NCC Issues Statement on Energy Bill

The NCC commends House Agriculture Committee Chairman Peterson’s (D-MN) stalwart efforts to successfully negotiate amendments to The American Clean Energy and Security Act (H.R. 2454) which authorizes USDA to develop and administer agricultural offsets in a cap-and-trade program.

Published: June 25, 2009
Updated: June 25, 2009

Statement by the National Cotton Council on
H.R. 2454 - The American Clean Energy and Security Act

The National Cotton Council (NCC) is the central organization of the U.S. cotton industry representing producers, ginners, warehousemen, merchants, cooperatives, textile manufacturers, and cottonseed handlers and merchandisers in 17 states stretching from California to Virginia. Taken collectively, the annual economic activity generated by cotton and its products in the U.S. economy is estimated to be in excess of $100 billion.

The NCC commends Chairman Peterson’s stalwart efforts, in the face of formidable opposition, to successfully negotiate amendments to H.R. 2454 which authorizes USDA to develop and administer agricultural offsets in a cap-and-trade program. The NCC supports development of these offsets as a means to mitigate, to some degree, the impact of significantly higher energy and input costs to production agriculture and agribusiness.

Upon consideration of the broad impacts of this legislation, however, NCC has concluded that the higher costs of energy and other production inputs for every sector of the U.S. cotton industry will far outweigh any benefits resulting from offsets. Production, marketing, and processing will be adversely affected in varying degrees. A preliminary analysis of direct energy costs related to production, ginning, marketing, and yarn spinning indicates that every 10% increase in input prices will increase costs by at least $175 million. The estimate, which should be viewed as a lower bound, does not fully account for the ripple effects that higher energy costs will have on all industries that supply inputs to the U.S. cotton and textile industry.

NCC is deeply concerned about the international disparity that this bill would establish for U.S. industries. China and India, the two largest cotton and textile producing countries, are competitors with U.S. cotton in the international market. Both countries are significant and growing greenhouse gas emitters and both have thus far refused to sign onto any agreement to curtail their emissions. The additional production costs that will result from implementation of the provisions of H.R. 2454 will place U.S. cotton and cotton products at a clear disadvantage in international markets, which are critically important to the U.S. cotton industry.

For these reasons, NCC urges support for Chairman Peterson’s amendments but can not support the bill without significant modifications and improvements to address the concerns outlined above.