Impacts of HR2454 from Independent Sources
Congressional Budget Office Cost Estimate
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Climate Change
Legislation would cost the average household only $175 a year by 2020
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The CBO said that
the poorest 20 percent of American households would actually receive a $40
benefit in 2020 from the legislation
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The richest 20
percent of households would see a net cost of $245 a year
The Effect of Higher Energy Prices from HR2454 on
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Analysis projects
production costs for the average MO farm producing:
l
Dryland corn
would only increase 3.2% by 2020, and 3.8% by 2030
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Irrigated corn
would only increase by 3.5% and 4.1%
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Soybeans by only
1.6% and 2%, respectively
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Summary: While
these represent increased production costs, the increases are modest;
especially considering no analysis was done of benefits to ag resulting from
offsets or larger renewable energy market opportunities
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Analysis on
impact of HR2454 on average IA corn and soybean farm
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Report projects
an increased production cost of $4.52/acre by 2020, which is roughly a 1.5%
increase
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Conclusion: If
the
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The analysis went
one step further and estimated that producers could make on average $8/acre for
switching to no-till alone and selling the resulting carbon benefits in the
offset market
l
Add in the
billions of dollars of revenue as a result of biomass, biogas, wind turbines,
and solar cells, and the rural/ag economic impacts looks better still
USDA: A Preliminary Analysis Of The Effects Of HR2454
On U.S. Ag
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In summary,
USDA’s analysis shows that the ag sector will have modest costs in the
short-term and net benefits – perhaps significant net benefits – over the
long-term
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Short-term impact
on net farm income is less than a 1% decrease, but ag offset markets may cover
these costs
l
Costs remain low
in part because of provisions that reduce the impacts of the bill on fertilizer
costs
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Medium-term and
Long-term costs to agriculture rise but remain modest
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3.5% and 7.2%
decreases in net farm income, respectively
l
However, benefits
to agriculture from an offsets market rise over time and will likely overtake
costs in the medium and long term
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Other studies
that account for the impact of higher energy prices on input substitution and
demand for bio-energy find that HR2454 leads to higher ag incomes, even without
offsets
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Analysis
concludes that the Waxman-Markey energy and climate legislation will cost
Americans roughly the same as a postage stamp a day
l
Analysis projects
an annual increase in costs of about $83 (adjusted for inflation) by 2030, or
roughly 23 cents a day
Duke
University Nicholas Institute For Environmental Policy Solutions:
The Effects of Low-Carbon Policies on Net Farm
Income
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On net, the
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Analysis looks at
$15/tCO2e, $30/tCO2e, and $50/tCO2e and shows the
average per-acre cost of GHG-intensive input use would increase 0.85%, 2.94%,
and 5.65% per acre, respectively
l The gains in indirect revenues are the largest component of
additional revenue, amounting to approximately $10–$36 billion per year
l Direct GHG payments generate annualized revenues of
$1.77–$18.11 billion per year
l Overall, the revenue gained from direct (offsets) and indirect
(increased commodity markets and renewable energy and bio-mass benefits) revenues
could substantially exceed the relatively moderate increases in energy based input
costs
Provisions of HR2454 for U.S. Representative Farms
Ø In general, the feedgrain/oilseed farms located in or
near the Corn Belt and wheat farms located in the
l
The
analysis utilized the EPA estimated energy price changes, as well as, their
estimates of carbon and ag commodity prices to evaluate the farm level impacts
of HR2454 and assumed that a fee structure similar to that used by the Chicago
Climate Exchange (CCX) would likely be imposed under HR2454 for CO2e trading
l
two NE
farms used in this analysis, which had an average annual revenue generated from
selling CO2e (2010-2016) of $10,337.80 on a 1,960-acre grain farm &
$22,097.80 on 4,300-acre grain farm.The two
l Rotational grazing and new grass seeding
carbon credits were not accounted for in the studytwo NE farms used in this analysis, which had an average
annual revenue generated from selling CO2e (2010-2016) of $10,337.80 on a
1,960-acre grain farm & $22,097.80 on 4,300-acre grain farm.two NE farms
used in this analysis, which had an average annual revenue generated from
selling CO2e (2010-2016) of $10,337.80 on a 1,960-acre grain farm &
$22,097.80 on 4,300-acre grain farm.
