March 5, 1998

I would like to thank you, Mr. Chairman, for holding a hearing on this very important subject.  This occasion gives us the opportunity to discuss a very complex issue, namely the Kyoto treaty  and its potential impacts on the U.S. agricultural sector.  We should view the Kyoto treaty as a work in progress , and discuss today how it might be changed to further benefit American farmers.

Few would question that there is a lot at stake in the climate change debate for American farmers.  Farmers already know that weather is their largest source of uncertainty, but many scientists believe that the uncertainty would become worse under climate change, driven by higher temperatures and more variable rainfall.  Although the science of climate change is not fully understood, waiting for certainty may leave us no time to address the problem.

We in Congress are in a pivotal position to ensure that policy regime which requires stiff increases in energy prices is never enacted.  I believe that our commitments can be met by taking advantage of the market-based provisions offered in the Kyoto accord and the types of tax incentives for increasing energy efficiency that the President proposed in his State of the Union address in January.
Agriculture in particular is well-positioned to capture the types of benefits offered, both under the President’s incentive package and any emissions trading program developed under the Kyoto framework.   Some changes may need to be made in the President’s proposal to make certain that tax incentives are available for energy efficient practices in agriculture as well as the manufacturing and housing sectors.

For example, American farmers have already achieved an admirable track record in reducing their consumption of energy for production purposes.  A recent USDA study indicates that farm-level use of energy, excluding electricity, declined 25 percent between 1978 and 1993.  Put another way, output per unit energy improved by 50 percent over the same period.  In some ways, the agricultural sector can serve as a model to other sectors in demonstrating how to  save energy.  These changes occurred even without direct tax incentives for improving energy efficiency.   Knowing the ingenuity of our farmers, I am sure that even more can be done in this area.

One of the recognized techniques for keeping carbon dioxide out of the atmosphere is to capture it in plants or soils which are left undisturbed, a process called carbon sequestration.  Many of the practices now in use in agriculture, such as conservation tillage, already serve to sequester carbon.  Although the treaty language is not crystal-clear, there appears to be scope for markets in which large entities such as utilities which emit greenhouse gases acquire credits earned on carbon sequestration projects to offset a portion of any reductions they commit to.  With its control of more than a billion acres of land in cropland and pasture, the U.S. agricultural sector should be a major player in such a market.  I urge the Administration to make sure the final rules of the Climate Change Accord are written to encourage such activities.

Finally, farmers have the ability to make a major contribution to the mitigation of climate change through their production of crops that can be used to produce ethanol and other bio-based fuels.  The sector already contributes more than 1.6 billion gallons of ethanol to the nation’s automotive fuel supply.  On top of that, a panel of industry experts and scientists assembled by the President suggested a need for biofuel production capacity by 2030 of 19 billion gallons in this country alone.

Beyond ethanol, there is also great potential in harnessing other potential sources of energy from the farm.  Last fall, the Secretary of Agriculture visited the small town of Centerville, Iowa to witness a part of the future.  In nearby fields, farmers had planted hundreds of acres of Switchgrass as part of a biomass energy project.  Here farmers, local power utilities, researchers and the federal government have joined in a partnership to prove that electricity can be generated economically from biomass.  This pilot project will convert switchgrass to electricity in a coal fired power plant, and is another step toward the development of home-grown energy supplies in Iowa and across the country.

The next step is the development of biomass energy systems which utilize hydrogen fuel cell to produce electricity.  I call this concept electrofarming and it has many advantages over the coal-fired biomass system.  For example, hydrogen fuel cells produce no emissions, only water and electricity.  Fuel cells are more efficient than turbines, even at lower power levels.  Farms could use electrofarming systems to provide the energy for their farm and sell the excess to the power grid, leading to higher rural incomes and more decentralized power production.

However, none of these benefits will be realized without a lot of hard work, both by us and by American farmers.  One small step in the right direction will be the extension of the ethanol tax credit to 2007, a provision of the transportation bill now being debated on the floor of the Senate.  Passage of the President’s climate change incentive package, with the clarifications I mentioned above, is also necessary to bring about these changes.  Above all, we need to be sure that the Department of Agriculture assumes a major role in the process of finalizing the implementation rules, so that American farmers emerge as the winners they deserve to be.