The first to consider is the EPA.  In short, a 2007 Supreme Court case decided that the EPA should regulate greenhouse gases (GHG) if they were found to be toxic. Two years later, in April of this year, the EPA found that not one, but six GHG’s pose threats to environmental and (thus) human health.  After 60 days of public consultation, a final EPA decisions will be delivered.

Now there’s the legislation bit. The cap and trade scheme, outlined extensively elsewhere – including on this blog, is having a tough time getting through congress. While not directly working together, the EPA’s decision probably boosts the likelihood of cap & trade passing. Why? Because the EPA’s progres essentially allows the regulation of GHG’s within existing laws. The Supreme Court carved out a seat for the EPA, a powerful one. Businesses and policymakers like to have seats at that table – they want (at least) a chance to influence. Congresspeople are now more likely to consider a bill to negate existing laws – within which the EPA holds power. This is not to say they want to strip the EPA of it’s authority – but they’d surely like to be part of the decision.

Edward Markey, the co-author of the cap & trade bill in the House, said: “It is no longer a choice between doing a bill or doing nothing. It is now a choice between regulation and legislation”. Indeed, perhaps cap & trade was a non-starter on it’s own. But maybe a little friendly competitino was all we needed to get some serious heads on this.

Eighty percent of US subsidies go to large farming businesses, however only 36 percent of Americans favor such subsidies while 61 percent oppose them. Opposition to subsidies for large farms was not substantively or statistically different among Republicans (62%), Democrats (60%), and independents (59%).

Here again views in farm states are not significantly different from the rest of the country. Only minorities approve of providing subsidies on a regular annual basis to small farms (39%) or large farms (13%). 

Seventy-seven percent of Americans do, however, favor providing subsidies to small farms (i.e. farms under 500 acres). Support is highest among Democrats (82%), followed by Republicans (73%) and then Independents (69%). Most small farms do not receive subsidies.

The public in farm states has views of farm subsidies that are little different than residents of non-farm states. In the 17 states that receive the largest amount of farm subsidies, just 35 percent of the public favors subsidies to large farming businesses, compared to 37 percent in non-farm states. There is support for subsidies for small farms in both farm states (79%) and non-farm states (75%).

Americans are also at odds with the way that farm subsidies are provided. Most subsidies are provided on a regular annual basis, independent of whether it was a good year or a bad year for the farmer. However only minorities of Americans think that subsidies should be provided on a regular annual basis, whether for small farms (37%) or large farms (15%).

There are two different realms of implication to consider. One is the alternative (local, organic, etc.)  food market, the other being international food markets. Interestingly, many objectives on both sides of the political aisle align with public opinion. 

On the one hand, the one-sided subsidies negatively impact small farmers, whose smaller scale is disfavored by traditional markets, policies, and infrastructures. In a system geared towards industrial, mass-scale production, smaller farmers need all the help they can get. And this isn’t just some specialty market to be left by the wayside. It is a thriving, growing sector to be taken seriously – and public opinion agrees.

And much to the contrast of local, small scale agriculture lies the international food arena. Many potential trading countries are opposed to trade agreements with the US on the grounds of inequitable agricultural systems. Best exemplified by Mexican corn markets post-NAFTA, it has become clear that the extent to which US agribusiness is bankrolled by the state is prohibitive in many sectors. 

While I’m not one to champion something for it’s free trade agreement (FTA) potential, I always love situations in which seeming opposites agree on the idiocy of the status quo. 

Obama has criticized existing subsidies, to the dismay of the strong farm lobby and it’s cornbelt funders. But this latest study does well to distinguish between monied interests and those of the general public. 

Scott Segal, director of the Electric Reliability Coordinating Council:

While EPA’s endangerment finding arises in the context of automobile emissions, the finding can have profound consequences for all industry in the United States.  Over 20 different industrial sectors are heavily dependent on traditional fossil fuels, and many more rely upon the products, feedstocks and commodities created by those industries.  The annual benefit of coal use alone has been estimated at more that $1 trillion in gross domestic product (GDP) and nearly 7 million jobs.

If reliance upon coal-fired generation were to diminish by a third as a result of EPA regulatory programs, GDP would be reduced by about $166 billion, household incomes by $64 billion, and employment by 1.2 million jobs.  To the extent green jobs are created, they would come only after severe trauma to the economy and would likely be lower-paying than the manufacturing jobs they displace.

Those in our economy least able to afford it would unfortunately be hurt the worst.  Americans living on fixed incomes, at or near the poverty level, pay a far greater percentage of their monthly income on energy bills.

While his is a reasonable reaction, I take issue with a couple of his points. First, he hardly acknowledges the focus of the EPA. The administration, quite clearly, is not interested in shutting down power plants, slashing GDP, and shipping jobs overseas.

The findings of the report, which comes after all major scientific orgs in the world have reported similarly, necessitate action. The approach is in the interest of transitioning from dirty, polluting, and indeed dangerous energy sources – to cleaner, more responsible, healthier sources. While many might argue that sheer levels of consumption is the culprit, those in power seldom dare suggest consumption cuts, especially in a recession.

So the figures of job loss and GDP reduction are unfounded, treating current sources as the only option, without which the country would crumble.

Segal goes on to comment on the burden placed on “Americans living on fixed incomes”. I’ve heard similar statements elsewhere with little explanation. There are programs in the proposed Cap & Trade scheme to ameliorate disproportionate energy price increases. I’ll look around for more on this, from either viewpoint.

STEPHANOPOULOS: Let me ask you then about energy. We showed your statement on the president’s decision through the EPA to regulate greenhouse gases. Also, you’ve come out against the president’s proposal to cap-and-trade carbon emissions. So what is the Republican answer to climate change? Is it a problem? Do you have a plan to address it?

BOEHNER: George, we believe that our—all of the above energy strategy from last year continues to be the right approach on energy. That we ought to make sure that we have new sources of energy, green energy, but we need nuclear energy, we need other types of alternatives, and, yes, we need American-made oil and gas.

STEPHANOPOULOS: But that doesn’t do anything when it comes to emissions, sir.

BOEHNER: When it comes to the issue of climate change, George, it’s pretty clear that if we don’t work with other industrialized nations around the world, what’s going to happen is that we’re going to ship millions of American jobs overseas. We have to deal with this in a responsible way.

STEPHANOPOULOS: So what is the responsible way? That’s my question. What is the Republican plan to deal with carbon emissions, which every major scientific organization has said is contributing to climate change?

BOEHNER: George, the idea that carbon dioxide is a carcinogen that is harmful to our environment is almost comical. Every time we exhale, we exhale carbon dioxide. Every cow in the world, you know, when they do what they do, you’ve got more carbon dioxide. And so I think it’s clear…

STEPHANOPOULOS: So you don’t believe that greenhouse gases are a problem in creating climate change?

BOEHNER: … we’ve had climate change over the last 100 years—listen, it’s clear we’ve had change in our climate. The question is how much does man have to do with it, and what is the proper way to deal with this? We can’t do it alone as one nation. If we got India, China and other industrialized countries not working with us, all we’re going to do is ship millions of American jobs overseas.

STEPHANOPOULOS: But it sounds like from what you’re saying that you don’t believe that Republicans need to come up with a plan to control carbon emissions? You’re suggesting it’s not that big of a problem, even though the scientific consensus is that it has contributed to the climate change.

BOEHNER: I think it is—I think it is an issue. The question is, what is the proper answer and the responsible answer?

STEPHANOPOULOS: And what is the answer? That’s what I’m trying to get at.

BOEHNER: George, I think everyone in America is looking for the proper answer. We don’t want to raise taxes, $1.5 to $2 trillion like the administration is proposing, and we don’t want to ship millions of American jobs overseas. And so we’ve got to find ways to work toward this solution to this problem without risking the future for our kids and grandkids.

STEPHANOPOULOS: So you are committed to coming up with a plan?

BOEHNER: I think you’ll see a plan from us. Just like you’ve seen a plan from us on the stimulus bill and a better plan on the budget.

I don’t think you can call that climate denial so much as climate confusion. It’s hard to believe that people are still stuck on these very rudimentary aspects of the energy discussion. Leave it to Boehner. That’s right, the findings of every major scientific organization are “almost comical”…

This, of course, comes after the recent EPA “finding” that C02 emmissions constitute a threat to health and safety. Profound, I know. Grist did a great job of aggregating some industry opinions.

From the American Petroleum Institute:

The proposed endangerment finding poses an endangerment to the American economy and to every American family. It could lead to greenhouse gas regulations under a law fundamentally ill-suited to addressing the challenge of global climate change. The regulations could impose complex, costly requirements on restaurants, colleges, schools, shopping malls, bakeries and many other businesses and institutions.

And from the Competitive Enterprise Institute, a concise little jab:

A more potent Anti-Stimulus Package would be difficult to imagine.

I trust more informed discourse is taking place… Right?

But regardless of the EPA’s plans, the Obama administration has set forth ambitious plans, including the cap & trade scheme, which would preceed any EPA actionn.  Personally, I much prefer leglislating energy policy than trying to regulate consumption administratively. A combination is likely a wise approach.

The extent to which the EPA will involve itself in energy regulation is yet to be announced. Early speculations, such as the following by Roger Martella – genearl counsel at EPA during Bush – suggest a very prominent role in carbon control:

The proposal, once finalized, will give EPA far more responsibility than addressing climate change. …It effectively will assign E.P.A. broad authority over the use and control of energy, in turn authorizing it to regulate virtually every sector of the economy.

 

 

That was when massively increased corn consumption by the ethanol industry sparked concerns that Americans were feeding their cars at the expense of poor people.

Not ethanol, but general energy-price increases hiked food-prices during that time, according to the report.

Aside from speculation and inquiry into the causes of food-price spikes – something I don’t trust the CBO to accurately research and report on – the report addresses the practical economics of ethanol production.

The exact break-even point for corn ethanol—without any subsidies–is when gasoline costs 90% of what a bushel of corn costs. That, the CBO says, has occurred precisely once in recent decades–in 2005.

That is the point at which ethanol is a viable competitor of gasoline.  With the massive government support for ethanol, the break-even point is reduced to about 70%.  Gasoline is currently worth about 37% of corn in futures markets….

Thus, ethanol depends on subsidization and expensive gas to become viable (ignoring impact on food prices). The cap & trade scheme will likely boost ethanol, regardless of any environmental or social impacts, with an increase in gas prices. The CBO cites a report finding ethanol to emit 20% fewer greenhouse-gas emissions than gasoline. If that is true, cap & trade would indeed boost ethanol’s viability.

I’m very skeptical of any “solution” that relies heavily on government’s manipulation of market prices. Subsidies are not certain, nor is the cap & trade scheme, nor is the impact on food prices. Perhaps ethanol just needs more R&D to reach economic, social, and environmental sense. But the stakes seem as great as the sum of existing government funding to botch this one.

http://www.nytimes.com/2009/04/08/opinion/08friedman.html?_r=2&ref=opinion

Obama’s 2010 budget contained cuts to directly-paid subsidies to farms earning more than $500,000 in income. Single, one time payments would be capped at $250,000. The cuts would save a projected $1 billion a year for 10 years.  This from White House statements:

Large farmers are well-positioned to replace those payments with alternate sources of income from emerging markets for environmental services, such as carbon sequestration, renewable energy production and providing clean air, clean water and wildlife habitat…

According to the US Agriculture Department, 126,000 US farmers earn over $500,000 per year. That’s a fair number of farmers, with a good bit of money, and a whole bunch of political support – in Reuters.

I was a bit shocked by the $500,000 gross cap on direct payments. Farmers often have huuuuge overhead costs, and half a million in income doesn’t mean anything in terms of profit. That’s not to say that being unprofitable warrants subsidization, though I would have expected a floor based on net profit, not gross sales.  But the measure did contain a litany of qualifiers and offsets in justification, as Farm Policy spells out.

The following taken directly from the proposed budget:

For example, the billion a year in savings would support an additional $985 million in child nutrition. The direct-payment subsidy is one of many. Other programs, such as the payments based on crop prices, will remain. Further, the cuts would phase in over a three year period.

In response to mounting criticism, this from spokesperson Nayyera Haq in the Ag dept:

In these difficult economic times, tough choices have to be made and responsibility for our future has to be shared. This proposal will target payments to those who need it most while making real investments in rural America and providing strong support for family farmers.

I’m impressed to see that statement from Vilsack’s office, it shows a real effort at reform, and a willingness to depart from business as usual. Vilsack himself, speaking on the bill, articulated his interest in supporting only “farmers that need it”, and to transition payments to support environmentally responsible changes in production.

Standing up to big agriculture is no walk in the park. Not even for Tom Vilsack. But I’m pretty excited to see this debate, and to have the administration on the side of progressive ag reform.

I was initially skeptical of the garden, knowing the relatively narrow solution that organic offers. But Mrs. Obama surprised me with her remarks on the occasion.

You can begin in your own cupboard,” she said, “by eliminating processed food, trying to cook a meal a little more often, trying to incorporate more fruits and vegetables.

Organic or not, considerable changes in the pantry are the necessary first step. Mark Bittman, in the NYT, offers a good snapshot in a recent peice on the matter.

…most Americans eat so badly — we get 7 percent of our calories from soft drinks, more than we do from vegetables; the top food group by caloric intake is “sweets”; and one-third of nation’s adults are now obese — that the organic question is a secondary one. It’s not unimportant, but it’s not the primary issue in the way Americans eat.

Ezra Klein, on the Internet Food Association, contributed to the discussion with a photo of organic oreos that simultaneously proves the point and leaves me scratching my head. Indeed, organic junk food is still junk food.

So what role does organic play? While growing quickly, certified organic still represents less than 3% of overall food consumed, according to the Organic Trade Association.  Bittman correctly points out the practical disadvantages of organic certification to many farmers. Small scale, “local”, healthful and environmentally responsible food producers are increasingly smaller than small. The costs of organic certification are prohibitive. Wholesaling to grocery stores isn’t economically viable.

Frankly, the premium is paid for uncertified foods at local outlets. Community Supported Agriculture (CSA) systems, farmers markets, roadside stands, etc. allow buyers to see firsthand the benefits of their food suppliers.

Now that a full 25% of organic certified organic foods are produced by major corporations, and box stores like Wal Mart are competing in the market, organic is far less appealing than ever.

We’ve identified a long list of criteria for the “right” food. Local, environmentally beneficial, good for workers, healthy, and I’m sure I’m missing some.

Organic does address a few of these concerns, and in many cases organics are at least healthier than their conventional counterparts. But organic has irreversibly entered the realm of industrial agribusiness, which is inextricably linked to the problems in our food system. These problems transcend labels and commercials.

I’m glad to hear Mrs. Obama speak about nutrition and the options available. Spending twice as much on organic oreos is doing much more to support the health of the problem than your own.

The specific policy updates are as follows:

Under the new rules, fuel economy standards for passenger cars will be set at 30.2 mpg in the 2011 model year, compared with the current 27.5 mpg standard. The light-trucks standard would rise to 24.1 mpg from the current standard of roughly 23 mpg. Combined, the fleet average for 2011 models is supposed to achieve 27.3 miles per gallon.

I’ve written before about my skepticism at these supply-side efforts at environmental reform. While going great lengths to reform antiquated and/or irresponsible policies, we perpetuate a culture of subsidized consumption that is the core of our gravest problems.

The gas tax proposal is gaining attention, and for good reason. Reactionary American buyers – of cars, energy, you name it – snatchy up SUV’s all day long after a couple days of cheap gas. Conversely, waiting lists for Prius’s get longer and longer with higher prices. The same is true for renewable energy, energy efficient appliances, and much more. Regardless of return on investment, and from the consumer to the research and development level, the cost of gasoline is largely responsible for setting the stage of consumption.

So why not put a floor on the price of gas? Despite being politically unpalatable, as all new taxes are, it could potentially be the stabilizing force in energy politics. Like Obama’s proposed cap and trade policy, revenenues could help relieve the effects of higher costs for those unable to incur them. The remaining money could help support new technologies, etc.

I can’t overstate the stabilizing potential of such a policy. Consumers could analyze with confidence the cost / benefit of cleaner technologies. Producers could similarly invest and produce more responsibly, without the fear of volatile prices suddenly dropping.  Two mpg’s ain’t gonna cut it, and until we address the subsidization of overconsumption, no policy will.