue and the discussion has been
that you are putting a price on carbon, you are increasing the
cost on fuel. We forget where we were last summer when we have
$4 gasoline. And I was out, Madam Chair, and I am sure you
were, in the agricultural community and the farming community,
and people were telling us they were going to go broke; that
they were really hurting in terms of the cost of oil and the
impact on them.
And the only reason economists tell us we aren't at $4
gasoline right now is we have a worldwide recession, which we
haven't seen since World War II, and we have a deep recession
here in the United States.
And so to somehow assume that we are just going to sit here
and that the cost of gasoline today is going to stay stable for
the next 10 or 15 years is I think an absolute fantasy. So we
should be focusing on how we get out of that box. And the
reason we are in the box is because we are overly dependent on
foreign oil to the tune of we are headed toward 70 percent
dependence on foreign oil. And the oil that is left in the
world we are talking about over two-thirds of it, over 66
percent, is in six Middle Eastern countries, Russia and Iran,
and we have 3 percent.
So we are in a very, very difficult situation in terms of
how we move forward with developing our oil resources. And many
of us are for developing our oil resources, but we only have 3
percent.
So the vision, I believe, and Mr. Krupp, I would like you
to comment on this, the vision I think most of us have is that
through putting a price on carbon, we move ourselves in a new
direction with our over-dependence on foreign oil. We try to do
something about that. We move ourselves in a direction of a
renewable economy.
And by the way, when we talk about a low carbon fuel
standard, we actually have a low carbon fuel standard in place.
We put it in place in 2005 and 2007 in the energy legislation.
It is called a renewable fuels standard, which we are expanding
on and improving upon. So let's not pretend we don't have a low
carbon fuel standard in place and that we are trying to
generate those kinds of renewable fuels.
But Mr. Krupp, I wish you could comment a little bit on
where this contrast of dependence on foreign oil, we are headed
down this road of becoming more dependent, and where you see
putting a price on carbon taking us, and what opportunities it
opens up for us in some job potential and all of those kinds of
things. Please.
Mr. Krupp. Thank you, Senator.
I think the biggest new economy, the biggest new source of
jobs in the world is going to be these alternative energy
sources and cleaning up our fuels and cleaning up our energy
sources. I see if we do nothing a future where a bunch of
tyrants who don't like us have their foot on our throat. And I
don't know how we get the foot off of our throat unless we act.
And this bill, according to MIT and others who have modeled
it, would reduce our dependency of oil by billions, tens of
billions of dollars every year. So I do think that the choice
is between allowing us to continue to be whipsawed by the whims
of some of these Mideast nations, or by doing something to
diversify our sources of energy and fuel.
And the beauty of the bill is it opens up a market for a
lot of different things. Some farmers will be able to
participate with bio-energy, others with methane. Some will be
able to put wind turbines on, not everyone will be. I agree
with what you have said, Bob. Others will be able to put solar
panels on their land. There will be a variety of ways that
farmers and landowners can participate.
We cannot go with business as usual, America is losing
jobs. We are dependent on foreign countries for the bulk of our
oil supply, many of whom are very hostile to our interests.
Taking action like the ACES legislation provides, allows us to
get off that dependency and an explosion of new wealth for
America.
Senator, those who oppose this legislation may find in a
few years that they regret it very much because instead of
importing oil at that point, we may be importing solar panels
and wind turbines because we failed today to take that step.
I am not willing to sit by and watch us fail. We have to do
something different.
Senator Udall. Thank you very much. And we, I know that the
Chairman feels this very strongly, we are trying to move on a
clean energy economy, trying to capture, as you said, the
industrial potential of the future.
Thank you very much, and thank you, Madam Chair.
Senator Boxer. Thank you, Senator, very much.
And I thought, Mr. Krupp, your comments were beautifully
put because at the end of the day, no farmer that I know wants
to be dependent on oil from people who don't like us and who
are using the proceeds to hurt us. No farmer wants that. No
farmer that I know wants to sit back and allow climate change
to ravage this country, this Nation.
And I am going to ask Senator Udall if you could once again
share with us what you told us, that if we do nothing and the
climate changes the way the vast majority of peer-reviewed
scientists tell us, what happens to your State, the big
picture.
Senator Udall. Well, the thing that happens in New Mexico,
and this is something that all of us can look at the models.
And I have been told about the models for New Mexico. And
basically, imagine that you all know how we move a mouse around
on a screen and grab something and slide it. Well, basically
what I have been told is that if you look at the intermountain
west model and looking at double the temperatures of everyplace
else in the country, you are going to have a dramatic impact.
And the impact would be the equivalent of taking New Mexico and
dragging it 300 miles to the south. I don't know how many of
you have been 300 miles south of New Mexico, but you are in the
middle of Chihuahua, Mexico. OK?
The mountains that they have down there are not forested.
We have fantastic forested mountains, up to 10,000 feet. We
have ski areas. The snowpack that is on top of those mountains
recharges the water. Just for example in the city of Santa Fe,
40 percent of our water comes from our snowpack. So you would
be changing that whole equation, changing the water situation
in New Mexico.
Second what you would do is be drying out those forests.
The forests might well by mid-century just disappear and you
would have flora that would obviously adapt, but the forests
would be gone. You would have increasing forest fires in that
period because of what is happening.
So the impacts are going to be dramatic. It was brought up
about being worried about farmers and ranchers. Well, the
ranchers, what the U.S. Climate Impact Report found that
Federal grazing land will be less productive because it is
going to be hotter. So there will be less forage for the
cattle, so the ranchers are going to be hurting.
These are the kinds of things that I think we are trying to
prevent. And I think we need to look at where we are headed in
the future, and it is not a pretty future for the intermountain
west, and the way I would just describe it is more forest
fires, less water, more thirst, and a real change or wiping out
of a way of life.
Senator Boxer. Well, I wanted to end on that note because
we have a responsibility to protect our kids and our grandkids,
not just ourselves. We have lived through the years that we
weren't affected by what was on the horizon. And now it is our
job to ensure that future generations can live in a hospitable
environment.
And every time we have done this as a Senate, it has been a
winner. I have gone through that. Every landmark environmental
law was attacked harshly, predictions made that it would be
just the end of the world. And this is certainly no exception.
And I would like to close by saying the American Farmland
Trust really gets it. In their letter of support, they say,
``Keep in mind the potential cost of not supporting climate
change legislation. Climate change is a real environmental
challenge affecting our global ability to produce food and
fiber in the years ahead.''
So we need to look at that, and factor in the costs of
doing nothing, being naysayers; no, we can't; no, we shouldn't;
no, we mustn't. And I think if we can get over that mind set of
no, we will do the right thing.
I just want to say to the panel, I so appreciate each and
every one of you being here, and we will work with all of you.
As we take the Waxman-Markey bill and we put our stamp on it,
we are going to need all of you to work with us.
Thank you.
We stand adjourned.
[Whereupon, at 11:50 a.m. the committee was adjourned.]
[Additional statements submitted for the record follow:]
Statement of Hon. Benjamin L. Cardin,
U.S. Senator from the State of Maryland
Madam Chairman, thank you for holding this hearing on how
the roles of America's farm, forests and the hardworking people
tied to the land cultivation are impacted by climate change yet
stand to profit from the offsets that will be included in the
climate and energy legislation we construct.
Agriculture both affects and is affected by climate change.
Australian farmers are contending with an unprecedented--and
completely unforecasted--7-year drought that has crippled the
entire continent's agriculture industry. Our changing climate
creates immeasurable challenges for farmers. Historical weather
and climate cycles are no longer reliable for planning crop
selection, sowing and harvesting seasons, or precipitation
patterns.
As I mentioned in my statement at last week's Climate
Change hearing, a 2 percent increase in global temperature can
create significant heat stress for plants and animals and also
aids in the spread of both plant and animal diseases. \1\ Much
of Maryland's agricultural growers and poultry producers are
located on Maryland's Eastern Shore, and rising sea levels and
increased salt water infiltration into groundwater sources are
serious concerns of mine for the future prosperity of
Maryland's farmers.
---------------------------------------------------------------------------
\1\ Professor Alan Buckwell, director of the Land and Business
Association of the United Kingdom.
---------------------------------------------------------------------------
The measures we are considering may present new challenges
for farmers and foresters. However, a system of carbon offset
credits will provide agricultural growers a new commodity to
effectively sell, in addition to their products, in the
marketplace and would create new revenue streams for the
agricultural industry.
However, in order to achieve actual reductions in
greenhouse gases from agriculture, farmers must reduce:
methane,
nitrous oxide, and
their overall greenhouse gas production.
Congress's climate and energy legislation must help them do
so. Beyond offering offsets for the carbon sequestration of
agricultural and forestry biomass, climate change legislation
should also help farmers by:
incentivizing the conversion of unproductive cropland
back to its natural state,
providing for research and development into feed and
digesters to reduce and capture livestock methane,
accounting for the carbon sequestration of agricultural
biomass, and
increasing the water efficiency of irrigation systems.
These are ways we can help our farmers and help solve the
climate crisis at the same time.
It is important for farmers to understand what they stand
to gain from this legislation. Agriculture Secretary Tom
Vilsack is engaging in field visits to rural communities across
the country to share information about the challenges and
opportunities a carbon constrained economy present for farmers
and ranchers. I think it is unfortunate that so much negative--
and often misleading--information is conjuring fears among
America's agricultural sector, and it is imperative that more
outreach needs to be done to explain the impacts of climate
change on growers, the need for action, and the key role
agriculture plays in fixing the problem.
With EPA's scientific expertise we can develop an
agricultural offsets program that is verifiable, effective and
robust. With USDA's on-the-farm expertise, we can create a
carbon offset program that is tailored to individual farms.
With farmers at the center, we can build an effective domestic
offset program that combats global warming, generates
significant revenue for our farmers, and keeps our key resource
lands in production for America and the world.
I look forward to working with my colleagues to make a
strong climate bill that benefits farmers, and I look forward
to our witnesses' testimony.
Statement of Hon. David Vitter,
U.S. Senator from the State of Louisiana
Thank you, Chairman Boxer and Ranking Member Inhofe, for
holding this hearing to discuss what I believe is a very
important issue.
This is a significant moment in history, as the societies
that choose to expand and improve their use of energy will
advance beyond those that don't. The primary objective of any
country's energy policy should be to promote abundant supplies
of affordable energy and to ensure that it is distributed to
consumers. For examples of that philosophy look no further than
China and India, where the two nations are attempting to bring
great numbers of their populations out of poverty and into
competition in a global economy. Cap-and-trade is the opposite
of that effort.
While proponents have argued that the United States needs
to lead other nations to adopt their own cap on carbon
emissions, three of the world's top five emitting sources have
categorically stated their intent to reject meaningful
emissions limits. China, the world's No. 1 emitter, stated that
``it is not possible for China to accept a binding or
compulsory target.'' Russia, the No. 4 emitter, has called the
emissions target ``unacceptable, and probably unattainable.''
India, the No. 5 emitter, has said, ``India will not accept any
emission-reduction target--period.''
There are not many in the agriculture industry that trust
cap-and-trade legislation will make their industry more
competitive or that Government is likely to get this right.
Perhaps the Missouri Farm Bureau said it best when they stated:
`` `Skeptical' and `apprehensive' may understate our
members' feelings toward proposed legislation and regulations
to reduce man's supposed impact on the Earth's climate. Whether
it is called global warming or global climate change, we have
serious reservations about lawmakers and regulatory officials
imposing sweeping new regulatory requirements and costs on the
U.S. economy while it is business as usual in China, India, and
other countries emitting large quantities of greenhouse gases
(GHGs).''
There exists a great misunderstanding in a good portion of
our society about what exactly energy is and means to people
and our economy, but the ones that are paying attention to cap-
and-trade are starting to get it. Some people believe that
advances in efficiency will limit the need for future energy
sources. Others believe that increasing the cost of energy
won't have an adverse effect on middle income families or the
working poor. And still some believe that forcing heavily
subsidized noncompetitive energy into an energy portfolio will
have a net positive impact on small businesses, manufacturers
and farmers. In fact, these beliefs are quite wrong.
As a society advances and technologies improve we know that
energy begets the need for more energy. We now produce energy
in many forms much more efficient than the carbohydrate energy
farms once required to power the oxen that pulled farm
implements. As that efficiency has increased so has our need
for energy. Energy consumption per unit of GDP has been falling
for thousands of years. We have consistently become more
efficient. However, energy consumption as a whole has been
steadily increasing--along with our quality of life.
Our ability to grow and advance as a society is wholly
dependent on affordable energy. Low cost energy has proven to
be the greatest equalizer in the history of mankind. Thanks to
affordable energy the poor can stay cool in Louisiana's hot
summers, and the elderly can stay warm in Wisconsin's cold
winters. And thanks to energy's role in agriculture we are able
to feed more people than at any time in the history of the
world. That will only improve with more abundant and affordable
energy.
For the agriculture industry, implements once pulled by
horses and oxen are now pulled by massive Caterpillars and John
Deere tractors. These machines are much more efficient than
oxen, but they require more energy. There exists a quite
recognizable correlation between rising employment and rising
consumption of conventional fuels. In the ag industry
conventional fuels provide the energy that processes material
and powers the increasingly advanced machines that provide
internationally competitive farm products.
When the debate over efficiency was lost in the quest for
affordable and reliable energy, proponents of reducing energy
consumption realized that the only way to actually reduce
consumption is by driving up the cost of energy. This cannot be
done without reducing the standard of living on America's
middle class and low income earners. To achieve this goal you
need something bigger and scarier than simply a desire to
reduce our use of energy.
From Energy Secretary Chu to the environmental groups that
support a unilateral reduction in carbon emissions, a
consistent effort has gone to convincing proponents that the
only way to decrease fossil fuel consumption is to increase the
cost of energy. The effort has been made by filing one lawsuit
after another to prevent domestic production and has included
challenging onshore and offshore production in Alaska,
convincing the Administration to cancel or slow offshore
leasing programs in the Gulf of Mexico, and making every effort
to increase taxes on domestic production. Yet cap-and-trade
remains the best option for rapidly increasing the cost of
energy and thus reducing energy consumption.
The agriculture industry is quite right to be skeptical of
the Waxman-Markey legislation or any other legislation capping
carbon emissions. As they say, the devil is in the details.
Unfortunately, this devil has the potential to devastate our
economy, reduce the standard of living for most or all
Americans, and could make us more reliant on not only foreign
energy, but also foreign agriculture.
As this committee works on legislation once touted by Enron
and now by former Vice President Al Gore as an opportunity for
``global governance,'' I look forward to working through and
discussing the many challenges ahead. Thank you.
[Additional material submitted for the record follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]