By DAVE BLOWER JR.
Farm World Editor

INDIANAPOLIS, Ind. — Supporters of the U.S. House-approved climate change bill, also called the cap-and-trade policy, say the bill’s opponents will claim that it will eliminate American jobs and raise prices on most goods for American consumers.

Mick Calvin, a fuel expert with Indianapolis-based fuel company CountryMark, told Farm World Expo visitors earlier this month that cap-and-trade will put the 89-year-old co-op out of business.
“We’ve been told that if cap-and-trade is passed and signed by President Obama, CountryMark might have to buy as much as $100 million in carbon credits each year,” Calvin reported. “We’re a $56 million per year company; you do the math.”

According to the U.S. Environmental Protection Agency (EPA), cap-and-trade is a market-based policy tool that puts a mandatory cap on air pollution emission levels while providing the sources of these emissions flexibility in how they comply.

The government sets the cap emission levels and monitors those companies that generate the pollution. Companies that produce less than the allowed emission level may sell the balance of their emission credit to companies that will exceed the mandated cap levels.

Successful cap-and-trade programs, the EPA reported, reward innovation, efficiency and early action and provide strict environmental accountability without inhibiting economic growth.
Corporations and national governments may trade or sell emission allowances to companies that will exceed emission-cap levels.

The EPA cites the national Acid Rain Program as a successful cap-and-trade program. This program regulates 3,500 fossil-fuel-powered, electric generators that are mostly located in the Midwest – where coal-powered electrical plants are most common. The EPA said annual sulfur dioxide emissions, as a result of the program, have been reduced by 43 percent compared to levels generated by these same power plants in 1990.

Nevertheless, farm groups and farm-related service businesses remain split on the possible effects of the Waxman-Markey Climate Change bill (HB 2454) which was adopted by the U.S. House of Representatives by a 219-212 vote earlier this summer. Only eight Republicans voted for the bill while 44 Democrats voted against it.
The National Farmers Union supports the Waxman-Markey bill and its similar companion in the Senate. The American Farm Bureau Federation, on the other hand, has campaigned that the bill will increase input costs for farmers.

“This is probably the biggest issue we face when the Senate gets back in session in September,” said Indiana Farm Bureau Executive Director Don Villwock. “The bill on the table right now will increase costs on about everything that is used by someone in production agriculture.”

No bill in the Senate has been offered, yet, this year. A bill written by Connecticut Sen. Joe Lieberman (S. 2191) last year has been the basis for debate.

CountryMark testifies

CountryMark CEO Charlie Smith wrote to the U.S. Senate Committee on Agriculture, Nutrition and Forestry that the Waxman-Markey cap-and-trade bill would likely render his business insolvent.

“If the pending legislation passes without recognition of the different financial capabilities of these two segments of our industry, the first casualty will be companies such as CountryMark that today are one of only a few petroleum refiners providing 100 percent American energy to the marketplace,” Smith said to the committee in Washington, D.C. on July 22.

“Climate change legislation is the single biggest threat to the viability of CountryMark and the investment of our farmer cooperative owners. Our latest estimate, based on the Waxman-Markey Climate Change bill as reported by the House Commerce Committee, is that the cost of carbon taxes on CountryMark will exceed $100 million per year for both our direct manufacturing emissions and emissions produced from consuming our product.”
Buying and selling carbon credits, he said, will have a far-reaching impact.

“The issue of carbon credits have the potential to dominate our economy for better or for worse,” Smith predicted. “It’s an attempt to shock the system.”

He added that it is an obvious attempt to shock U.S. consumers from using petroleum-based products.

“This isn’t new, we’ve been discussing this for a long time,” Smith said. “The Waxman-Markey bill is more aggressive than many of the other proposals that have historically been discussed.”

Smith said there are many factors in controlling greenhouse gases (GHG). He explained that a recent drop in the gross domestic product due to the falling economic climate in America and the world has also resulted in lower GHG emissions.

Smith said the Obama Administration believes that if America reduces GHG emissions, then the rest of the world will follow. Smith believes this policy is faulty.

“India and China are not going to comply with these regulations,” he said. “Where do you think good-paying American jobs are going to go when you can no longer comply with the cap-and-trade policies?”

Lost jobs hurts economy

In addition to working with Midwest farmers by mixing and selling a variety of grades of corn-based ethanol and soybean-based biodiesel, CountryMark buys all of its crude oil from producers who drill in the 53,000-square-mile Illinois Basin oil field. CountryMark also owns four drills in this basin.

The basin, which spans Illinois, western Indiana and western Kentucky, produces a high-grade crude oil which is refined in Indiana.

CountryMark employs 350 workers in the rural areas of southwest Indiana and southeast Illinois. The company’s Mt. Vernon refinery boasts an annual payroll of nearly $27 million in wages and benefits. Those jobs are in jeopardy if cap-and-trade is signed into law, Smith said.

“On average, we spend $60,000 in wages and $22,000 in benefits for these employees,” he explained. “There are some management wages in there, but most of the payroll is dominated by classic, blue-collar jobs. The employees may not start at that level, but they get there. These are good jobs that are hard to come by in this area of Indiana.”

Despite CountryMark’s gloomy view of the petroleum industry regulated under cap-and-trade rules, Smith said the plan is to stay in business.

“Our plan is to outcompete the competition with our products and services,” Smith explained. “The plan is to survive, but this potential legislation puts a real strain on the business.”