By Jake Caldwell 

Jake Caldwell is Director of Policy for Agriculture, Trade, and Energy at the Center for American Progress. A former program director at the National Wildlife Federation, he is an adjunct professor at the University of Maryland School of Law and specializes in the relationships among trade, environment, and development.  

Is it possible to imagine an energy future that helps lift the fortunes of large and small agricultural producers around the world, combat global warming, and open overseas markets with policies that could, simultaneously, lessen United States’ dependence on fossil fuels and promote more equitable international trade? The challenges ahead are daunting, but this year represents an important moment in which to lay the groundwork for a new approach.

In 2007, as Congress prepares to reauthorize a new farm bill and address other key energy and trade legislation, the United States has a critical opportunity to improve our nation’s competitiveness and strengthen the linkages among agriculture, energy, and trade in a manner that spurs innovation, rewards rural communities in the U.S. and abroad, and allows us to take concrete action to confront climate change.

Rising global demand for oil and concerns regarding the costs and consequences of global warming are contributing fresh momentum to enlisting agriculture as a partner in diversifying our sources of energy and promoting technological innovation. Farm-based renewable energy, and sustainably produced biofuels, in particular, have the potential to offer a way forward. 

The United States must diversify its energy supply and foster innovation in the agriculture and transportation sectors by investing in renewable energy sources. Biofuels—liquid fuels produced from agricultural crops and wastes—have shown tremendous potential to deliver a secure and stable supply of fuel to supplement our growing energy demands. 

We must move rapidly and deliberately toward the commercial development of the next generation of advanced cellulosic biofuels derived from bulk plant matter, such as corn stover, and dedicated energy crops grown in a sustainable manner. Conversion of non-food crops and agricultural residue to fuel has the potential to reward the low carbon benefits of advanced biofuels and deliver a triple dividend to farmers in the form of payments for dedicated energy crops, carbon sequestration, and agricultural waste materials. 

At the same time, biofuels are not a panacea capable of meeting all of our diverse energy needs. Much work remains to be done to increase dedicated energy crop yields, reduce biomass conversion and transportation costs, and improve the sustainable production of biofuels. But, if developed in combination with cleaner cars, better fuel economy, and stronger conservation efforts, the impact of farm-based renewable energy will be profound.  

The current patchwork approach to agriculture, energy, and trade policy is unsustainable. Family farmers from Kansas to Kenya must confront restricted global markets and roller coaster prices for their products. High energy costs, overproduction, market concentration, and other barriers undercut revenue and distort trade. Only five products account for almost half the $280 billion in annual support to agricultural producers globally. Tariffs and tariff rate quotas in the EU, Japan, and other countries account for 80 percent to 90 percent of the total costs of agricultural trade and act as significant barriers to trade. The World Bank estimates that the elimination of tariffs and other protective barriers globally would inject $16 billion annually into the economies of several developing countries and open key markets for all producers.

At the same time, as global demand for oil continues to rise, our dependence on oil for energy is emerging as a major influence on agricultural production, our environment, and the welfare of the poorest people on earth. The vast majority of the world’s poorest countries are net importers of oil, and 25 of the world’s 47 poorest countries are completely dependent on imported oil.Climate change will adversely affect poor countries’ economies that are dependent on agriculture. For example, crop yields in sub-Saharan Africa are projected to fall by 20 percent, and some scenarios predict famine induced by climate change to displace more than 250 million people worldwide by 2050.

The next generation of advanced biofuels can make a key contribution to our efforts to lessen our dependence on fossil fuels, diversify our sources of energy, and meaningfully reduce greenhouse gas emissions that contribute to global warming. According to a recent study at the University of Tennessee, such advanced biofuels could supply 25 percent of U.S. petroleum needs by 2025 while pumping $700 billion into the economy. They could also provide a significant boost to our rural economies as well, raising farm incomes by $180 billion. In the 2007 farm bill, Congress has an opportunity to expand the modern safety net to serve more farmers and reinvest a modest portion of commodity-based subsidies into green payments for conservation programs on working lands. In so doing, producers will be encouraged to grow value-added dedicated energy crops such as switchgrass, miscanthus, and fast growing trees in a sustainable manner. The result will be a greater number of people and regions able to produce new feedstocks for biofuels and a more diversified income stream for rural communities. 

As we confront global warming and the realities of a carbon-constrained economy, agriculture policy should reward farmers for their everyday actions to reduce greenhouse gas emissions and sequester carbon on their land—actions that contribute to the nation’s overall efforts to combat global warming. Petroleum-based gasoline blended with ethanol reduces greenhouse gas emissions by up to 13 percent, while studies indicate cellulosic biofuels produced from switchgrass and other sources can make significantly greater greenhouse gas reductions. A recent University of Minnesota study concluded that perennial grasses can absorb 4.4 metric tons of greenhouse gases—14 times what they produce—after a decade of growth. In addition, dedicated energy crops typically have a higher density of energy than crop residues, and the use of energy crops will also allow crop wastes to remain on the land to improve soil quality and store carbon. 

It is essential that we provide incentives to biofuel producers for efforts to conserve land and water resources, maximize greenhouse gas reduction methods, and grow energy crops in a sustainable manner. Any consideration of utilizing land currently enrolled in conservation programs for biofuels production must ensure that the primary conservation goals of the programs are not compromised. Measures should be taken to improve the levels of evaporative emissions from some blends of biofuels, and coal-burning biofuel plants should be discouraged. The use of transparent certification and labeling criteria to encourage sustainable production of biofuels should be developed immediately by a broad range of stakeholders. 

Diversifying into energy crops will improve agricultural prices by slowing the oversupply of traditional agricultural commodities on global markets. Better prices for corn, soybeans, and wheat, such as we are currently experiencing, increase income and flexibility from a variety of sources. At the same time, we must ensure that a rapid ramp-up in prices does not lead to increased price and supply volatility or irreversible damage to the land and our environment. 

A sustained and consistent period of improved prices will also allow the United States, Europe, and Japan to meet the request of developing countries to improve their commitments to agricultural subsidy and tariff reform, thereby opening one avenue for progress in the stalled World Trade Organization’s Doha round of multilateral trade negotiations and contributing to global poverty reduction. International trade challenges to our farm policies, such as Canada’s recent complaint regarding our agricultural support programs and the ongoing cotton subsidy dispute with Brazil, will be defused. A competitive global market in biofuels, with the United States leading the way through shared technology and a phase-down of the current import tariff, will allow many developing countries with appropriate soil and climatic conditions to enter the biofuels marketplace. 

The establishment of farmer cooperatives and locally-owned biorefineries and biofuel facilities must also be a priority of U.S. energy and agriculture policy. As current biofuel production capacity expands rapidly, the private sector and government must redouble their efforts to improve market demand for biofuels, including the establishment of more E85 fuel pumps and more fuel-efficient flex-fuel vehicles. 

As Congress debates key energy and trade legislation this year, members of Congress have an historic opportunity to demonstrate leadership. We must act now to strengthen our commitment to the next generation of advanced cellulosic biofuels, bolster long term demand with cleaner fuels and cleaner cars, and encourage greater investment in the research, development, and commercialization of new biofuel and biobased technologies. 

The United States should be investing in the capacity of our agriculture community to lead our nation toward diversified energy production, increased prosperity, and greater security. In leading, we can free ourselves and our friends from the high costs of narrow and outdated energy and agricultural policies and take small steps toward building a better energy future for all.

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