Tag Archives: political
Europe Acts to Fix Its Crippled Carbon Market
SustainableBusiness.com News After months of wrangling, a vote in the European Parliament is bringing relief to the EU’s stricken Emissions Trading System (ETS), the world’s first and largest cap-and-trade program. The vote shows the political will to address the oversupply of allowances (permits to emit carbon) that has led to unsustainably low carbon prices. On July 2, Members of the European Parliament (MEPs) voted in favor of a “backloading” proposal which would withhold hundreds of million of permits. Pulling back available permits to balance supply and demand (in order to raise prices) is exactly what’s been needed, but a previous vote caved to industry interests, which convinced them that higher carbon prices risked the bloc’s competitiveness. That move collapsed carbon prices by another 45%, to €2.63 ($3.38) per ton of carbon dioxide, and led many to question whether Europe remains committed to the program – its flagship climate change policy. However, that price collapse triggered intense debate and a renewed effort to save the market. “This is a good decision by the European Parliament and is an important step forward for climate change policy,” says Ed Davey, the UK’s climate change minister. “We need a stable carbon market so we get more certainty for investors so emissions reductions can be achieved at the lowest cost possible.” Carbon allowances have lost 75% of their value over the last four years as Europe’s economic downturn, and the faster-than-expected development of renewable energy capacity has reduced demand for allowances from emitters. As the world’s first market, it did not have rules that would come into play when demand drops. The lack of the ability to reduce the supply of allowances led to a glut. Last year, the European Commission proposed to ‘backload’ 900 million allowances, holding them back until later in the decade. This would push prices up, giving time for structural reforms to the system to be introduced. “This is a reassuring signal for industry and international observers – many of whom have recently adopted their own emissions trading schemes – that the EU remains committed to decarbonizing Europe’s economy in the most cost-efficient way,” says Hans ten Berg, the Secretary General of Eurelectric, which represents Europe’s electricity sector. “Today’s positive vote is a much needed step in the right direction, but it is nevertheless only a first step. We urge the Commission to continue down this path of strengthening the ETS in the long run by proposing more significant structural reforms.” The backloading proposal still needs to clear several more hurdles, although analysts say last week’s vote was the toughest. Traders expect the Commission to begin withholding allowances next year. Structural reforms, however, are likely to be years off, given the drawn-out processes involved in European policy making. Elections next year to the European Parliament are likely to slow deliberations, and most observers don’t expect reforms to be agreed until 2017. But last week’s vote shows there is political will to fix Europe’s carbon market, say participants. “The ‘yes’ vote should provide a short-term boost to carbon prices and confirms the EU’s commitment to the success of the ETS and to implementing the long-term improvements that are still needed,” says Thomas Rassmuson, a Founding Partner at CF Partners, a risk advisory and investment firm specializing in renewables and commodities. Continue reading
Farm Bill Defeat Shows Agriculture’s Waning Power
Manuel Balce Ceneta/Associated Press Speaker John A. Boehner failed to draw enough Republican support for a bill last month. By RON NIXON Published: July 2, 2013 WASHINGTON — The startling failure of the farm bill last month reflects the declining clout of the farm lobby and the once-powerful committees that have jurisdiction over agriculture policy, economists and political scientists said this week. Although a number of factors contributed to the defeat of the bill — including Speaker John A. Boehner’s failure to rally enough Republican support and Democratic opposition to $20 billion in cuts to the food stamps program — analysts said the 234 to 195 vote also illustrated the shift in the American population and political power to more urban areas. “There are a small number of Congressional districts where farming continues to carry much sway,” said Vincent H. Smith, a professor of agricultural economics at Montana State University. “Especially in the House, the farm lobby has been substantially weakened.” For much of American history, the agriculture sectors wielded tremendous political power. Farm groups were able to get key farm legislation passed by rallying millions of farmers in nearly every Congressional district. Influential farm state legislators like Representative Jamie L. Whitten of Mississippi, a Democrat who was chairman of the Appropriations Committee and its subcommittee on agriculture, brought billions in agriculture financing to their states and fought off attempts to cut subsidy programs despite pressure from both liberals and conservatives. Mr. Whitten died in 1995 after 53 years in Congress. But as Americans have moved to the cities and suburbs, farmers and lawmakers representing districts largely dependent on agriculture have seen their political muscle steadily decline. Just 2.2 million people now work in farming in the United States, or about 2.5 percent of the total work force. Farming now accounts for about 1 percent of gross national product, down from a high of about 9 percent in 1950. Only 40 lawmakers represent largely farming districts, according to research by Mr. Smith in 2006. He said that number was probably smaller today. Nonetheless, agriculture groups said they continue to have influence and blamed increased partisanship for the inability of Congress to pass the farm bill. “Agriculture used to be a nonpartisan issue that both Democrats and Republicans could support,” said Danny Murphy, president of the American Soybean Association. “Now people are lining up to take sides; it’s nutrition or farm programs,” he said. “For us, it’s a nonissue. We’re farmers, how can we be against food?” Barry L. Bequette, dean of the School of Agriculture, Research, Extension and Applied Sciences at Alcorn State University in Lorman, Miss., said the issue was not a lack of power. “Farmers just haven’t learned how to utilize the power they have,” he said. “All the groups are fractured and focused on their own narrow issues.” But agricultural economists like Mr. Smith said the Congressional response to last year’s drought and this year’s debt talks provide more evidence of the waning political influence of agriculture. Last summer, as the worst dry spell in 50 years was causing widespread damage to farmland and livestock, national farm organizations pushed for the passage of a farm bill that would provide relief. But the groups were unable to muster enough support to even get the bill to the floor for a vote. Representative Frank D. Lucas, Republican of Oklahoma and chairman of the House Agriculture Committee, which did pass a farm bill , made several appeals to House leaders to bring the legislation up for a vote, but they declined. When the Obama administration and Republican leaders worked out a compromise to avert automatic tax increases in January, Mr. Lucas and Senator Debbie Stabenow, the Michigan Democrat who is chairwoman of the Senate Agriculture Committee, tried desperately to get the farm bill included in the talks. Both touted the savings they had achieved in both the House and Senate version of the bills. But their pleas were largely unheeded. The Senate instead chose to include in the tax package a slimmed-down farm bill proposal by Senator Mitch McConnell of Kentucky, the Republican minority leader. Mr. McConnell’s proposal extended only portions of the current farm bill, which was passed in 2008. The extension did not provide disaster assistance for livestock owners, who had to kill thousands of cows, pigs and chickens because of rising feed prices and lack of water. It eliminated money for conservation programs and financing for fruit and vegetable growers and organic farmers, and cut a program that pays milk producers when feed prices increase. The proposal did contain provisions to prevent milk prices from rising and left in place direct payments to farmers or farmland owners, whether or not they grow crops. The payments, which total about $5 billion a year, have long been criticized as examples of wasteful government spending. The bill passed the Senate by 89 to 8, with a reluctant Ms. Stabenow voting for it; it passed the House by 257 to 167. Mr. Lucas also voted for the House bill. Farm groups said they felt equally ignored. An exasperated Ms. Stabenow summed up the feeling of both farm state lawmakers and the farm sector in an interview shortly after the deal was announced. “There is absolutely no way to explain this other than agriculture is just not a priority,” she said. Collin C. Peterson, the Minnesota Democrat and ranking member on the House Agriculture Committee, sent a letter to House leaders involved in the debt talks. “I could not believe that you and your leadership team could treat the committee with such disrespect,” he wrote. Continue reading
