Magagna outlines cap and trade’s negative impacts on agWritten by Christy Hemken
The hearing was hosted by the House and Senate Western Caucus, which is composed of 20 members who have come together to work on Western issues. Senator Barrasso (R-Wyo.) chairs the committee on the Senate side, while Representative Rob Bishop (R-Utah) chairs the House side.
The American Clean Energy Act of 2009, sponsored by Representative Henry Waxman (D-Calif.) and Representative Edward Markey (D-Mass.), and therefore commonly referred to as the Waxman-Markey Bill, would increase U.S. energy prices 20 percent by 2030, according to the Energy Information Administration.
In addition, critics claim there will be significant negative impacts to U.S. jobs, contrary to the Obama administration’s claim that the new law would create two million new “green jobs.”
Magagna says the hearing was spurred by a Senator from California who’s brought witnesses to testify in support of the bill, with no opportunity for those who oppose it.
“The Caucus decided to have their own hearing to call some attention to all the concerns regarding this legislation,” says Magagna.
He says there were seven individuals who were called to testify before the group, and he was the representative for agriculture in the West. Others represented the Heritage Foundation, the eastern coal industry, Deseret Power of Utah, among others.
From the hearing the Caucus will put together a report including both written and oral testimony that will be used as a tool to outline concerns in the debate as it moves forward.
“This testimony will be compiled and used to ensure that our side of the story gets told,” says Magagna.
“Some of the questions I got from members of the caucus show they really do understand this piece of legislation may do little or nothing in terms of climate change, but it has serious economic impacts,” says Magagna.
Magagna shared with the Caucus how the overwhelming prices of diesel, gasoline and propane in 2008 provide us with a preview of the impacts of high energy costs. “Many of my members who had already taken all feasible steps to drastically reduce their input costs began to plan their exit from production agriculture,” he says. “Fortunately, the relief in energy prices in 2009 has given them some renewed optimism.”
A WSGA member told Magagna, “These costs are already stifling growth and regular, necessary maintenance items. Any additional costs imposed by government are obviously another blow to any size business.”
According to Magagna, the EPA analysis of HR 2454 conservatively projects the impact of cap and trade legislation on energy prices for the period from 2015 to 2050. Price increases for electricity range from 10.7 percent in 2015 to 35.2 percent in 2050. For natural gas the corresponding increases are 7.4 percent and 30.9 percent while impacts on petroleum prices are projected at 3.2 percent and 14.6 percent. “Agriculture simply cannot absorb these incremental increases to already rising production costs in the light of current flat to declining prices for many commodities,” he told the committee.
Although per-acre energy costs may be almost negligible on open range livestock operations, Magagna says several factors contribute to high overall costs, including traveling long distances with livestock trailers to check livestock and water supplies, winter feeding with tractors and heavy equipment and rotational grazing systems on federal land grazing permits that require frequent livestock movement and more water supplies.
Magagna maintains that, while some of the added energy costs of processing and transporting agricultural products will be passed on to the consumer, much of the cost increase will be reflected in prices received by producers.
Regarding unintended environmental consequences, Magagna says, “Though the relationship remains tenuous and unproven, it is important to assess the broader environmental impacts of this legislation. As specifically related to agriculture, the economic costs of cap and trade will make it more difficult for some to continue and to enhance agricultural practices that haven proven environmental benefits.”
He lists two examples as rotational grazing, which has been shown to improve forage production with benefits to the environment and wildlife, including endangered species. “These management systems require more intense management, fencing, water development and regular movement of livestock. All of these activities will become significantly more costly under cap and trade,” he says.
As a second example he notes that ranchers currently spend $5,000 to $10,000 per well to convert from generators or undependable windmills to solar pumping. “Environmental benefits accrue both from less use of gas engines and less need to visit the pumping sites. However, the cost of solar pumping conversions can be expected to rise significantly in response to cap and trade,” he comments.
He says the testimony put a heavy focus on job losses. “The economists who were speaking didn’t see the President’s prediction of two million new green jobs happening.”
His testimony emphasized the impact on the ability of young ag producers to operate. He also noted the impact on supporting industries, including animal pharmaceuticals, fertilizers, feeds, farm equipment, fencing and tack. “While many of these jobs are located in manufacturing centers, a significant number are sales and support positions in the field,” he said in his testimony.
He continued, “As agriculture declines so do our small western communities. In many small towns in Wyoming the survival of local businesses—the tire shop, repair service, bank, grocery store—is dependent on the economic strength of the agricultural sector.”
“Agricultural jobs range from basic manual labor to highly skilled crop and livestock production positions,” he says. “For many individuals agricultural work is both a profession and a passion.”
“Agriculture holds multigenerational families together,” he continues. “When the agricultural operation ceases, these generational ties are lost, communities disintegrate and a critical skill-set disappears; our ability to feed ourselves as a nation is diminished. This is a price that our nation cannot afford to pay for a cap and trade system that is at best an uncertain response to unsubstantiated climate change concerns.”
“To me, there’s no more green job than a cowboy on his horse riding across the range managing his cattle in a responsible way,” says Magagna.