The Fertilizer Institute has been responding to a report released May 13 by the Pew Center on the competitiveness impacts of potential climate change policies. In summary, says TFI, the report states that the impacts of a cap and trade policy would be limited to energy-intensive industries, including phosphatic and nitrogenous fertilizers (not specifically mentioned in the report, but referenced in the appendix). The reports also “finds” that energy-intensive industries would only lose one percent of production to imports, assuming a CO2 cost of $15/ton and no equivalent carbon policies in other countries. TFI says the report findings indicate that most of the projected economic impact of cap and trade policy would result from a move by consumers towards less emissions-intensive products rather than an increase in imports or a shift of jobs or production overseas.
TFI said the authors conclude that the projected impacts of a cap and trade policy can be addressed through policies targeted to energy-intensive sectors. They outline a range of policy options, including compensating energy-intensive sectors covered by a mandatory cap for their regulatory costs; excluding those sectors from the cap and trade program; and using border adjustment measures to equalize costs for domestic and imported energy-intensive goods.
TFI responded to media inquiries regarding the findings of the report by emphasizing the following talking points.
- As an energy-intensive industry that has already achieved tremendous efficiencies due to the high cost of natural gas, the industry is close to a theoretical maximum in energy efficiency that is limited by the laws of chemistry.
- Any argument about cap and trade policy’s potential to decrease demand for a product instead of driving up imports does not apply to fertilizers, as fertilizers are a necessary tool in food production that farmers cannot do without. Specifically, TFI pointed to level fertilizer use trends and the great increases in fertilizer use efficiency that U.S. farmers have already achieved.
- Losing the remaining U.S. fertilizer production to imported products is equivalent to the U.S. outsourcing its food production to many of the same countries from which we are seeking to become energy independent.