Agriculture Industry Letter
to Senate
Re: American Power Act
Members of the Senate:
As a coalition of food, feed, ingredient, beverage, and consumer product processors,
manufacturers, distributors, and retailers, we respectfully provide you with our perspectives on the American Power Act (APA) recently introduced by Senators Lieberman and Kerry, and how climate change legislation may impact our ability to provide abundant and affordable food to all Americans.
Climate change legislation will have both direct and indirect impacts on the cost of food, feed, and household products. Although our facilities emit a very small fraction of national greenhouse gas emissions, we are disproportionately vulnerable to cap-and-trade legislation for two reasons. First, under the APA discussion draft, as in the House-passed climate legislation, no allowances are allocated to our industry, forcing our members to purchase allowances that are given to other industries for free. Second, our industry uses a significant amount of electricity, often for food safety measures, such as food heating and refrigeration, that cannot be altered. This leaves us disproportionately vulnerable to indirect costs in the form of higher electricity prices.
At this moment, the United States has the safest, most affordable, most abundant food supply in the world. But multiple studies, including those issued by the United States Department of Agriculture on the House-passed cap-and-trade bill, demonstrate that climate legislation could put domestic food production, and our nation’s food security, at risk. As a result, climate legislation must be carefully designed to avoid significantly increasing the price of food and other household products. Congress must consider the impact that raising the costs of these necessary items may have on American families, particularly during a time of economic hardship. For this reason, we have joined together to represent the views of this vital segment of our economy as Congress debates this important issue.
If a cap-and-trade approach is taken, we believe that climate legislation should employ the following principles:
- Allowances – The distribution of allowances should be based upon an industry’s historic emissions and additional allowances should be distributed to reflect early action reductions in emissions between 2000 and 2013. The APA fails to provide allowances to the manufacturers, distributors or retailers of food, feed, or household products, putting our industry at a significant economic disadvantage to other industries. A pro rata distribution of allowances would be fairer and would avoid the impression that the allowances represent subsidies to favored industries—an accusation that could diminish public acceptance of climate change legislation, subject the United States to World Trade Organization disputes, and expose American companies to retaliatory tariffs.
- Offsets – A viable offset system is essential to contain costs. Food processors, farmers, forest landowners, and others should be permitted to generate offsets, including efforts to capture methane either on the farm or through modifications to wastewater systems, to reduce the cost of allowances without unnecessary limitations on the quantity of available offsets. No distinction should be drawn between the use of domestic and international offsets, and no restrictions should be placed on the use of offsets by covered facilities. A well designed offset system should strike a balance between the need for affordable offsets and the need for productive farmland. It is key that the retirement of frequently cultivated farmland is limited. Sound climate change legislation should not pit our climate security needs against our food security needs.
- Preemption – The APA takes a positive step by pre-empting state cap-and-trade
programs, but comprehensive climate legislation should explicitly preempt EPA and state regulation for all sources, large and small, including EPA’s Clean Air Act authority to issue New Source Performance Standards for emissions of carbon dioxide and impose greenhouse gas controls on stationary sources through the New Source Review program.
- Threshold – If a cap is adopted, EPA should not be authorized to lower the threshold for the cap in the future. Capturing facilities emitting between 10,000 and 25,000 tons of carbon dioxide would more than double the number of facilities subject to the cap, but only increase the share of emissions subject to regulation by one half of one percent.
- Trade – Climate legislation should be designed to comply with our trade obligations. Climate legislation should not authorize the Administration to place border measures on goods imported from other nations that do not have equally stringent limits on GHG emissions. Instead, climate legislation should be contingent on Senate ratification of an international commitment to reduce greenhouse gas emissions that includes all major sources of emissions.
As you consider climate legislation, we urge you to carefully consider its impact on the price of food and household products. We believe that poorly considered legislation could increase food and feed prices and reduce the international competitiveness of our businesses. We would be pleased to discuss these or other issues related to climate change legislation with you or your staff in greater detail.
Sincerely,
American Bakers Association
American Feed Industry Association
American Frozen Food Institute
American Meat Institute
Grocery Manufacturers Association
Institute of Shortening and Edible Oils
International Dairy Foods Association
National Chicken Council
National Council of Farmer Cooperatives
National Meat Association
National Oilseed Processors Association
National Renderers Association
National Turkey Federation
North American Millers’ Association
Pet Food Institute
Snack Food Association
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