On June 2, 2014, the U.S. Environmental Protection Agency, as part of President Obama’s Climate Action Plan, proposed a plan to cut carbon pollution from power plants by 30 percent by 2030. The official title of the proposal is: “Emission Guidelines for Greenhouse Gas Emissions from Existing Stationary Sources: Electric Utility Generating Units (EGU GHG Existing Source Guidelines). The proposal is focused on the electricity generating sector and does not include direct regulations or caps on the agricultural sector. As shown in the table below, electricity generation is responsible for approximately 1/3 of domestic emissions, while less than 10 percent is attributed to agriculture.

Domestic Emissions of Greenhouse Gases, by Sector (million metric tons of CO2 equivalent)

In the proposal announced this week, the EPA is proposing emission guidelines for states to use in developing plans to address greenhouse gas emissions from existing fossil fuel-fired Electricity Generating Units (EGUs). EPA is proposing state-specific rate-based goals for carbon dioxide emissions from the power sector. This rule, as proposed, would set in motion actions to lower the carbon dioxide emissions associated with existing power generation sources in the United States. States are provided flexibility and will ultimately determine their own approaches to comply with the goals established in this regulatory action, including cap and trade programs, which can involve agricultural practices as a provider of credits or offsets.

The proposed regulations are widely expected to be challenged in court as opponents contend that the regulations exceed the authority that EPA has under existing law. Legislation is also being introduced by Members of Congress to block the proposed regulations and could come in the form of amendments to the annual appropriations bills now moving through Congress.

In 2010, Congress rejected a national climate change emissions cap and trade plan. However, 10 states, including California and states in the Northeast and mid-Atlantic, have developed their own state or regional programs. By 2020 California is expected to collect about $5 billion a year in permit fees, with the bulk of the money being recycled into clean-energy projects. As part of its plan, California allows emission-lowering projects in sectors not covered by the cap-and-trade system, such as forestry and farming. These “offset projects,” which can be located anywhere in the United States, are subject to strict auditing and create credits that can be sold in the California market.

While the proposed regulations do not apply directly to agriculture, there is concern that adverse impacts could be felt by farmers via increased energy and fertilizer costs. Many Midwestern and northern plains states get much of their electricity from coal fired plants, which are the principal target of the proposed regulations. In an article for DTN/Progressive Farmer, reporter Chris Clayton posed the following pertinent questions:

How will they (agriculture) consider cap-and-trade programs and other emission reduction efforts pushed by EPA but run by the states? Will the flight to natural gas in the power-generation industry raise new complaints about fertilizer prices?

Can landowners gain some windfalls from investments in renewable energy? Windmills across the Midwest landscape and state renewable-energy portfolios would suggest so.

Can USDA and EPA make "ecosystem services" work for a wide swath of farmers? USDA has certainly embraced tenets of soil health through no-till or minimum-tillage practices. The Natural Resources Conservation Services is doing more to promote cover crops as are a growing number of state programs that are meant to improve water quality.

Is it possible to meld programs into USDA's eight critical conservation areas to offset carbon emissions while achieving the goals of those different regions? The eight conservation areas under the Regional Conservation Partnership Program are the California Bay Delta, Chesapeake Bay, Colorado River basin, Columbia River Basin, Great Lakes, Longleaf Pine Range in the Southeast, the Mississippi River basin and Prairie Grasslands in the plains.

The American Soybean Association (ASA) will continue to monitor the climate change proposals and discussions to ensure that the impacts to soybean farmers are appropriately recognized and considered. ASA will also continue to support and promote ways in which soybean farmers can or could contribute to reduced emissions, such as expanding production and consumption of biodiesel and biobased products, utilization of biotechnologies that result in more efficient soybean production, and investments in transportation infrastructure that reduces emissions through more efficient movement of commodities.