U.S. coalition to fight American biofuel subsidies
Oil companies, meat and dairy groups and nutrition advocates are likely to form a coalition to oppose higher renewable-fuel mandates and tax breaks for alternative energy in the farm bill, said Charles Stenholm, a lobbyist and former House Agriculture Committee member.
Stenholm said the coalition would support research, particularly on cellulosic ethanol, but in other aspects of alternative energy urge Congress to "be careful about the way the government subsidizes it" and "let the market be the determinant as much as is humanly possible."
If indeed the market were to be allowed to work in a genuine and truly global way, the developing world would get a major boost, because it can produce biofuels much more competitively than U.S. farmers. In this sense, we hope the American anti-subsidy coalition succeeds in its mission (as far as tax breaks are concerned). A recent report by the Global Subsidies Initiative showed that uncompetitive and energy inefficient biofuels ("lobby fuels") made in the U.S. receive billions in subsidies via hundreds of schemes, without which they would never survive (earlier post). The subsidies have created a market for ethanol and biodiesel in the U.S. - mission accomplished. But it is now time to abandon them and allow more efficient and competitive producers in.
U.S. agricultural subsidies have a global effect, and were the cause of the collapse of the World Trade Organisation's Doha Round, last year. Trade specialists however see the development of a global biofuels industry as an opportunity to revive the talks and close a deal on Doha. If biofuels create a viable global market for farmers, then the need for subsidies would disappear and the dispute could be partly resolved (earlier post).
But things will not be that easy. There are signs that the U.S. administration will pump even more billions worth of subsidies into the sector.
Stenholm, who is a senior government affairs adviser at a large law firm, said he has been hired by the American Petroleum Institute to protect its interests in the renewable-energy debate and that his clients also include the International Dairy Foods Association, the National Pork Producers Council and the Livestock Marketing Association:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: subsidies :: corn :: developing world :: WTO :: Doha :: bioenergy trade ::
Oil companies have long argued that government intervention favorable to renewable fuels is unfair. Stenholm said meat and dairy groups are concerned that increased use of corn for ethanol is leading to higher feed prices while nutrition advocates are concerned that food prices may rise, making it harder for poor people to afford food. As a veteran of farm bill debates in Congress, Stenholm said, "Until you get the nutrition community behind your overall (bill), you can't pass it."
Agriculture Department Chief Economist Keith Collins said at a Farm Bureau session Sunday that the use of ethanol has so far not increased food costs because producers and processors have made their decisions based on past years' supply and demand, but that the demand for corn for ethanol could increase food costs in future years.
Stenholm said he believes the basic commodity programs that subsidize crops such as wheat and cotton will be reauthorized. The high prices for corn, soybeans and wheat, Stenholm said, means the Congressional Budget Office will project that subsidies for those commodities won't be high.
He said Congress does need to deal with a World Trade Organization ruling that a farm bill provision banning the planting of fruits and vegetables on land that receives subsidies means that that a direct payment program that the United States has classified as non-trade distorting is trade-distorting.
But he added, "I'd be surprised there's any real opposition (in the commodity title) that can't be compromised into a winning position. ...You know the ingenuity of the agriculture committee."
Stenholm represented the 17th District of Texas until the Republican-controlled Legislature reconfigured the boundaries of the district. He lost a race for re-election in 2004.
Article continues
Stenholm said the coalition would support research, particularly on cellulosic ethanol, but in other aspects of alternative energy urge Congress to "be careful about the way the government subsidizes it" and "let the market be the determinant as much as is humanly possible."
If indeed the market were to be allowed to work in a genuine and truly global way, the developing world would get a major boost, because it can produce biofuels much more competitively than U.S. farmers. In this sense, we hope the American anti-subsidy coalition succeeds in its mission (as far as tax breaks are concerned). A recent report by the Global Subsidies Initiative showed that uncompetitive and energy inefficient biofuels ("lobby fuels") made in the U.S. receive billions in subsidies via hundreds of schemes, without which they would never survive (earlier post). The subsidies have created a market for ethanol and biodiesel in the U.S. - mission accomplished. But it is now time to abandon them and allow more efficient and competitive producers in.
U.S. agricultural subsidies have a global effect, and were the cause of the collapse of the World Trade Organisation's Doha Round, last year. Trade specialists however see the development of a global biofuels industry as an opportunity to revive the talks and close a deal on Doha. If biofuels create a viable global market for farmers, then the need for subsidies would disappear and the dispute could be partly resolved (earlier post).
But things will not be that easy. There are signs that the U.S. administration will pump even more billions worth of subsidies into the sector.
Stenholm, who is a senior government affairs adviser at a large law firm, said he has been hired by the American Petroleum Institute to protect its interests in the renewable-energy debate and that his clients also include the International Dairy Foods Association, the National Pork Producers Council and the Livestock Marketing Association:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: subsidies :: corn :: developing world :: WTO :: Doha :: bioenergy trade ::
Oil companies have long argued that government intervention favorable to renewable fuels is unfair. Stenholm said meat and dairy groups are concerned that increased use of corn for ethanol is leading to higher feed prices while nutrition advocates are concerned that food prices may rise, making it harder for poor people to afford food. As a veteran of farm bill debates in Congress, Stenholm said, "Until you get the nutrition community behind your overall (bill), you can't pass it."
Agriculture Department Chief Economist Keith Collins said at a Farm Bureau session Sunday that the use of ethanol has so far not increased food costs because producers and processors have made their decisions based on past years' supply and demand, but that the demand for corn for ethanol could increase food costs in future years.
Stenholm said he believes the basic commodity programs that subsidize crops such as wheat and cotton will be reauthorized. The high prices for corn, soybeans and wheat, Stenholm said, means the Congressional Budget Office will project that subsidies for those commodities won't be high.
He said Congress does need to deal with a World Trade Organization ruling that a farm bill provision banning the planting of fruits and vegetables on land that receives subsidies means that that a direct payment program that the United States has classified as non-trade distorting is trade-distorting.
But he added, "I'd be surprised there's any real opposition (in the commodity title) that can't be compromised into a winning position. ...You know the ingenuity of the agriculture committee."
Stenholm represented the 17th District of Texas until the Republican-controlled Legislature reconfigured the boundaries of the district. He lost a race for re-election in 2004.
Article continues
Saturday, January 20, 2007
"Plants for power in place of nuclear power plants" - a look at the International Green Week
The IGW opened within a new context, now that the European Union has set an ambitious goal to reduce its dependence on fossil fuels and given its farmers ample financial incentives to reach those goals. The new proposal sets a target of 20% for renewables in EU energy consumption by 2020, and 10% minimum target for biofuels in transport fuel by the same date. This objective is said to be feasible without creating unmanageable tensions between food and non-food production (earlier post).
At the opening of the event, some interesting announcements and perspectives on bioenergy were presented. Not in the least those on subsidies and financial incentives.
EU Agriculture Commissioner Mariann Fischer Boel said: "This is an excellent opportunity for European agriculture to play a part in one of the greatest challenges facing the European Union today. Our CAP (Common Agriculture Policy) reforms have already given biofuel production a major push – now I want to build on this further."
The CAP was changed in 2003 to encourage European farmers to grow energy crops. It decoupled direct payments from production so farmers could base planting decisions more on market signals. The 2003 CAP reform introduced a €45 per hectare ($143 per acre) aid for land used for energy crop production, a measure that was extended recently to the new EU member-states (earlier post). Countries are also allowed to grant national aid of up to 50% of the costs of establishing permanent crops on areas on which an application for the energy crop aid has been made. In short, just like the US, the EU offers lavish amounts of subsidies to its future energy farmers.
According to Boel, getting 'up to speed in the production of bioenergy' could create up to 300,000 new jobs throughout Europe, many of which will be in rural districts.
On CAP reform, José Manuel Barroso, President of the European Commission, said: "It is already encouraging farmers to grow energy crops by measures such as decoupling direct aid, the specific energy crops scheme and the possibility of using set-aside for the cultivation of non-food crops. Bioenergy could prove to be a strong card for the future of European farmers. It provides them with an opportunity to produce with an eye to the market."
And, interestingly, he added that "If for instance a German farmer can earn more today by selling the maize he produces for processing into bio-gas than for traditional feed production, we should see this as opening up fresh opportunities for a new generation of farmer-entrepreneurs."
Gerd Sonnleitner, President of the German Farmers' Association, says renewable energy now meets almost 7% of Germany's requirements for electricity, heating and fuel. The earlier target - 12.5% of the country's electricity needs from renewable sources by 2010 - has almost been reached. "Bio-energy is experiencing a genuine boom and has evolved into one of the largest growth sectors on the German renewable energy market," says Sonnleitner. "65,000 jobs have been created, and this figure is set to double by 2010:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: subsidies :: Common Agricultural Policy :: EU ::
"Our farmers are now producing bio-energy and renewable raw materials on an area measuring some 4 million acres compared with just 2 million acres five years ago," says Sonnleitner. "This now amounts to 13% of the total cultivated area in Germany, making us the leaders in this field in Europe. An increase in the area under cultivation to as much as 7.5 million acres is being forecast.
A large part of the GreenWeek exhibit hall is dedicated to bioenergy under the title, "Plants for power in place of nuclear power plants."
A major congress organised by the German Federal Ministry of Food, Agriculture and Consumer Protection convenes this weekend under the title "Agriculture and Bioenergy – the Lights will go out without Agriculture" [*pdf].
Article continues
posted by Biopact team at 6:30 PM 0 comments links to this post