1. Climate Change Legislation & Agriculture
2010 Nebraska Beef Feedlot Roundtables 1

2. Climate Change
Source:

3. Climate Change
Source: Congressional Budget Office

4. 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,
S. 1733, Clean Energy Jobs and American Power Act
Introduced 9/30/09, In committee (actually, six committees)

5. U.S. GHG Emissions Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

6. CO2 Emissions Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

7. CH4 Emissions Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

8. N2O Emissions Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

9. GHG Emissions by Sector
Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

10. Agricultural GHG Emissions
Source: EPA, Inventory of U.S. Greenhouse Gas
Emissions and Sinks:

11. 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 (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and 20% in ).
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.
Source: Congressional Research Service

12. Climate Change Legislation
Agriculture provisions in H.R. 2454
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
Allows for a specific exemption for livestock (enteric fermentation from ruminant animals) from uncapped emissions guidelines
Source: Craig Raysor, Gillon & Associates, PLLC

13. Lots of Analysis
The EPA has funded the development of several models that are capable of examining the impact of this bill and other similar bills
The environmental economists who worked on these models are very well respected and the work is sound
However, the only certainty in the bill is the limit on carbon, everything else is assumption driven
Source: ISU, Dermot Hayes presentation, Oct. 2009

14. 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

15. Energy Sources
Source: EPA Analysis of H.R. 2454, June 23, 2009

16. GHG Emissions & Abatements
Source: EPA Analysis of H.R. 2454, June 23, 2009

17. Domestic Offsets Implementing regulations not yet written
Uncertainty about how the offsets would work in agriculture, particularly for conservation tillage, but the intention is clearly to use these offsets as a way to stimulate agricultural incomes
Consideration of leakage is prohibited pending a study
Heavy reliance on the growth of trees on pasture and crop land
Source: ISU, Dermot Hayes presentation, Oct. 2009

18. Domestic Offsets
Source: EPA Analysis of Waxman-Markey,
April 20, 2009

19. Domestic Offsets
Source: ISU, Dermot Hayes presentation, Oct. 2009

20. Shifting Land Patterns
Source: EPA, “Greenhouse Gas Mitigation Potential
in U.S. Forestry and Agriculture”, Nov. 2005

21. International Offsets
Must be a developing country that is a member of a unilateral or multilateral 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
Source: ISU, Dermot Hayes presentation, Oct. 2009

22. Allowances
2030
2016
Source: Congressional Research Service, June 2009

23. Carbon Prices Increase Over Time
Source: EPA Analysis of H.R. 2454, June 23, 2009

24. Prices Are Sensitive to Offsets
Source: EPA Analysis of H.R. 2454, June 23, 2009

25. Energy Price Paths
Source: EPA Analysis of H.R. 2454, June 23, 2009

26. Impacts on an Average Household
Source: EPA Analysis of H.R. 2454, June 23, 2009

27. Comparison of Results Allowance Price
Source: ISU, Dermot Hayes presentation, Oct. 2009

28. Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
the American Clean Energy and Security Act of 2009 On U.S. Agriculture”

29. Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
the American Clean Energy and Security Act of 2009 On U.S. Agriculture”

30. Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
the American Clean Energy and Security Act of 2009 On U.S. Agriculture”

31. Climate Change Legislation Analysis
Source: USDA, Office of Chief Economist, “The Impacts of
the American Clean Energy and Security Act of 2009 On U.S. Agriculture”

32. Concluding Thoughts
The potential for cropland conversion points to higher crop prices and feed costs
Crop prices and feed costs will likely track carbon prices
Cropland and pasture conversion will benefit landowners through higher rents
Agriculture will experience the benefits and the costs of climate change legislation

33. Thank you for your time! Any questions?