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Conservation, Credit, Energy and Research Subcommittee Opening Statement on Climate Change Legislation and its Potential Economic Impacts on the Farming Sector

Good Morning. Chairman Holden and Ranking Member Goodlatte.

    Thank you for having this hearing today to examine Climate Change legislation and its economic impacts on the farm sector.  H.R. 2454, the misleading titled “American Clean Energy and Security Act of 2009,” otherwise known as cap-and-tax was the vehicle used in the House of Representatives early this July.  While narrowly passing the House by 219-212 margin, there was strong bipartisan opposition to this bill, which will be detrimental to our economy.

    I represent Ohio's Fifth Congressional District, the largest agricultural and largest manufacturing district in Ohio.  Recently, I sent a letter to the Chairmen and Ranking Members of the House Agriculture, Energy and Commerce, and Small Business Committees, as well as Democratic Leadership asking them to hold a joint hearing on the impact which climate change legislation will have on the agriculture, manufacturing, and small business sectors.  The Midwest is dependent on agriculture, manufacturing and small businesses, and I hear daily from my constituents regarding this issue and what negative effect it will have upon them.  I was joined on the letter by Republican Leader John Boehner and Republican Conference Chairman Mike Pence, both also from the Midwest, along with 29 other Members of Congress.

    Unfortunately, only 0.8 percent of Ohioans are actively employed in the agriculture sector.  The farmers in my district are not solely farmers; they are producers who farm full time and many of whom also have full time jobs in industries such as manufacturing. Ohio boasts over 618,000 manufacturing jobs according to most recent Bureau of Labor Statistics data. These are people who work in energy intensive industries that will be hit the hardest if this proposed climate change legislation is signed into law, or if the proposed Federal regulations are made final.  These current pieces of legislation and proposed Environmental Protection Agency regulations will not only kill jobs in the United States, but will destroy the agriculture, manufacturing and small business jobs in my Congressional District and throughout the country.  These are the same small businesses that make roughly 70-80 percent of all new jobs in the United States each year.

    My district’s main crops are corn, soybeans, and wheat.  All of these crops have a significant operating cost for fuel, seed, electricity, fertilizers, and chemicals, all of which will increase heavily under current climate change legislation in the House and Senate.  Operating costs amount to 71 percent for corn, 50 percent for soybeans, and 72 percent for wheat.  Farmers in my district will not be able to sustain their farms and support their families with these increased costs.

    According to the Heritage Foundation, farm income is expected to drop $8 billion in 2012, $25 billion in 2024 and over $50 billion in 2035 if H.R. 2454 is enacted or similar legislation.  This represents decreases of 28, 60, and 94 percent, respectively.  In addition, I have farmers in my district that strongly believe in domestic energy production to reduce our costs at the pump and our dependency on foreign oil, all the while helping to bring back American jobs.  With gasoline and diesel prices continuing to rise, the only thing this legislation will reduce is the size of individuals’ pocketbooks, especially with gasoline and diesel costs projected to be at least 58 percent higher under current climate change legislation.  Under the current climate change legislation being proposed, economic impacts are severe, with job loss predicted at an astounding 1.1 million with peak unemployment projected at 2.5 million.  This legislation will have an even more devastating effect by 2035, as by that time this legislation is projected to have reduced our gross domestic product by $9.6 trillion.  This legislation will result in higher energy costs for consumers, particularly in areas such as mine, where coal is the primary energy source.  

    Over 86 percent of Ohio’s electricity is generated by coal.  The costs incurred from this legislation on electricity generators will be passed along to the consumers.   Not only will farmers in my district, and throughout the country, be burdened with not being able to afford to operate their farms, this legislation will raise their electric rates, gasoline rates and place an even larger burden on their family.  A family of four could incur costs anywhere from $1,500 to $4,300 per year.  In these tough economic times, this is an unbearable cost on the taxpayer.  

    The Fifth District’s rural community relies on eleven different electric cooperatives to supply electricity throughout the district.  Rural utility companies such as the ones in Ohio are more dependent on coal for electricity generation than utilities in urban areas.  According to data from the National Rural Electric Cooperative Association, eighty percent of electricity production by a rural electric co-op is generated by coal compared to fifty percent nationally.

    In 2006, China surpassed the United States as the world’s largest carbon dioxide emitter.  According to date from the Global Carbon Project, from 2000 through 2007, global total greenhouse gas emissions increased by 26 percent.  During that same period, China’s carbon dioxide emissions increased 98 percent, India’s increased 36 percent, while the United States’ carbon dioxide emissions only increased by 3 percent.  If the United States were to completely cease using fossil fuels, the increase from the rest of the world will replace United States’ emissions in less than eight years.

    We have an Administration that has stated they do not want to burden tax increases on anyone making under $200,000 per year.  However, Americans who make under this amount still use electricity and gas, they still go the service station to fill their gasoline tanks, and they purchase things that have to be manufactured, processed and transported.  With each of these respective items, cap-and-trade will drive up prices.

    A 2008 study by Doane Advisory Services, who is testifying today, has calculated the per-acre production cost increases under current climate change legislation.  With my district’s main crops being corn, soybeans, and wheat, we would see an increase in production costs of each by 27 percent, 15 percent and 27 percent, respectively.  These are direct prices only, and do not take into account the high costs of transportation, manufacturing, and processing of these crops.

    Just as burdensome as proposed climate change legislation will be, the 2009 United Nations’ Conference on Climate Change in Copenhagen is projected to produce an agreement similar to the one passed in 1997 in Kyoto.  Just like Kyoto, Copenhagen will be an agreement that will be detrimental to the U.S. economy and its energy intensive industries.  This agreement will be a legally binding, comprehensive threat to America, especially detrimental to the Midwest.

    Copenhagen will be a multi-nation agreement with 192 countries participating in this process, which makes the United States and its efforts to control its outcome very difficult to agree on the final terms.  America will be expected to show leadership at Copenhagen and succumb to the European Union and the group of 77 developing countries to agree to a legally-binding document.  The U.S will be required to reduce their greenhouse gas emissions significantly even though countries such as China and India will not be forced to comply.  The U.S. has had little if no increase in greenhouse gas emissions since 1997, yet we will be expected to further reduce ours to make up for other countries non-participation.  This will do nothing but further decrease jobs, reduce our GDP, drive up the costs of energy, and increase our national debt.  This agreement will force our taxpayers’ hard-earned dollars to go to developing nations to develop their clean energy programs.  The U.S. will be forced to redesign their energy policy, as well as help fund other countries’ energy policies including sending billions of dollars every year to China.

    As if U.S. government regulation is not enough, U.S. companies and small businesses would be forced into investigations and decisions to be casted down upon them by foreign entities and governments.  Just like cap-and-trade legislation, the Copenhagen Agreement will be a pure transfer of wealth not from the heart of the Midwest to the East and West Coasts, but from the entire United States to the rest of the world.  The Energy Information Administration in the Department of Energy released a study which projected costs of U.S. compliance between $100 and $397 billion annually.  Between legislation, regulations, and a potential treaty, American farmers, manufacturers and small businesses are facing severe consequences.

    It is time for Congress to take a strong look at climate change legislation and the effects it will have on our economy, especially how hard it will affect the Midwestern states that rely heavily on agriculture, manufacturing, and small businesses.  I am still requesting that a joint hearing be held between the House Committees on Agriculture, Energy and Commerce, and Small Business.  I do not want to see the Midwest be unfairly penalized, and we must ensure that our hard-working Americans have job security in farming and manufacturing.  We need to keep American farmers feeding the world, our manufacturers in operation to keep our citizens employed by making American-made products, and our small businesses given incentives to create jobs and expand operations to new markets.  I look forward to working with my colleagues on both sides of the aisle on this critically important matter