Study Shows Need for Climate Change Rules that Recognize Agricultural Contributions
A principle role undertaken by the 25x’25 Alliance is to explore opportunities for the agricultural and forestry sectors to participate in the new energy future that is emerging. With national attention focusing on initiatives that can stem climate change, the Alliance is facilitating a discussion on the role of the agricultural and forestry sectors in a reduced carbon economy, in which the use of fossil fuels is decreased and greenhouse gas emissions are reduced.
To further that discussion, 25x’25 today released a study conducted by the University of Tennessee’s Bio-Based Energy Analysis Group that projects how meeting several proposed energy/climate change policy scenarios might impact the U.S. agricultural sector. The policy scenarios that have been analyzed include a cap-and-trade regulatory system and varying treatments of agricultural offsets. The study’s results show impacts on economic returns, climate benefits, feedstock prices and land use impacts.
The study, entitled Analysis of the Implications of Climate Change and Energy Legislation to the Agricultural Sector, shows that net returns for U.S. agriculture are positive under a properly constructed cap-and-trade program. However, the study goes on to show that if carbon emissions are regulated by EPA as prescribed under a 2007 Supreme Court ruling, net farm income is projected to fall below USDA baseline projections.
The long-awaited and comprehensive assessment indicates that income from offsets and from market revenues under a properly constructed cap-and-trade program is higher than any potential increase in input costs, including energy and fertilizer.
A cap-and-trade system that allows multiple offsets, including those for bioenergy crop production, while restricting the removal of crop residues to acceptable, environmentally beneficial levels, would generate some $209 billion over baseline in net returns accumulated from 2010 to 2025. The number jumps to $364 billion over baseline if carbon regulation is left to EPA without legislative guidance.
Input costs will increase under any scenario, the study says. But EPA regulation subjects U.S. agriculture to higher input costs with no opportunity to be compensated for the greenhouse gas reduction services that farmers, ranchers and forestland owners can provide.
The study indicates that no major shifts in commodity cropland use are expected under a properly constructed cap-and-trade system. Furthermore, at a meaningful but moderate carbon price of up to $27 per metric ton of carbon equivalent (a price level projected by EPA), no cropland is expected to be converted to forests and grassland. However, under EPA regulation, carbon prices could go up to $160 per ton and lead to the conversion of as much as 60 million acres of cropland.
As Congress debates legislation that addresses climate change, lawmakers must establish a viable and equitable regulatory system that recognizes the contributions of farmers, ranchers and forestland owners. The University of Tennessee study shows that solutions from the land not only make good tools in the fight against climate change; they also benefit agriculture and forestry.
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