House Agriculture Committee Chairman Collin Peterson (D-MN) announced victories for farmers and the ethanol industry Wednesday after the end of a late-Tuesday negotiating session with Democratic leaders over a climate change bill that could come up for a vote by Friday.

"We think we have something here that could work for agriculture," Peterson said modestly to reporters, as he described some big concessions from Energy and Commerce Committee Chairman Henry Waxman (D-CA). As Peterson and farm group lobbyists told Agriculture Online Wednesday, these are the key changes:

• USDA, not the Environmental Protection Agency, would run a cap and trade program that would allow farmers and landowners to sell carbon credits to coal-fired power companies and other large emitters of greenhouse gases believed to be contributing to global warming.
• Farmers who have already made changes in production, such as no-till, that would capture carbon, would get credit for those changes, going back to 2001, and they would be allowed to participate in any new cap and trade program.
• For at least six years, EPA will not able to use an international indirect land use change when it estimates the carbon footprints of ethanol and biodiesel. Indirect land use threatened to make many existing biodiesel plants and new ethanol plants ineligible for government mandates that require gasoline and diesel blenders to use the biofuels. Under the compromise, that requirement will be taken out of the 2007 energy law and an independent group such as the National Academies of Science would review the science behind the theory that more corn acres for ethanol are leading to deforestation in the Amazon. After a five year review, Congress would have another year to study the issue before EPA could act.

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And, Peterson said, USDA, EPA and the Department of Energy would have to agree on the effect of indirect land use on ethanols complete output of carbon dioxide.

"What that means is that USDA has veto power over this," Peterson said.

Dropping the indirect land use calculation is a major reason that Peterson will now work for the climate bill's passage, he said. "This is a huge deal to get that out of there," he said, referring to the 2007 law that requires EPA to calculate indirect land use effects. "I don't think we'll ever get that out any other way."

Much of the deadlock boiled down to distrust of agriculture by EPA and environmental groups and vice-versa, Peterson said.

He said that he believes most of the Democrats on his Agriculture Committee will now vote for the bill, which just two weeks ago seemed to have unanimous bipartisan opposition from farm state legislators.

When asked about some industry and farm group estimates of a high energy costs that the climate change bill would force on consumers and businesses, Peterson said that he believes a Congressional Budget Office estimate of $175 per year per family is accurate and conservative.

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He said that no one really knows the increased energy costs for farmers, but "the worst case scenario that I can see, and this is out of the blue, but I think the worst case is going to be a five to 10% increase for farmers."

Peterson also said he thinks the Senate will make other changes in the bill before it becomes law.

The agriculture community, however, remains divided over whether to support the climate change bill.

The American Farm Bureau Federation is still urging members of Congress to vote against the bill, Paul Schlegel, Farm Bureau's director of congressional relations told Agriculture Online.

"We are enormously supportive and appreciative of everything Mr. Peterson has done," Schlegel said. "It just doesn't work for agriculture. It's expensive."

Farm Bureau estimates that the bill would increase farmers' operating annual costs by $5 billion nationally by 2020, he said. He conceded that all estimates of the cost are uncertain at this point, but he considers the $5 billion projection by Farm Bureau to be the best-case scenario.

The group is also worried that if nations like China, which now puts out more greenhouse gases than the U.S., don't have their own climate laws, industrial production capacity, including some agriculture, will shift to those countries.

Farm Bureau also questions the science behind concerns about global warming. And it's concerned that the climate change bill won't provide enough energy to replace the fossil fuels that the bill would limit.

Roger Johnson, president of National Farmers Union, told Agriculture Online that his organization is leaning toward supporting the bill, after it gets a chance to see Peterson's negotiated changes in print.

Johnson said that a climate change bill, even though it might bring some increased costs, is a much better alternative for farmers than having EPA regulate greenhouse gases.

"In the absence of it being passed, we have a Supreme Court decision compelling EPA to regulate," Johnson said. The climate change bill exempts agriculture from having to limit greenhouse gas emissions. And it would allow farmers to sell carbon credits, under USDA supervision, not the EPA. Without the bill, farmers might face emissions caps from EPA and they wouldn't be able to sell carbon credits.

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Johnson added that from the talking points on the bill that he's seen, farmers who have already signed up to sell carbon credits on the voluntary Chicago Climate Exchange, through his organization, Iowa Farm Bureau's AgraGate and other private groups would be allowed to sell credits under the new congressionally mandated program. Johnson expects carbon prices to rise dramatically from the current level of $1 to $2 per ton of carbon dioxide equivalent. And farmers who had started carbon-capturing practices such as no-till, methane digesters or planting cover crops, might also be compensated for what they've done, going back to 2001.

"It just sounds like we got a lot," he said.

Farm Bureau argues that most of the benefit from a cap and trade system will go to owners of forest land. The Chicago Climate Exchange already gives owners of private forest land in the southeast several times higher credits than Great Plains farmers who convert cropland to grass.

But Johnson said he's not certain which regions or farms will benefit most. Unlike a carbon tax, cap and trade "lets the market sort it out," he said.

Johnson and Jimmy Daukus, a lobbyist for American Farmland Trust, said that this latest compromise and possible passage of the bill by the House, is only the first step in the process. Johnson is pleased by reports that the Senate willl involve its agriculture committee chairman, Tom Harkin of Iowa, when it starts to consider its own climate change bill.

Added Daukus, "I think there's a lot of policy development and discussion ahead."

Before this Friday's House vote on the climate bill, "I think you will see that some more farm state legislators and organizations will support it," Daukus said. "I don't think it will ever be unanimous."

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And, while a few Republicans from California and urban districts might vote for the bill, most members of the GOP remain strongly opposed. The party has introduced its own American Energy Act, which promotes clean, renewable sources, such as wind, solar, hydropower, and nuclear, while also producing more American-made oil and natural gas offshore.

The Democrats' bill drew criticism Wednesday from the GOP Rural America Solutions Group, which is co-chaired by Representative Frank Lucas of Oklahoma, the ranking Republican on the House Agriculture Committee.

"Despite the agriculture community's best efforts to slow this bill down and allow the legislative process to work, Speaker Nancy Pelosi is moving forward with bringing this bill to the floor for a vote on Friday," Lucas said. "This is a bill that promises to destroy our standard of living and quality of life with higher energy costs, higher food prices and lost jobs."