Enough Political Capital to Pass Climate Bill?

Senate introduced its climate change bill last week, but there definitely is an uphill battle to get it passed in an election year.

The long anticipated climate change bill being developed by Sen. John Kerry, D-Mass., and Sen. Joe Lieberman, I-Conn., was introduced last week. The American Power Act aims to take away the focus of the now tainted concept of "cap and trade" and instead focus it on energy, but energy costs will still increase under the proposed bill.

The political landscape is difficult for passage of the bill, especially as Sen. Lindsey Graham, the Republican who had worked together with Kerry and Lieberman on the bill backed out days before its introduction. Healthcare passage seemed impossible and was accomplished. So although commentators won't say passage of climate change legislation is impossible, the odds are long to secure passage before this fall's already contentious elections.

The latest measure seeks reductions in greenhouse gas (GHG) emissions by 17% below 2005 levels in 2020, 42% in 2030, and 83% in 2050. Those reduction targets are similar to the targets included in other climate change bills.

Power plants will face the first restrictions, followed six years later by energy-intensive manufacturers. Transportation emissions will be regulated under the national carbon cap, though under a separate trading program.

To offset rising energy costs, the bill would provide rebates to users of electricity, natural gas and home heating oil. Additional rebates, amounting to 2.5% of the allowance auction revenue, would be available for low-income residents, and 12.5% of revenue would go to eligible Social Security recipients.

The bill includes 12 titles covering numerous environmental and energy issues, from expanded nuclear power and carbon capture and sequestration to revenue sharing for states that want to conduct more offshore oil and gas production. The bill requires industrial sources including fertilizer manufacturing to have emission allowances for GHG emissions beginning in 2016; provides trade exposed industries (fertilizer, chemicals, steel, cement, glass, etc.) with 15% of the available allowances annually for free between 2016–2025; prevents the Environmental Protection Agency (EPA) from moving forward with its current plans to regulate GHG emissions under the Clean Air Act; and contains language on border adjustments that would attempt to prevent adverse impacts from imports from countries without GHG emissions caps.

The EPA plans to release its official analysis in the coming weeks on the impact of the bill.

Preventing acreage shift

Kerry and Lieberman said the bill would exempt farms and most small and medium-sized businesses from the emissions provisions, concentrating efforts on the largest polluters.

In an attempt to prevent an acreage shift to forestry that would hurt the nation's food supply or drive up commodity prices, the bill has a "circuit breaker" that would require the agriculture secretary to conduct periodic analysis of land removed from crop production or grazing for afforestation projects and enable the secretary to restrict the amount of acres or quality farm ground from converting to forestry for carbon-offset afforestation projects if such an acreage shift causes "serious adverse effects on United States agriculture or the public interest."

This language was added to the bill after concerns were raised that landowners would convert millions of acres to collect carbon offsets rather than continue growing crops or raising livestock.

The bill will also require two new studies: one by the National Academy of Sciences on how to define renewable biomass and a second by U.S. EPA and the Interior and Agriculture departments on how the use of biomass affects food production and the environment.

Ag opposition

Former Agriculture Secretary Sen. Mike Johanns, R-Neb., who has vocalized opposition to the bill says, "The bill will additionally be destructive for agriculture, small businesses, and other job creators, preventing them from growing and hiring. American families struggling to make ends meet deserve better than a proposal to increase their costs and endanger their jobs."

The American Soybean Association (ASA) continues to have significant concerns with climate change proposals and their impact on agriculture, including the just unveiled Kerry-Lieberman bill. ASA remains concerned with the impacts that could result from enactment of climate change legislation that unilaterally subjects U.S. farmers, manufacturers and other businesses to emissions caps and increased energy costs without appropriate measures to ensure that the U.S. maintains economic competitiveness.

Additionally, while the Kerry-Lieberman bill begins to recognize the threat of climate change legislation resulting in the afforestation of productive farmland, it doesn't go far enough to prevent it. ASA believes that strong safeguards need to be included to ensure that U.S. farmland, which is the most productive land in the world, is not idled or afforested in response to carbon sequestration incentives. Last fall ASA issued a paper outlining its concerns about and priorities for any climate change legislation that may be considered, and these concerns and priorities remain paramount today.

A statement from Bob Stallman, president of the American Farm Bureau Federation, states, “As with other climate change bills, we have concerns about the economic impact on farmers and ranchers because of potentially higher fertilizer and energy costs. We do not want to see farmers driven out of business due to additional regulation and the potential for higher input costs. Agriculture also could be forced to shrink due to land moving out of production into trees to sequester carbon. We also believe it is imperative that any energy legislation must assure a greater supply of nuclear energy, renewable fuels and natural gas for American consumers. Further, we note the absence of renewable electricity standards in the bill and will work toward their inclusion in the future."

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