Washington-U.S. Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) on May 12 introduced the American Power Act, a new energy and climate bill that includes provisions for increasing nuclear power and offshore drilling, but also retains a cap-and-trade system for reducing carbon pollution by factories and electric utilities. The bill would require electric power utilities to obtain pollution permits starting in 2013. The permits could be traded on a regulated market, and would initially be provided free by the government before transitioning to a full auction system by 2030. The bill encourages offshore drilling, but would allow U.S. states to prohibit offshore oil activity within 75 miles of their coasts. The legislation drew a mixed response from industry and agricultural interests. “The climate change legislation introduced today by Sens. Kerry and Lieberman provides government incentives that will encourage a wide range of utilities to switch to natural gas as an alternative for generating energy, as well as incentives for natural gas vehicles,” said Ford West, president of The Fertilizer Institute (TFI). “This will undoubtedly increase the demand for and price of natural gas, which there is no substitute for in the manufacturing process of nitrogen fertilizers.” TFI said the domestic fertilizer industry is highly dependent on a reliable and reasonably priced supply of natural gas, noting that as much as 90 percent of the cost of producing nitrogen fertilizers can be directly attributed to the price of natural gas. “Despite the bill authors’ stated intent to offset natural gas rate increases for industrial users, its design fails to protect the fertilizer industry from the threat of fuel switching since our natural gas feedstock purchases are not made through a local distribution company,” West said. “Congress must keep in mind that fertilizer is a crucial food security resource that is responsible for 40 to 60 percent of the world’s food supply. Essential industries, such as fertilizer, will be severely challenged by climate policy that does not address our unique sensitivity to the price and availability of natural gas. It is vital that Congress develop climate change legislation that will preserve the fertilizer industry and many other U.S. manufacturing sectors’ ability to remain viable in a very competitive global market.” The National Corn Growers Association (NCGA) also released a statement, saying it was reserving judgment until it and EPA had fully analyzed the bill. NCGA noted, however, that it could not support the earlier Waxman/Markey bill in the U.S. House, which also contained cap-and-trade language, “due to the potential adverse economic impacts on corn growers.”
Transparency Across the Fertilizer Value-Chain