Download Climate Change Legislation & Agriculture.

Climate Change Legislation &
Agriculture
2010 Iowa Turkey Federation Meetings
Department of Economics
GHG Emission Rules
• Greenhouse gas rules are coming
– Whether through legislation or regulation
• EPA has the authority to regulate GHGs
– Via Clean Air Act
• However, Congress would like to set the rules
– H.R. 2454, American Clean Energy and Security Act
of 2009,
• Passed in U.S. House of Rep. on 6/26/09, 219-212
– S. 1733, Clean Energy Jobs and American Power
Act
• Introduced 9/30/09, In committee (actually, six committees)
Department of Economics
Agricultural GHG Emissions
Soil fertilization
Belching cows
Department of Economics
Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2007
Climate Change Legislation
American Clean Energy and Security Act of 2009 (H.R. 2454)
• Requires utilities to supply an increasing percentage of their demand
from a combination of energy efficiency savings and renewable
energy (20% in 2021-2039).
• Provides for issuing, trading, banking, retiring, and verifying
renewable electricity credits.
• Establishes targets to cap and reduce greenhouse gas (GHG)
emissions, annually, so that GHG emissions from capped sources
are reduced to 97% of 2005 levels by 2012 and 17% by 2050; and
establish a federal GHG registry.
• Provides for trading, banking and borrowing, auctioning, selling,
exchanging, transferring, holding, or retiring emission allowances.
Source: Congressional Research Service
Department of Economics
Key Assumptions
• The US economy was already on a slow growth
path for energy consumption, the analysis
assumes that this continues
• Coal fired plants largely shut down and are
replaced by nuclear
• Enormous reliance on international and domestic
offsets
• If we cannot build the large number of nuclear
plants or find the international offsets, then the
price of carbon will increase at about twice the
reported rate
Source: ISU, Dermot Hayes presentation, Oct. 2009
Department of Economics
GHG Emissions & Abatements
Source: EPA Analysis of H.R. 2454, June 23, 2009
Department of Economics
Energy Sources
Source: EPA Analysis of H.R. 2454, June 23, 2009
Department of Economics
Shifting Land Patterns
Department of Economics
Source: EPA, “Greenhouse Gas Mitigation Potential
in U.S. Forestry and Agriculture”, Nov. 2005
International Offsets
• Must be a developing country that is a member of
an emissions reduction agreement with the United
States
• Must have the technical capacity to monitor,
measure, report and verify forest carbon fluxes
resulting from deforestation
• Must have the capacity to reduce emissions from
deforestation, including strong forest governance
• The international offset project itself must be shown
to result in permanent verifiable reductions that are
net of any leakage measures
Department of Economics
Map Source: CIA World Factbook data,
Wikimedia Commons
Carbon Prices Increase Over Time
Source: EPA Analysis of H.R. 2454, June 23, 2009
Department of Economics
Prices Are Sensitive to Offsets
Source: EPA Analysis of H.R. 2454, June 23, 2009
Department of Economics
Impacts on an Average Household
Source: EPA Analysis of H.R. 2454, June 23, 2009
Department of Economics
Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
Department of Economics the American Clean Energy and Security Act of 2009 On U.S. Agriculture”
Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
Department of Economics the American Clean Energy and Security Act of 2009 On U.S. Agriculture”
Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
Department of Economics the American Clean Energy and Security Act of 2009 On U.S. Agriculture”
Concluding Thoughts
• Crop prices and feed costs will likely track
carbon prices
• Land conversion will benefit landowners
through higher rents
• Potential offsets from the turkey industry:
Tree planting and on-farm “green” energy
generation
• Agriculture will experience the benefits and
the costs of climate change legislation
Department of Economics
Thank you for your time!
Department of Economics