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USA farmers nervous about emissions trading

- Thursday, May 28, 2009

Farmers in the USA were initially enthusiastic about the proposed introduction of a US emissions trading scheme, seeing it as an opportunity to be paid for agricultural offsets, however a degree of nervousness has set in as the Waxman-Markey Bill has started its progress through the legislature.

The reason for the nervousness is that the Bill currently does not explicitly recognise agricultural offsets, and farmers are nervous that if these are not expressly mentioned in the legislation, they may not be adopted as legitimate offsets. This would mean that the ETS would impose additional costs on farmers (through higher energy and fertiliser costs) but would not bring any balancing benefits - such as payments for changes in farm practices that can be sold as emission offsets.

In contrast to Australia, there is no proposal to include agricultural emissions in the USA scheme. This means US farmers will not be required to calculate their farm emissions and pay the cost of emission permits for these. The Australian Government has said this will not happen in Australia before 2015, but that it is likely a cost of some form will be imposed on direct farm emissions after 2015.

The US legislation (the Waxman-Markey Bill) has a long way to go in terms of legislative progression. It is estimated (see discussion here) that up to eight other Committees will examine (and amend) the Bill before it goes to a vote on the floor of House of Representatives. This is anticipated some time in June or July. The Bill will then have to go before the Senate and its committees, and then finally will require Presidential approval before it becomes law.

As the USA has not ratified the Kyoto Protocol (and some would suggest is never likely to because ratification would have to be endorsed by the House and the Senate) it is not bound by Kyoto Protocol emission accounting rules. This means agricultural offsets (such as the adoption of minimum tillage) can be recognised within the US ETS if included in the legislation. Australia's ratification of the Kyoto Protocol has precluded recognition of most agricultural offsets, unless accounting rules are changed after 2012, when the Protocol expires.

Blinky Bill commented on 28-May-2009 03:13 PM
Does this tell us something about the relative strengths of the US and Australian farm lobbys? In Australia farm groups hope at best to limit the damage of government policy, while the US farm lobby aims to maximise the benefits and subsidies with every new piece of legislation.

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