11 June 2009 21:29 [Source: ICIS news]
HOUSTON (ICIS news)--Higher farm input costs resulting from carbon reduction policies in proposed US energy legislation would drive producers of fertilizers and other critical farm support industries overseas, a group of agribusiness associations said on Thursday.
In a letter to US House Speaker Nancy Pelosi, the Agriculture Energy Alliance (AEA) said that as currently formulated, the American Clean Energy and Security Act of 2009 (HR 2454) would burden US farmers with significantly higher production costs.
Furthermore, the legislation would put producers of key agricultural inputs such as fertilizer and petroleum products at a serious competitive disadvantage and would force more production overseas to countries with no carbon reduction policies, the AEA said.
The bill does not provide farmers with the ability to recover cost increases through the sale of carbon offset credits, the AEA said.
The US agricultural sector is highly energy intensive and relies on natural gas, petroleum products and other energy inputs for food processing, irrigation, crop drying, heating farm buildings and homes, crop protection chemicals, and nitrogen fertilizer production.
The group said the legislation fails to recognise the support and benefits that agriculture, through best management practices, can provide related to the reduction of carbon emissions.
To that end, any cap-and-trade legislation must account for those benefits and allow farmers to earn the potential revenue from carbon sequestration trading to help offset increased input costs, the AEA said.
Protection for US business interests in the energy bill has support from all quadrants.
In testimony during a House subcommittee hearing on energy and the environment on 9 June, Nat Keohane of the Environmental Defense Fund said federal allocations raised through cap and trade should go to energy consumers - particularly low-income households.
In addition, the bill "should preserve and strengthen the international competitiveness of American businesses and workers during the transition to a clean energy economy".
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