Thank you, Mr. Chairman, for inviting me to testify here today. The Heartland Institute is a 19-year-old nonprofit research and education organization based in Chicago. My testimony is based on a joint research project by economists at The Heartland Institute, the Hudson Institute, and the American Farm Bureau Federation. Our opinions are our own.
Carbon sequestration certainly appears from a distance to be an attractive alternative to mandating reductions in greenhouse gas emissions, especially since many experts believe forcing utilities and other significant emitters to reduce emissions is very costly and would produce few offsetting benefits. But upon closer inspection, carbon sequestration in the agricultural sector faces daunting problems of its own. I would like to call your attention to four such problems.
1. Paying farmers and livestock producers to sequester carbon would lead to heavy-handed and potentially ruinous regulation of farms and ranches.
Farmers can indeed help store more carbon in their crops and soil, but farming itself – especially dairy farms and cattle ranches – is a significant source of greenhouse gases. According to the latest data from the EPA, agricultural soils in the U.S. in 2001 sequestered 15.2 million metric tons carbon dioxide equivalent, compared to total emissions of 526 mmtCO2e. (See table 1 on next page.) Emissions were 35 times as great as net sequestration.
If farmers want to be paid to store carbon, they had better expect to be charged for emitting carbon. It is unrealistic to expect the industry would be for long exempted from the same emission permit requirements imposed on other emitters. Soon, other regulations would be imposed on farmers in the name of fighting global warming, including limitations on production per acre for some crops, mandatory fallowing of crop land, limits and restrictions on livestock production, and restrictions on the use of fertilizer.
Greenhouse Gas Emissions and Sequestration
Sources of emissions mtCO2e*
Total global emissions 28 billion
Total U.S. emissions 6.9 billion
Agricultural emissions 526 million
Forestry (759 million)
Agricultural soils (15.2 million)
* metric tons carbon dioxide equivalent
Source: USEPA, U.S. Greenhouse Gas Emissions and Sinks: 1990 - 2001, Final version, April 2003.
2. Endorsing sequestration may mean endorsing “cap and trade” programs, which means higher energy costs and lower profits for farmers.
Without a government-imposed cap on greenhouse gas emissions, few emitters would need to buy the emission permits farmers would earn by sequestering more carbon. But a cap and trade program would have the same effect as an energy tax, and such a tax would have to be set high – the equivalent of $0.50 a gallon of gasoline or more – in order to reduce emissions enough to make a difference.
Higher energy prices would dramatically reduce profits in the U.S. agricultural sector. Research I conducted with the American Farm Bureau Federation in 1998, found that farmers stand to see their net profits fall by as much as 84 percent, and typically 50 percent, if gasoline taxes are raised by 50 cents per gallon. Total annual U.S. farm production expenses would rise over $20 billion. Since it is difficult for farmers to pass cost increases along to consumers, a cap and trade greenhouse gas program could cause a 48 percent decrease in net farm income.
3. Environmentalists will be disappointed, too.
Even if a carbon sequestration program benefitted farmers, it would do little to offset U.S. (let alone global) greenhouse gas emissions. Agricultural soils in the U.S. today capture only one-twentieth of 1 percent of total annual U.S. greenhouse gas emissions, according to EPA, or 1 percent according to USDA. (See Table 1.) Once saturation levels were reached, there could be no more gains on cropland with known farming systems, meaning agricultural sequestration is not a long-term greenhouse gas management tool.
Carbon sequestration in agricultural soils rose only 14 percent from 1990 to 2001, again according to official EPA data. It is beyond the powers of imagination to forecast, as Prof. Lal apparently does, that we could suddenly increase carbon sequestration by 1000 percent or 10,000 percent or even more.
The biggest gains in carbon storage occur when cropland is returned to forests. Subsidizing tree planting, however, would reduce U.S. farm exports and prompt more farm output in countries where there are no artificial constraints on farming. This would lead to more clearing of forests in Third World countries, where deforestation is already a major problem. On a global scale, more carbon, not less, would be released into the atmosphere.
4. Emissions trading is more problematic than its advocates admit.
The ubiquitous presence of carbon dioxide in ambient air makes it very difficult to associate emissions with any specific source. Unlike sulfur dioxide, there are potentially hundreds of thousands or even millions of sources of carbon dioxide and other greenhouse gases. To avoid participants “gaming the system,” complex and probably unenforceable rules would be needed to determine that emission reductions are genuine, entity-wide, and net of any increases in emissions caused by higher energy use or other emission-generating activity in some other division of a plant or company, either concurrently or at some later time.
Existing emissions trading programs are characterized by thin markets, government over-regulation that kills innovation, changing rules that leave investors high and dry, verification problems, and government meddling. All this uncertainly will, and quite rightly should, discourage participation by businessmen and –women. The new Sarbanes-Oxley Act, which criminalizes even minor accounting mistakes, could hold the chief executive officer liable if a restatement of the value of permits earned or purchased becomes necessary.
I conclude that carbon sequestration by farmers and ranchers in the U.S. is a false hope for those seeking to be paid to do what they would do anyway. It is a false dream for environmentalists who see it as a major part of the solution to global warming. And it is a poor strategy for an industry that should know better than to join a movement composed of groups and individuals who have been among its most strident critics.
Thank you again for giving me this opportunity to be with you today. I am happy to answer any questions you might have.
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Joseph L. Bast is president of The Heartland Institute, a 19-year-old national nonprofit research organization based in Chicago, Illinois. He can be contacted at 19 S. LaSalle Street #903, Chicago, IL 60603, phone 312/377-4000, email firstname.lastname@example.org.
 Our research will be published by The Heartland Institute in August 2003 as “Carbon Sequestering: Eco-Boon or Eco-Bane?” Heartland Policy Study #102, by Joseph L. Bast, Dennis Avery, Alex Avery, James L. Johnston, John Skorburg, and Terry Francl. The study is now undergoing peer review.
 The Energy Information Administration in 1998 estimated reducing emissions to 7 percent below 1990 levels – the goal set by the Kyoto Protocol – would have lowered annual gross domestic product (GDP) $397 billion and increased the price of electricity 86.4 percent and of gasoline, 52.8 percent. WEFA, an economic consulting firm, estimated the loss of GDP at $375 billion and further projected the loss of 2.4 million jobs and a per-household cost of $3,372. (GDP figures and per-household figures have been revised to reflect 2001 dollars.)
 U.S. Environmental Protection Agency, U.S. Greenhouse Gas Emissions and Sinks: 1990 - 2001, Final version, April 2003. Note that this is the most authoritative source of estimates for carbon emissions and sequestrations, being produced in compliance with guidelines from the Intergovernmental Panel on Climate Change (IPCC) and used to produce the IPCC’s global greenhouse gas inventory.
 All of these regulations, and others, were under active consideration by the Clinton administration as part of its global climate change program.
 Terry Francl, Richard Nadler, and Joseph Bast, “The Kyoto Protocol and U.S. Agriculture,” Heartland Policy Study #87, October 1998.
 USEPA, supra note 3. Tons sequestered (15.1 million) is 0.02 percent of total emissions (6.9 billion). Note that both figures are expressed in metric tons of carbon dioxide equivalent, which is the IPCC’s preferred method of measuring emissions. “Carbon dioxide equivalent” is about 3.666 times “carbon equivalent,” an alternative measure of emissions. EPA reports both measurements.
 USDA’s estimate of total sequestration in agricultural soils is 73 million metric tons of carbon dioxide equivalent (20 million metric tons of carbon), approximately five times as much as EPA. USDA’s estimate was cobbled together in one year for the State Department by a staff soil economist named Marlen Eve. See Don Comis, Hank Becker, and Kathryn Barry Stelljes, “Depositing Carbon in the Bank: The Soil Bank, That Is,” Agricultural Research, Vol. 49 #2 (2001), pages 4-7.
 USEPA, supra note 3.
 USEPA, supra note 3. According to EPA, forests in the U.S. sequestered 759 million metric tons of carbon dioxide equivalent in 2001, 50 times as much as agricultural soils.
 See Jim Johnston, “Midwesterners Leery of Greenhouse Gas Credits,” Environment & Climate News, February 2003, pages 5-6.
 See Jim Johnston, “Emission Trading for Global Warming,” Regulation, Vol. 21, #4, (1998); John Blaney, “Emissions: Where Are the Traders?” Public Utilities Fortnightly, June 15, 2003, page 34.