Transcript Policy Implications for Biofuels and Commodities.

Policy Implications for Biofuels and
Commodities
Midwestern Legislative Conference
Overland Park, Kansas
August 9, 2009
Chad Hart
Assistant Professor/Grain Markets Specialist
[email protected]
515-294-9911
Department of Economics
250
Dept. of Energy Projections
Billion gallons
200
150
100
50
0
2010
2015
2020
Gasoline/Ethanol
Department of Economics
2025
2030
Diesel/Biodiesel
Source: Energy Information Administration,
Annual Energy Outlook 2009
Dept. of Energy Projections
40
35
Billion gallons
30
25
20
15
10
5
0
2010
Domestic Ethanol
Department of Economics
2015
2020
Imported Ethanol
Biodiesel
2025
2030
Liquids from Biomass
Source: Energy Information Administration,
Annual Energy Outlook 2009
Renewable
Fuels
Standard
(RFS)
40
35
Billion Gallons
30
25
20
15
10
20% GHG Emission Reduction
If construction started after Dec. 2007
5
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
0
Conventional Biofuels
Cellulosic Biofuels
Biodiesel
Additional Advanced Biofuels
Department of Economics
Dept. of Energy Projections
Department of Economics
Source: Energy Information Administration,
Annual Energy Outlook 2009
Draft Lifecycle GHG Reductions
Source: EPA, May 2009
Department of Economics
Draft Lifecycle GHG Reductions
Source: EPA, May 2009
Department of Economics
CARB Fuel Carbon Values
Source: CA Air Resources Board, Summer 2009
Department of Economics
CARB Fuel Carbon Values
Source: CA Air Resources Board, April 2009
Department of Economics
Climate Change Legislation
American Clean Energy and Security Act of 2009 (H.R. 2454)
• Requires utilities to supply an increasing percentage of their demand
from a combination of energy efficiency savings and renewable
energy (6% in 2012, 9.5% in 2014, 13% in 2016, 16.5% in 2018, and
20% in 2021-2039).
• Provides for issuing, trading, banking, retiring, and verifying
renewable electricity credits.
• Establishes targets to cap and reduce greenhouse gas (GHG)
emissions, annually, so that GHG emissions from capped sources
are reduced to 97% of 2005 levels by 2012, 83% by 2020, 58% by
2030, and 17% by 2050; and establish a federal GHG registry.
• Provides for trading, banking and borrowing, auctioning, selling,
exchanging, transferring, holding, or retiring emission allowances.
Source: Congressional Research Service
Department of Economics
Climate Change Legislation
Agriculture provisions in the bill
• Provides some exemptions from the GHG emission reduction
requirements for agriculture and forestry
• Provides incentive-based approach to GHG emission
reduction/capture
• Allows USDA to help establish eligible GHG offset practices and
review of those practices
• Shifts question on indirect-land-use to an independent panel for study
with EPA and USDA to review in the future (with a rule to be in place
6 years after passage)
• Allows for a specific exemption for livestock (enteric fermentation
from ruminant animals) from uncapped emissions guidelines
Department of Economics
Source: Craig Raysor, Gillon & Associates, PLLC
Climate Change Legislation
Department of Economics
Source: USDA, Office of Chief Economist
“A Preliminary Analysis of the Effects of HR2454 on U.S. Agriculture”
Climate Change Legislation
“Since farming is energy intensive, it will be hit hard by
Waxman-Markey's energy price hikes. In addition to higher
diesel fuel and electricity costs, prices for natural gas-derived
fertilizers and other chemicals will also rise. Everything else
affecting agriculture, from the cost of constructing farm
buildings to the price of tractors and other farm equipment, will
also go up. Consequently, farm profits are expected to decline
by 28 percent in 2012 and will be an average 57 percent lower
from 2012-2035.”
Department of Economics
Source: Ben Lieberman, Heritage Foundation,
July 21, 2009
Climate Change Legislation
“Ultimately, greenhouse gas emissions are probably going to
be regulated, whether Congress acts or not. In 2007, the
Supreme Court ruled that the Environmental Protection
Agency has the authority under the Clean Air Act to regulate
greenhouse gas emissions if they are found to endanger public
health or welfare. The Supreme Court required EPA to
determine if they are a public health hazard or not, and earlier
this year, the EPA put out a proposed finding that says
greenhouse gas emissions are a danger to public health and
welfare.”
Department of Economics
Source: Rep. Collin Peterson (D-MN),
Hutchinson (MN) Leader, July 23, 2009
Thank you for your time!
Any questions?
http://www.econ.iastate.edu/faculty/hart/
Department of Economics