The Fertilizer Institute (TFI) president Ford B. West testified before the House Agriculture Committee at a hearing held to examine the Waxman-Markey climate change legislation, which is pending in various committees of the House after its recent passage by members of the Energy and Commerce Committee. Thursday’s hearing provided the first opportunity for agriculture to weigh in on the issue and included testimony from U.S. Department of Agriculture Secretary Tom Vilsack, as well as a number of witnesses from national trade associations representing a broad range of agricultural and rural interests. West provided testimony highlighting the opportunity that exists for agriculture to contribute to the reduction of greenhouse gas (GHG) emissions and also described the ramifications to the fertilizer industry, and in turn U.S. farmers, which may come as a result of implementing a cap-and-trade system.
"Farmers can play a very important role in the reduction of climate change related emissions," explained West. "Best management practices including low-till and no-till farming, as well as farmers’ use of the right fertilizer product, at the right rate, right time and right place, all contribute to increasing the carbon content of soils, reducing erosion, boosting crop yields and significantly reducing GHG emissions."
In addition to describing the role that exists for agriculture to contribute to climate change mitigation, West explained some of the preemptive efforts that the fertilizer industry has taken to become more energy efficient and environmentally sensitive.
"The fertilizer industry has gone to great lengths to advocate environmental stewardship," said West. "Between 1983 and 2006, the industry reduced the amount of natural gas used to produce a ton of ammonia by 11% and along with that energy efficiency came carbon reductions that are estimated by EPA to have allowed U.S. nitrogen producers to reduce their GHG emissions from 1990 to 2006 by 4.5 million tons of CO2 equivalent."
Despite the preemptive efficiency efforts that have been undertaken, West pointed out that in order for the domestic fertilizer industry to remain competitive, while operating under the proposed cap and trade policy, the industry will need to achieve even greater efficiencies, which is problematic due to the fact that there will be a time when the industry’s efficiency gains will eventually be limited.
"While our industry is committed to additional energy efficiency projects, there will come a point where, due to the constraints of chemistry, the U.S. fertilizer industry will not be able to achieve additional efficiency gains," stated West.
Adding to this problem is the potential for the proposed legislation to encourage a number of utilities to turn to natural gas as an alternative for generating electricity, which may drive up the price of that commodity. Natural gas is a feedstock that is required for the production of nitrogen fertilizers and the U.S. nitrogen industry has already been impacted by challenges associated with rising natural gas prices.
"Since 2000, the U.S. nitrogen industry has closed 26 nitrogen fertilizer production facilities, due primarily to the high cost of natural gas," said West. "The fertilizer industry has grave concerns that our remaining domestic nitrogen production cannot stay operational through any transition period of a cap-and-trade system where utilities switch to natural gas and fertilizer producers are forced to buy emission credits on the open market."
In closing, West provided perspective on how the proposed climate change bill could place the domestic fertilizer industry at a competitive disadvantage compared to global fertilizer producers who are not operating under a cap-and-trade system and who have access to plentiful supplies of cheap natural gas.
"What Congress needs to understand is that this cap-and-trade proposal may place our industry at a serious competitive disadvantage compared to global fertilizer production and could force the domestic fertilizer industry overseas to countries that have no carbon reduction policies in place. Congress must tread cautiously and consider the fact that without dramatic changes, the current climate change bill will render the U.S. nitrogen industry uncompetitive and result in a loss for the economy and for the cause of reducing CO2 emissions."
Source: TFI press release