Cap and trade will impact many industries, including agriculture


WOOSTER, Ohio — Farmers and other businessmen have no reason to fear the concept of cap and trade, said an economist with Ohio State University.

During Ohio State University Extension’s recent agriculture outlook for 2010, environmental and resource economist Brent Sohngen said cap and trade is not climate change. Instead, it’s “a tool you would use if you decided to do something about the climate.”


Cap and trade is defined as a market approach to handling carbon emissions and other environmentally-damaging emissions. It works by setting an emissions standard, and rewarding businesses that produce the least amounts of emissions, with marketable energy credits that can be sold or traded to companies whose emissions exceed the standard (known as the cap).

Sohngen, who spoke before a crowd in late November about its affect on agriculture, called cap and trade “sound policy we can use for all kinds of environmental purposes that will reduce the costs of society to meet those same goals.”

Mixed views

But not everyone agrees, especially in the farm sector. Questions were raised following his presentation about whether such policy could hinder food production, especially in a time when world food demand appears to be rising, and some countries, like some in Africa, are starving.

But Sohngen said he thinks cap and trade can co-exist, partly because the world’s hungry are not necessarily hurting over a lack of supply — instead, because of inter-governmental and inter-country policy.

Other questions centered on how cap-and-trade policy would be monitored, and what kinds of changes farmers would need to consider.

Compliance concerns

Sohngen said farmers would likely need some type of brokers to monitor the trading of credits.

Ways farmers could participate include conservation measures, including leaving land fallow, and also growing carbon sequestering plants, such as trees, in place of usual field crops.

But tree planting and similar ideas concern livestock producers, who say it could limit the amount of feed available, and send feed prices even higher.

Industries respond

In a released statement, the American Farm Bureau Federation stated that cap-and-trade legislation would impose higher energy and food costs on consumers, raise fuel, fertilizer and energy costs for farmers and ranchers, and shrink the American agricultural sector, resulting in reduced U.S. food production.

“The consequences of climate legislation far outweigh the benefits and aren’t worth capping America’s future,” said AFBF President Bob Stallman.

The no-cap campaign

Farm Bureaus across the country are participating in “Don’t Cap Our Future,” a campaign where members sign a new farm cap with that slogan, and deliver their caps to their U.S. senators.

Ohio Coal Association also wrote a response to cap and trade, stating this policy will eliminate Ohio jobs and increase consumer prices or energy, especially electricity.

“The mandatory carbon-emission reductions outlined in this bill will bring deep cuts in coal production,” the association wrote. “Not only the coal industry is impacted, but all Ohio companies dependent upon competitive utility costs and all Ohioans who would pay higher electricity costs alike will see the far-reaching negative effects of this legislation.”

Concept looks familiar

The concept of cap and trade is nothing new, but if approved by Congress, U.S. participation would be.

In 1997, the Kyoto Protocol was formed — a treaty binding developed nations into a cap-and-trade program for major greenhouse gasses. The United States, however, did not ratify the treaty.

Cap and trade is a market concept, but has most recently been tied to the American Clean Energy and Security Act of 2009, known also as the Waxman-Markley comprehensive energy bill.

Included in its standards is a reduction of economy-wide greenhouse gas emissions of 17 percent, by 2020. The bill was narrowly approved by the U.S. House of Representatives in June, and awaits the Senate’s decision.

Get our Top Stories in Your Inbox

Next step: Check your inbox to confirm your subscription.



We are glad you have chosen to leave a comment. Please keep in mind that comments are moderated according to our comment policy.

Receive emails as this discussion progresses.