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Thursday, December 31, 2009

HEARING OF THE SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE SUBJECT:ECONOMIC OPPORTUNITIES FOR AGRICULTURE, FORESTRY COMMUNITIES, ANDOTHERS IN REDUCING GLOBAL WARMING POLUTION CHAIRED BY: SENATOR BARBARABOXER (D-CA) WITNESSES: JEFFREY HOPKINS, PRINCIPAL ADVISER, ENERGY ANDCLIMATE POLICY, RIO TINTO; BILL HOHENSTEIN, DIRECTOR, GLOBAL CLIMATECHANGE PROGRAM, DEPARTMENT OF AGRICULTURE; FRED KRUPP,... (Part13).(Congressional Hearing).

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HEARING OF THE SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE SUBJECT: ECONOMIC OPPORTUNITIES FOR AGRICULTURE, FORESTRY COMMUNITIES, AND OTHERS IN REDUCING GLOBAL WARMING POLUTION CHAIRED BY: SENATOR BARBARA BOXER (D-CA) WITNESSES: JEFFREY HOPKINS, PRINCIPAL ADVISER, ENERGY AND CLIMATE POLICY, RIO TINTO; BILL HOHENSTEIN, DIRECTOR, GLOBAL CLIMATE CHANGE PROGRAM, DEPARTMENT OF AGRICULTURE; FRED KRUPP, PRESIDENT, ENVIRONMENTAL DEFENSE FUND; BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU FEDERATION LOCATION: 406 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C. TIME: 10:00 A.M. EDT DATE: TUESDAY, JULY 14, 2009(Part 13)

SEN. JOHN BARRASSO (R-WY): Thank you very much, Madame Chairman.

Mr. Stallman, if I could, in your testimony you said that any climate change legislation will also impose additional costs on all sectors of the economy -- will result in higher fuel, higher fertilizer, higher energy costs to farmers and ranchers across the country. And you also quoted EPA Administrator Lisa Jackson saying that the "U.S. action alone will not impact CO2 levels." What are farmers and ranchers across the country suppose to think of this logic? I mean, if passing a bill doesn't solve climate change, yet dramatically increases their costs of doing business. Does the Ag community think Washington is out of touch with what is happening? When I go back home, talk to ranchers, talk to farmers in Wyoming, they are very concerned. What are you hearing from the farmers and ranchers across the country?

MR. STALLMAN: Well, I'm hearing that concern specifically about the Waxman-Markey bill, about the potential for costs without any return. The cost benefit analysis, the costs were clearly there with mandated restrictions on the use of carbon in a carbon economy. And the benefits, you know, nothing will happen with regards to climate change. Lisa -- Administrator Jackson has indicated that. We actually do have a solution in our policy; and it's a voluntary cap and trade.

It's a true market solution, it's not a market where government mandates restrictions; and then let's the marketplace work. A voluntary cap and trade would allow companies to do what they would with carbon reductions. And then, the consumers and our citizens would pay with their dollars, if that is what they desire to have happen. Our consumers and citizens would pay with their dollars to support those companies who reduce carbon emissions. That would be an indication of the will of the people. And it would also be a true market solution; and our policy supports that.

SEN. BARRASSO: Senator Udall mentioned the concept of the winners and losers in the Ag community of the Rocky Mountain West; and then people across the country under this Waxman-Markey cap -- the bill. The -- I mean I worry about Western ranchers, whose operations are heavily dependent on the use of federal lands for livestock, as well as very limited opportunity for offsets. As you talk about -- these ranchers are constrained in the types of grazing practices they can employ on federal lands. Federal lands themselves don't qualify for offset opportunities.

The majority of the West is federal land. I can't see how the agriculture community in the Intermountain West states could possibly survive under this bill given, you know, your testimony today. Are these the intended consequences or the unintended consequences you think of this bill in terms of the impact on our ranchers on federal land?

MR. STALLMAN: Well, I don't believe anyone set out to have those consequences. So there are unintended consequences, but they're very real. And the few agricultural organizations that support the Waxman- Markey bill, they gloss over the fact that the benefits of the agricultural offsets program included in there -- it's varied across the country. And your example of what happens to ranchers, who are on federal lands -- they have no opportunities for real offsets. And yet, they have to eat up the additional -- or absorb the additional energy costs that will be created.

And so, that's what we're facing. We're facing with only a few instances of agricultural producers being able to participate in offsets, which according to our analysis, would not offset their increased energy costs any way. It just makes it better than it would have been. But then some producers, as those you've indicated, fruit and vegetable producers and others, aren't going to have any real opportunity to participate in the offsets markets. And that makes it even worse for them.

SEN. BARRASSO: Do you think this bill can be perfected to the point where energy and input costs would be beneficial to farmers and ranchers? Or do you think that we -- that there is no way to do that?

MR. STALLMAN: Under the current structure and what it portends for cost increases in the energy sector, I think it will be very difficult. I think we will continue to work to find provisions; and working with Senator Harkin, over here on the Senate side, to improve the bill on behalf of agriculture. And there are things that can be done overall, as I talked about earlier, about having more specific ways of plugging that energy home (ph).

The number of nuclear reactors that are proposed that will occur under the Waxman-Markey bill were basically on the assumption that carbon costs get high enough to cause those to be cost effective; and that they will be billed. We could maybe have a different model where we support a different regulatory structure for citing and approving nuclear reactors that will perhaps make the process quicker. So we could close that energy gap. So there are some things that can be done that are missing we think in the Waxman-Markey bill.

We still have to worry about this international competitiveness issue for farmers and ranchers. Those ranchers that you are talking about are competing in the international marketplace. And if their costs are higher, and those costs are solely imposed in the United States, and our competitors overseas don't have those same restrictions because those governments refuse to accept mandates -- which many have said that they will. Other than that, it just puts us in an international competitiveness nightmare in us being able to sell our products overseas. So that's another clear concern that we hope we can address in the Senate version.

SEN. BARRASSO: Thank you, Mr. Stallman.

Thank you, Madame Chairman.

SEN. BOXER: Thank you. And I hope you know we will look forward to working with you on those issues.

Senator Udall.

SEN. TOM UDALL (D-NM): Thank you, Madame Chair.

You know, when we talk about this issue and the discussion has been that you're putting a price on carbon; you're increasing the cost on fuel. We forget where we were last summer when we had $4 gasoline. And I was out Madame Chair, and I'm sure you were in the agricultural community, in the farming community. And people were telling us they were going to go broke -- that they were really hurting in terms of the cost of oil and the impact on them.

And the only reason economists tell us we aren't at $4 gasoline right now is we have a worldwide recession, which we haven't said since World War II. And we have a deep recession here in the United States. And so, to somehow assume that we're just going to sit here and that the cost of gasoline today is going to stay stable for the next 10 or 15 years; is I think an absolute fantasy. So we should be focusing on how we get out of that box. And the reason we're in the box is because we are overly dependent on foreign oil to the tune of -- we're headed towards 70 percent dependence on foreign oil.

And the oil that is left in the world -- we're talking about over two-thirds of it, over 66 percent is in six Middle Eastern countries, Russia and Iran; and we have three percent. So, we're in a very, very difficult situation in terms of how we move forward with developing our oil resources. And many of us are for developing our oil resources, but we only have three percent.

So the vision, I believe -- and Mr. Krupp, I'd like you to comment on this. The vision I think most of us have is that through putting a price on carbon, we move ourselves in a new direction. Our over dependence on foreign oil, we try to do something about that. We move ourselves in a direction of a renewable economy. And by the way, when we talk about a low-carbon-fuel standard, we actually have a low- carbon-fuel standard in place. We put it in place in 2005 and 2007 in the energy legislation. It's called the Renewable Fuel Standard, which we are expanding on and improving upon.

So let's not pretend we don't have a low-carbon-fuel standard in place. And that we're trying to generate those kinds of renewable fuels. But Mr. Krupp, I wish you could comment a little bit on where -- this contrast of dependence on foreign oil, we're headed down this road of becoming more dependent. And where you see -- where you see putting a price on carbon taking us; and you know, what opportunities it opens up for us in some job potential and all of those kinds of things, please.

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Source Citation
"HEARING OF THE SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE SUBJECT: ECONOMIC OPPORTUNITIES FOR AGRICULTURE, FORESTRY COMMUNITIES, AND OTHERS IN REDUCING GLOBAL WARMING POLUTION CHAIRED BY: SENATOR BARBARA BOXER (D-CA) WITNESSES: JEFFREY HOPKINS, PRINCIPAL ADVISER, ENERGY AND CLIMATE POLICY, RIO TINTO; BILL HOHENSTEIN, DIRECTOR, GLOBAL CLIMATE CHANGE PROGRAM, DEPARTMENT OF AGRICULTURE; FRED KRUPP,... (Part 13)." Congressional Hearing Transcript Database 16 July 2009. Academic OneFile. Web. 31 Dec. 2009. .


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