1. Department of Economics Policy Implications for Biofuels and Commodities Midwestern Legislative Conference Overland Park, Kansas August 9, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Department of Economics Dept. of Energy Projections Source: Energy Information Administration, Annual Energy Outlook 2009

3. Department of Economics Dept. of Energy Projections Source: Energy Information Administration, Annual Energy Outlook 2009

4. Department of Economics Renewable Fuels Standard (RFS) 60% GHG Emission Reduction 50% GHG Emission Reduction 20% GHG Emission Reduction If construction started after Dec. 2007

5. Department of Economics Dept. of Energy Projections Source: Energy Information Administration, Annual Energy Outlook 2009

6. Department of Economics Draft Lifecycle GHG Reductions Source: EPA, May 2009

7. Department of Economics Draft Lifecycle GHG Reductions Source: EPA, May 2009

8. Department of Economics CARB Fuel Carbon Values Source: CA Air Resources Board, Summer 2009

9. Department of Economics CARB Fuel Carbon Values Source: CA Air Resources Board, April 2009

10. Department of Economics Climate Change Legislation Source: Congressional Research Service 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 (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 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, 83% by 2020, 58% by 2030, 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.

11. Department of Economics Climate Change Legislation Source: Craig Raysor, Gillon & Associates, PLLC Agriculture provisions in the bill Provides some exemptions from the GHG emission reduction requirements for agriculture and forestry Provides incentive-based approach to GHG emission reduction/capture Allows USDA to help establish eligible GHG offset practices and review of those practices Shifts question on indirect-land-use to an independent panel for study with EPA and USDA to review in the future (with a rule to be in place 6 years after passage) Allows for a specific exemption for livestock (enteric fermentation from ruminant animals) from uncapped emissions guidelines

12. Department of Economics Climate Change Legislation Source: USDA, Office of Chief Economist “A Preliminary Analysis of the Effects of HR2454 on U.S. Agriculture”

13. Department of Economics Climate Change Legislation Source: Ben Lieberman, Heritage Foundation, July 21, 2009 “Since farming is energy intensive, it will be hit hard by Waxman-Markey's energy price hikes. In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise. Everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also go up. Consequently, farm profits are expected to decline by 28 percent in 2012 and will be an average 57 percent lower from 2012-2035.”

14. Department of Economics Climate Change Legislation Source: Rep. Collin Peterson (D-MN), Hutchinson (MN) Leader, July 23, 2009 “Ultimately, greenhouse gas emissions are probably going to be regulated, whether Congress acts or not. In 2007, the Supreme Court ruled that the Environmental Protection Agency has the authority under the Clean Air Act to regulate greenhouse gas emissions if they are found to endanger public health or welfare. The Supreme Court required EPA to determine if they are a public health hazard or not, and earlier this year, the EPA put out a proposed finding that says greenhouse gas emissions are a danger to public health and welfare.”

15. Department of Economics Thank you for your time! Any questions? http://www.econ.iastate.edu/faculty/hart/