Chad Hart, Far right, an Iowa State University assistant professor, participated in the recent ag outlook and management seminar in Sac City, and shared his insights on how climate change legislation might affect U.S. agriculture.

SAC CITY – As President Obama prepares to head to Copenhagen, Denmark, for the global climate change conference in December, it’s important to understand how proposed climate change legislation will affect agriculture in the United States and Iowa.

“Greenhouse gas rules are coming, whether you believe in global warming or not,” said Chad Hart, an Iowa State University assistant professor and grain market specialist.

H.R. 2454, the American Clean Energy and Security Act of 2009, passed in the U.S. House on June 26, by a vote of 219 to 212. While there are many unknowns with climate change legislation, the House bill will hit everyone, said Hart, who noted that it’s not clear yet how the Senate’s version of climate change legislation will affect agriculture.

“The entire economy will feel the effects of the House bill, because it does mean significantly higher energy prices.”

While there are a wide variety of estimates on what climate change legislation could do to U.S. agriculture, farming will be especially hard hit by energy price hikes, according to ISU research. In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise.

In addition, everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also rise. Consequently, farm profits are expected to decline by 28 percent in 2012 and will be an average of 57 percent lower from 2012 to 2035.

While the direct impact on corn production costs has been calculated at 6 to 8 percent due to higher energy and fertilizer costs, the actual increase could be twice this amount, according to U.S. Department of Agriculture and the Food and Agricultural Policy Research Institute, which is a joint effort of ISU’s Center for Agricultural and Rural Development and the University of Missouri-Columbia.

In addition, livestock producers will face higher utility costs. The total for these two impacts is about $3.50 per hog by 2030, with benefits of about $1.50 per hog for fertilizer displacement and/or manure offsets, according to a budget-based analysis.

Congress wants to write the rules

Europe already has some climate change laws on the book to address GHG issues, Hart said. Here at home, the U.S. Environmental Protection Agency has the authority to regulate GHGs, via the Clean Air Act, although Congress would like to set the rules, he noted.

While agriculture has been linked to 5 percent of GHG emissions, agriculture wasn’t mentioned originally in H.R. 2454, a 1,500-page bill. However, the original bill establishes targets to cap and reduce GHG emissions annually, so that emissions from capped sources are reduced to 97 percent of 2005 levels by 2012, 83 percent by 2020, 58 percent by 2030 and 17 percent by 2050.

The bill also provides for the trading, banking, borrowing, auctioning, selling, exchanging, transferring, holding or retiring of emission allowances.

In addition, the bill requires utilities to supply an increasing percentage of their demand from a combination of energy efficiency savings and renewable energy.

When a 50-page amendment was made to H.R. 2454, the following provisions addressed agriculture:

• Provide some exemptions from the GHG emission reduction requirements for agriculture and forestry.

• Provide incentive-based approach to GHG emission reduction/capture.

• Allow USDA to help establish GHG offset practices. USDA would partner with EPA on this, Hart said.

• Allow for a specific exemption for livestock (enteric fermentation from ruminant animals) from uncapped emissions guidelines. “This means the EPA can’t make a ‘cow tax,’ even if they wanted to,” said Hart, who added that EPA has long taken the stand that it will only regulate man-made issues, not natural processes.

The only certainty in the bill is the limit on carbon, added Hart, who noted that everything else is assumption-driven. These assumptions include the U.S. economy remaining on a slow growth path for energy consumption, and the fact that coal-fired plants will be largely shut down and replaced by nuclear power plants.

This will require 100 new nuclear plants in 40 years, Hart said. “I’m 40 years old, and there hasn’t been a nuclear plant built in my lifetime, due to the public’s concerns about nuclear energy. If nobody wants a nuclear plant in their backyard, how are we going to build nuclear plants in 100 backyards?”

The House bill’s assumptions also place enormous reliance on international and domestic offsets. Domestic offsets promote a heavy emphasis on the growth of trees on pasture and cropland.

“Instead of growing an acre of corn, you would grow an acre of trees,” said Hart, who noted that rental values for U.S. cropland used to grow trees would take into account carbon prices, in terms of dollars per ton. While there is uncertainty about how offsets would work in agriculture, particularly for conservation tillage, the intention is clearly to use these offsets as a way to stimulate agricultural incomes, Hart added.

On a global scale, international offsets must involve a developing country that is a member of a unilateral or multilateral emissions reduction agreement with the United States. They must have the technical capacity to monitor, measure, report and verify forest carbon fluxes resulting from deforestation.

In addition, they must have the capacity to reduce emissions from deforestation, including strong forest governance.

In many cases, the international component of climate change legislation comes down to money changing hands.

Consider China, Hart explained, whose economy grew 6 percent this year and has experienced double-digit growth for the past 10 years.

“China sits on a lot of coal and it’s the cheapest fuel for them,” Hart said. “How do you get them to move away from coal when they want to continue growing their economy? It will take money changing hands.”

Contact Darcy Dougherty Maulsby by e-mail at yettergirl@yahoo.com.