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Climate Compromise; CFTC Issues
Climate Compromise- Language and Perspectives
Reuters writer Charles Abbott reported yesterday that, “The climate bill advancing in the U.S. House of Representatives will reward farmers who plant trees or take other steps to control greenhouse gases, and remove for five years an obstacle to corn-based ethanol, farm-panel Chairman Collin Peterson said on Wednesday.”
(Note: An audio clip from yesterday’s AgriTalk Radio Program with Mike Adams included comments on these developments from Chairman Peterson- click here to listen (MP3-3:00). In addition, the legislative language for the agricultural amendment to H.R. 2454, the American Clean Energy and Security Act of 2009, is now available by clicking here. A summary of the amendment is available here.)
Mr. Abbott explained that, “Rep. Collin Peterson, House Agriculture Committee chairman, also said he and Democratic leaders reached an agreement on the ‘biomass issue that had been hanging us up.’
“Peterson said that, under the agreement, the climate change legislation will use the 2008 farm law’s definition of biomass, instead of a more restrictive one that had been in the bill.”
After specifying more details of the negotiated compromise, yesterday’s Reuters article indicated that, ‘My initial reaction to this deal is it doesn’t fix the real problems with the bill,’ said Frank Lucas, Oklahoma Republican.
“Lucas and other Republican lawmakers say the climate bill will drive up energy costs in rural America.”
House Ag Committee Ranking Member Lucas offered additional perspective on the climate bill compromise on yesterday’s AgriTalk Radio Program- to listen to this clip from Rep. Lucas, just click here (MP3- 2:40).
In addition, a news release issued yesterday by the Rural America Solutions Group stated that, “Today, Rural America Solutions Group Co-Chairs Frank Lucas (R-OK), Sam Graves (R-MO), and Doc Hastings (R-WA), held a press conference call [MP3] to express their opposition to H.R. 2454, a National Energy Tax bill sponsored by Congressmen Henry Waxman (D-Hollywood) and Edward Markey (D-Massachusetts) that would unfairly target rural Americans. The U.S. House of Representatives is expected to vote on H.R. 2454 this Friday.”
Yesterday’s news release quoted Rep. Lucas as saying, “Despite the agriculture community’s best efforts to slow this bill down and allow the legislative process to work, Speaker Nancy Pelosi is moving forward with bringing this bill to the floor for a vote on Friday. This is a bill that promises to destroy our standard of living and quality of life with higher energy costs, higher food prices, and lost jobs.”
In his Reuters article from yesterday, Mr. Abbott also pointed out that, “Farm groups said the Waxman-Peterson compromise was a step in the right direction, but they have reservations about the overall bill. Some groups, including the American Farm Bureau Federation and the National Pork Producers Council, have announced opposition to the bill. The National Farmers Union, which backs a carbon-trading program, has called for changes.”
Farm Bureau President Bob Stallman issued a statement yesterday regarding the climate compromise. In part, Mr. Stallman noted that, “Even after the stellar efforts of House Agriculture Chairman Collin Peterson and many rural members of Congress to win vital changes for America’s farm and ranch families – efforts that we strongly endorse and support – there are simply too many flaws in the underlying bill…Despite inclusion of Chairman Peterson’s hard-fought provisions to reward farmers for carbon offsets and to remove the phony indirect-land-use calculation, this bill should be amended further or defeated.”
Paul Schlegel of the Farm Bureau also appeared on yesterday’s AgriTalk program to elaborate on the organization’s views on the climate bill- to listen to this portion of yesterday’s program, just click here (MP3-9:00).
Meanwhile, in a House Agriculture Subcommittee hearing yesterday to review Farm Bill implementation issues, Rep. Jerry Moran (R-Kansas) asked the witnesses about their thoughts on the climate compromise. The panelists included, Bob Stallman, Ron Litterer-National Corn Growers Association, John W. Hardwick- National Cotton Council, Erik Younggren- National Association of Wheat Growers, and Roger Johnson- National Farmers Union. To listen to this discussion from yesterday’s hearing, just click here (MP3- 6:30).
Dan Looker, writing yesterday at Agriculture Online, added more detail to portions of the climate compromise, and explained that, “For at least six years, EPA will not able to use an international indirect land use change when it estimates the carbon footprints of ethanol and biodiesel…Under the compromise, that requirement will be taken out of the 2007 energy law and an independent group such as the National Academies of Science would review the science behind the theory that more corn acres for ethanol are leading to deforestation in the Amazon. After a five year review, Congress would have another year to study the issue before EPA could act.”
Mr. Looker added that, “And, Peterson said, USDA, EPA and the Department of Energy would have to agree on the effect of indirect land use on ethanol’s complete output of carbon dioxide.
“‘What that means is that USDA has veto power over this,’ Peterson said.”
Tom Buis, the CEO of Growth Energy, issued a statement regarding this development yesterday, and noted in part that; “We congratulate Chairman Peterson and Chairman Waxman on reaching a common sense solution to this very controversial issue. We believe that additional study of the issue of indirect land use change will further demonstrate that these provisions should never have been a part of the 2007 energy law to begin with. Chairman Peterson’s steadfast leadership in ensuring an equal playing field for America’s homegrown fuel producers was critical to achieving this resolution. This is a good first step in a longer process, including full review by the House and Senate.”
DTN Ag Policy Editor Chris Clayton provided additional analysis of the climate agreement yesterday, reporting that, “USDA will approve farmers for a new carbon offset credit that farmers could sell on the open market, under details negotiated in the House climate-change legislation.”
The DTN article stated that, “Under the carbon offset provisions in the climate bill, USDA would write rules developing a new carbon program. USDA would certify farmers and issue a credit that they would then sell on the open market, Peterson explained. Others were concerned USDA would issue too many credits and dilute the value of the program.
“The bill still keeps a cap of 2 billion tons of carbon offsets nationally, but now agricultural producers would get the chance to take part in that carbon program. Despite not changing the level of offsets, Peterson said he is confident the needs of farmers will be satisfied.”
Mr. Clayton indicated that, “Included in the details is that farmers were ‘early actors’ in mitigating greenhouse emissions through their farm practices will also get credit for those efforts going back to 2001. That would include work such as no-till farming, planting trees and forestry.
“Further, Peterson said language will be clear in the bill that greenhouse-gas emissions from agriculture will not be regulated under the emissions regulations. Some of those costs will not be as large as projected because of new pollution allowances for rural electrical providers. The potential benefits from carbon offsets also should make up many of the costs, Peterson said.”
Yesterday’s DTN item also pointed out that, “Further, Peterson said there is still talk about setting up a program for farmers who might not be able to participate in a cap-and-trade program. Fruit and vegetable growers, cotton and peanut producers — those crops that cannot convert to no-till practices — could have a program to help mitigate costs ‘but that is a work in progress,’ Peterson said.
“The chairman noted that even if the House passes the bill later this week, the bill will likely be changed in the Senate and later conference talks. Peterson said he thinks future changes in the bill would continue to be positive for farmers.”
Amanda DeBard reported in today’s Washington Times that, “If a tree falls in Brazil, it will, in fact, be heard in the U.S. – at least if a little-noticed provision in the pending climate-change bill in Congress becomes law.
“As part of the far-reaching climate bill, the House is set to vote Friday on a plan to pay companies billions of dollars not to chop down trees around the world, as a way to reduce global warming.
“The provision, called ‘offsets,’ has been attacked by both environmentalists and business groups as ineffective and poorly designed. Critics contend it would send scarce federal dollars overseas to plant trees when subsidies are needed at home, while the purported ecological benefits would be difficult to quantify.”
Today’s Washington Times article added that, “The offsets ‘would be a transfer of wealth overseas,’ said William Kovacs, vice president for environmental affairs at the U.S. Chamber of Commerce.
“The Congressional Budget Office (CBO), the official fiscal scorekeeper on Capitol Hill, has not offered an estimate on how much the offset plan would cost, but the liberal Center for American Progress says it will be pricey.
“‘The international offsets market is not a huge or cheap market,’ said Joseph Romm, a climate expert at the center. ‘By 2020, the U.S. could be spending $4 billion on international offsets.’”
Climate Compromise- House Votes-Election Implications
Mike Soraghan reported yesterday at The Hill Online that, “The committee chairman once seen as the chief obstacle to moving climate change legislation predicted Wednesday that House Democratic leaders will pass the bill this week.
“‘I think they will be able to get the votes to pass the bill,’ House Agriculture Committee Chairman Collin Peterson (D-Minn.) said during a conference call, one day after he announced striking a deal with House Energy and Commerce Chairman Henry Waxman (D-Calif.) to resolve concerns raised by farm-state Democrats.”
The Associated Press reported this morning that, “While most Republicans remain strongly opposed to the bill, calling it a huge energy tax, support among House Democrats appeared to be growing.
“Even so, Democratic leaders and key sponsors of the bill were still meeting with fence-sitting Democrats to try to get their support. And Pelosi met late Wednesday for a second time with a small group of moderate Republicans to try to persuade them to support the measure.”
Today’s AP article added that, “A new Washington Post-ABC News poll shows that three-quarters of Americans think the federal government should regulate the release of greenhouse gases, and 56 percent said they would approve such measures even if it increased their monthly electricity costs by $10.”
Darren Samuelsohn reported yesterday at The New York Times Online (ClimateWire) that, “According to an E&E analysis (pdf) of the House floor debate, Pelosi could count on about 170 reliable supporters even before Peterson and Waxman reached their agreement, with another 105 fence-sitters, including 79 Democrats and 25 Republicans. The fence-sitter group does include about 25 of Peterson’s Agriculture Committee members, several of which said yesterday they are now in play pending what they see in writing.”
Bloomberg writers Lorraine Woellert and Simon Lomax reported yesterday that, “‘We believe the changes we’ve made are going to increase the likelihood of passage of the bill,’ Markey told reporters after the meeting. The agreement on agricultural provisions ‘is going to lead to support from moderate Republicans when the vote is cast,’ he said.
“‘This is going to be a tight vote,’ said Gerald Connolly, a Virginia Democrat.”
Dow Jones writer Siobhan Hughes reported yesterday that, “Democratic leaders are running into bumps in passing a climate-change bill through the U.S. House of Representatives this week – including opposition within the party’s own ranks.
“The fiscally conservative wing of the party, known as the Blue Dog Democrats, is proving the biggest obstacle. Rep. Earl Pomeroy, D-N.D. said on Wednesday that intends to vote ‘no.’ Rep. David Scott, D-Ga., declined to say he would vote for the bill. That adds to the list of Blue Dogs who are withholding support; four other members voted against the legislation in a committee vote last month.”
Meanwhile, Greg Hitt and Stephen Power reported in today’s Wall Street Journal that, “The climate-change bill headed for a House vote Friday is likely to be a defining issue of the 2010 midterm election.
“Republican leaders see the measure, one of President Barack Obama’s top priorities, as a perfect illustration of their broader case that Democrats are the party of high taxes and intrusive big government.
“In a memo circulated to House Republicans, Minority Leader John Boehner (R., Ohio) said the pending climate vote would have significant electoral consequences.”
Climate Legislation- Senate
Matthew Murray reported yesterday at Roll Call Online that, “Senate Environment and Public Works Chairman Barbara Boxer (D-Calif.) told colleagues Tuesday that her panel will begin marking up climate change legislation on July 27, according to sources familiar with the discussion.”
The article noted that, “The Golden State Senator holds a weekly meeting on Tuesdays to discuss climate change and environmental issues.
“Boxer is expected to use pending House climate change legislation as a starting point for her markup, sources confirmed.”
Mr. Murray added that, “Sources also confirmed that Senate Majority Leader Harry Reid (D-Nev.) set a Sept. 18 deadline for other committees with jurisdiction over climate change legislation to submit their proposals.
“Other Senate committees that could weigh in on the bill include Finance; Energy and Natural Resources; Foreign Relations; Commerce, Science and Transportation; and Agriculture, Nutrition and Forestry.”
Alexander Bolton reported yesterday at The Hill Online that, “President Obama’s climate change proposal ran into stiff Democratic opposition when he unveiled his budget proposal earlier this year. Democratic concerns were so intense that Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, pledged to withhold granting a special procedural protection, known as reconciliation protection, for climate change legislation.
“The desire of some Democrats in both chambers to postpone action on climate change does not sit well with Pelosi, who has made it her flagship issue.”
CFTC Issues
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The Commodity Futures Trading Commission should impose tighter position limits on commodity index traders to stop excessive speculation in the wheat markets, a U.S. Senate subcommittee report recommends.
“The 247-page report by the Senate Permanent Subcommittee on Investigations examined how commodity index traders ‘in the aggregate’ have made large contract buys on the wheat futures market that ‘pushed up futures prices, disrupted the normal relationship between futures prices and cash prices for wheat, and caused farmers, grain elevators, grain processors, consumers and others to experience significant unwarranted costs and price risks.’
“Industry reaction to the report has been mixed. The National Farmers Union said it ‘whole-heartedly’ endorses the report’s recommendations.
Mr. Clayton added that, “The CME Group, on the other hand, said it disagrees with the report’s findings and recommendations, which it said are ‘based on anecdotal information versus sound empirical and economic analysis.’ The CME Group said other studies, from the CFTC, the Government Accountability Office, Informa Economics Inc and CME Group, concluded ‘there is no causality between market participation of index funds and non-commercial traders and wheat price levels or cash market convergence at expiration.’ The CME Group said it has made changes in the wheat contract which it expects will improve convergence.”
Dow Jones writer Bill Tomson reported yesterday that, “The report and the subcommittee’s chairman, Sen. Carl Levin (D, Mich.), blame the Commodity Futures Trading Commission for facilitating the index traders by allowing some to go well beyond normal buying limits. The CFTC is the regulatory agency charged with overseeing futures markets.
“‘The CFTC helped create the problem by allowing some index traders to exceed the standard limit on the number of wheat contracts that traders are supposed to be able to hold at any one time,’ Mr. Levin said.”
Keith Good
