Climate-Change Shake-Up

January 13, 2010 09:52 AM

Would you take corn and soybean acres out of production to plant trees? Probably not in today's commodity market environment.

A new analysis of climate-change legislation signals that by 2050, with carbon credit prices at $70 per ton, 60 million acres would shift from crops or pasture ground into tree plantings. The potential swing in cropping patterns has sent ripples throughout the ag industry.

USDA Secretary Tom Vilsack raised questions about the time-liness of the analysis after it was released in December. He has directed USDA Chief Economist Joe Glauber to work with the Environmental Protection Agency (EPA) to update the Forestry and Agricultural Sector Optimization Model (FASOM) that produced the analysis.

"What is concerning to me is that Secretary Vilsack says there's probably more current information out there … more thorough information,” says senator and former USDA Secretary Mike Johanns (R-Neb.). "Isn't it the responsibility of the Agriculture Secretary to have the most thorough information?”

Questioning Motives. Johanns isn't alone in voicing his worries. The ranking Republicans on the House and Senate Ag Committees—Rep. Frank Lucas (Okla.) and Sen. Saxby Chambliss (Ga.)—penned a letter to Vilsack, noting: "Moving forward with flawed studies will result in bad policy and legislation.”

It's interesting that Vilsack is suddenly questioning the results of the updated analysis, says Jim Wiesemeyer of Informa Economics.

"This brings into question the quality of the vetting process throughout the Barack Obama administration,” he continues.

Endangerment Finding. Passage of climate legislation is not likely in 2010, due in part to a newly released EPA endangerment finding on greenhouse gases (GHG). While the agency says the finding doesn't mean it will regulate emissions of these compounds, it opens the door to go down the regulatory road in lieu of legislative action.

For example, the rule provides the foundation for EPA to regulate GHGs—which means the agency will be able to tell farmers that they can emit only a certain level of GHGs, says Tamara Thies, chief environmental counsel for the National Cattlemen's Beef Association.

"Instead of letting the issue of climate change be addressed through the proper democratic legislative process, EPA has decided to trump Congress and mandate greenhouse gas regulation under the Clean Air Act,” Thies says.

Carbon Credits Could Shift Acres
Highlights from the Forestry and Agricultural Sector Optimization Model, an economic analysis developed by researchers at Texas A&M University, include:
• Credits worth $13 per ton of CO2 sequestered would convert 8 million acres to trees by 2015.
• Credits worth $70 per ton of CO2 would convert 60 million acres to trees by 2050.
• Nearly all additional forestation would occur in the Corn Belt and the Great Lakes, Rocky Mountain and South-Central states.
• Corn and soybean production would decline 3.5% and 1.4%, respectively, in 2015.
• By 2050, there would be 22% less corn and 29% less soybeans.


Top Producer, January 2010

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