Climate Change https://www.iatp.org/ en The puzzle of carbon border fees and a just transition https://www.iatp.org/blog/202107/puzzle-carbon-border-fees-and-just-transition <span>The puzzle of carbon border fees and a just transition</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Thu, 07/15/2021 - 14:33</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>Y<span><span><span>esterday, the European Commission launched its plans for a Carbon Border Adjustment Measure (CBAM), which would charge fees on imports of certain high emissions goods. In the U.S., Democrats raised the possibility of “<a href="https://www.nytimes.com/2021/07/14/climate/border-carbon-tax-united-states.html">polluter import fees</a>” as part of a tax reform connected to the $3.5 trillion budget plan. In both cases, the idea is to ensure that domestic producers who are trying to transition to cleaner production methods aren’t undermined by cheaper high-emissions imports.</div> Thu, 15 Jul 2021 19:33:43 +0000 Cecelia Heffron 44609 at https://www.iatp.org Can we harness the power of trade agreements to achieve our climate ambitions? https://www.iatp.org/trade-agreements-achieve-climate-ambitions <span>Can we harness the power of trade agreements to achieve our climate ambitions?</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Thu, 07/15/2021 - 11:26</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span>As the climate emergency deepens, governments, civil society, corporations and individuals must pursue multiple paths in order to meet or exceed the goals of the </span></span><a href="https://en.wikipedia.org/wiki/Paris_Agreement"><span><span>Paris Climate Agreement</span></span></a><span><span>. The Paris Agreement is not self-enforcing, and the commitments of the signatory governments are voluntary.</span></span></span></span></p></div> Thu, 15 Jul 2021 16:26:49 +0000 Cecelia Heffron 44608 at https://www.iatp.org Corporate skirmishes over climate risk, carbon offsets https://www.iatp.org/corporate-skirmishes-climate-risk-carbon-offsets <span>Corporate skirmishes over climate risk, carbon offsets</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Thu, 07/01/2021 - 15:59</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span>During the past two weeks, as part of IATP’s work to reduce risk from climate change, we have responded to <a href="https://www.sec.gov/news/public-statement/lee-climate-change-disclosures">questions from the U.S. Securities and Exchange Commission (SEC)</a> and the private sector <a href="https://www.iif.com/Portals/1/Files/TSVCM_Public_Consultation.pdf">Task Force on Scaling Voluntary Carbon Markets (TSVCM)</a><span><span> public consultation report</span></span>.</div> Thu, 01 Jul 2021 20:59:58 +0000 Cecelia Heffron 44599 at https://www.iatp.org New territory: USDA puts spotlight on food supply chain resilience https://www.iatp.org/usda-puts-spotlight-food-supply-chain-resilience <span>New territory: USDA puts spotlight on food supply chain resilience</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Thu, 06/24/2021 - 16:19</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span>An under-the-radar executive order signed by the Biden administration in late February could have big implications for our food system. <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/">Biden’s order</a> called for more “resilient, diverse and secure supply chains” and asked federal departments, including the U.S. Department of Agriculture, to submit recommendations to achieve this goal. A deep examination of food supply chains and their current vulnerabilities is long overdue.</div> Thu, 24 Jun 2021 21:19:02 +0000 Cecelia Heffron 44585 at https://www.iatp.org IATP comment on the Task Force on Scaling Voluntary Carbon Markets phase II public consultation document https://www.iatp.org/documents/iatp-comment-task-force-scaling-voluntary-carbon-markets-phase-ii-public-consultation <div data-history-node-id="44586" class="node node--type-document node--view-mode-rss no-field-teaser-image title-not-empty ds-1col clearfix"> <div class="field field--name-field-author field--type-entity-reference field--label-above"> <div class="field--label">Author</div> <div class="field__items"> <div class="field--item"><a href="/about/staff/dr-steve-suppan" hreflang="en">Dr. Steve Suppan</a></div> </div> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong><a href="https://www.iatp.org/sites/default/files/2021-06/TSVCM%20consultation%20comment%20IATP%206.21.21.pdf">Download a PDF of the comment letter</a>. </strong></p> <h3><span><span><em><span>Introduction</span></em></span></span></h3> <p><span><span><span>The Institute for Agriculture and Trade Policy (IATP)<sup>1</sup> </span><span>appreciates this opportunity to respond to some of the questions posed in the TSVCM consultation document. We are particularly grateful that the TSVCM offers the option of responding to the consultation document in a letter, rather than only responding to survey questions. IATP responded in December 2020 to the survey questions for the draft TSVCM report and found it difficult to fit our responses within the character count limits of the questions boxes. We summarized elsewhere some of our responses in the context of a market integrity concern noted, but not discussed in the draft report, nor, indeed, in this consultation document — excessive speculation (Exhibit 31).<sup>2</sup></span></span></span></p> <p><span><span><span><span>Our responses to the consultation questions mostly concern the “Legal principles and contracts” section of the document, with some remarks on “credit level integrity.” The reason for our focus is that the TSVCM recommendations will be applied to contracts traded either on existing exchanges or in Over the Counter (OTC) trading, whether bilateral or on Swaps Execution Facilities. The “how” of trading is at least as important as what is traded. The TSVCM phase II consultation has little to say about the role of exchanges in emissions futures trading except “Exchanges are expected to set their own trading terms (see example in the Technical Appendix).” (slide 42) Given the possibility that different exchanges will trade offset futures on different terms, it is surprising that the Task Force’s Legal Principles and Contract Working Group does not have more to say about harmonizing exchange rules for trading emissions offset futures contracts, such as the CME Global Emissions Offset futures contract, and exchange traded offset swaps. Exchanges compete for business, so the likelihood of deregulatory arbitrage among exchanges to capture part of the anticipated boom in offset and avoidance credit trading should not be dismissed.  </span></span></span></span></p> <h3><span><span><span><em><span><span><span>“We have to be open to the idea that the voluntary market might fail” </span></span></span></em></span></span></span></h3> <p><span><span><span><span>IATP is not privy to insider details about disagreements among the TVSCM’s 400 plus members. But to judge by a recent article in Bloomberg Green, among the disagreements are varying opinions about transparency of TVSCM decision making and about the environmental integrity of the offset credits: <span><span>“’If they [offset emissions project developers] generate a lower carbon benefit than they claim and the company [buying such offset credits] is still emitting, well then you end up with more emissions than you would have otherwise,’ said [Eli] Mitchell-Larson [a consulting environmental scientist]. ‘We have to be open to the idea that the voluntary market might fail.’”<sup>3</sup></span></span></span><span> The consequences of market failure would be much greater than economic damage to market participants and to exchanges. The consequences could include failure of market participants to prioritize making investments to directly reduce their emissions and adapt to climate change, while they imprudently and preponderantly invest in poor quality offset and/or avoidance credits.</span></span></span></span></p> <p><span><span><span><span>If the emissions offset projects were found to be fraudulent or simply misrepresent the amount of emissions offset or misrepresent Economic Social and Governance (ESG) attributes described in the offset credit contract, the value of the contract could abruptly fall. If instances of fraud or misrepresentation were numerous and well-publicized, investors might not buy a disreputable contract even at the fallen price. If enough investors held large positions in an offset futures contract and the contract price fell rapidly in automated trading systems, exchanges would be forced to throw kill switches to stop the price fall and declare a market event to regulators, which likely would trigger an investigation of the contract. If such market events became frequent for several offset contracts, the voluntary carbon market could fail.<sup>4</sup></span><span> And, as Mitchell-Larson suggests, the failure would not impact negatively just participants in the offset and avoidance credit value chain, but the climate itself and its inhabitants.</span></span></span></span></p> <p><span><span><span><span>The consultation document reports that 45% of emissions offset buyers responding to a TSVCM phase I survey, as of October 2020, were concerned about a “lack of environmental and social integrity of certain projects” (slide 50) from which offset and avoidance credits would be derived. Forty-one percent of buyer respondents were concerned about the double-counting of emissions reductions, avoidance and/or removals by the projects’ home country (mostly a TVSCM identified dozen or so developing countries) and the buyers’ home country (mostly corporations and financial firms in North America and Europe) in reporting Nationally Determined Contributions (NDCs) to the U.N. Framework Convention on Climate Change (UNFCCC). (slide 50) Twenty-one percent of buyers were concerned that UNFCCC negotiations might not produce an agreement on “corresponding adjustments” to NDCs to avoid double-counting, which, if widespread among UNFCCC member governments, would vitiate any claim that emissions trading will result in absolute and overall emissions reductions consistent with the UNFCCC Paris Agreement of 2015. Underlying the concerns of the buyers is whether emissions reductions, avoidances and/or removals could be measured accurately from credible baselines. </span></span></span></span></p> <p><span><span><span><span>The TSVCM’s Credit-Level Working Group proposes an elaborate standards and implementation architecture to ensure that reductions, avoidance and/or removals would be near permanent (save for emissions reduction and avoidance reversals due to forest fires and other Force Majeure events). However, the Working Group has just this to say about the technologies of measuring and reporting emissions: “Accuracy of measurement requires specifications on data collection methods. These may include: sampling approaches and inventory specifications, calibration of meters, calibration and validation of biogeochemical models, specifications for the use of remote sensing tools. The calculation of uncertainty for any method must be defined by the Standard.” (slide 61) Nor does the Technical Appendix have anything further to say about the accuracy of emissions and baseline measurement, crucial factors both for launching the TSVCM model Core Carbon Principle (CCP) contract and for the UNFCCC negotiations on double counting and corresponding adjustments. </span></span></span></span></p> <p><span><span><span><span>A TSVCM leader, Annette Nazareth, has written that the use of Digital Ledger Technology (DLT) will enhance the accounting integrity of offsets in DLT enabled “smart contracts” to greatly reduce the possibility of fraud or misrepresentation of the quantity of emissions offset or avoided by the developers projects. IATP agrees that the use of DLT, with its immutable recordkeeping, can increase the accounting integrity of offset, avoidance and removal contracts.  However, she then writes,</span></span></span></span></p> <p><span><span><span><span><span><span>DLT alone, however, cannot resolve all issues relating to the integrity of carbon credits. Due to the complexities of carbon verification, there will likely always be some need for human control. For example, people will need to confirm that sensors are well placed, and that satellites monitoring forests do not reveal child labor violations. Unfortunately, human control also introduces risks. The step of transferring information from humans to the digital DLT may be susceptible to fraud.<sup>5</sup></span></span></span></span></span></span></p> <p><span><span><span><span>Although Nazareth’s techno-optimism is tempered, it is not tempered enough. It is not just the placement of sensors to measure GHG sequestration that should concern the TSVCM, but the physical robustness and accuracy of sensors in different soil types, depths and topographies<sup>6</sup></span><span> and the reliability of their digital signals transmitting GHG information to satellites for subsequent downloading and data aggregation.<sup>7</sup></span></span></span></span></p> <p><span><span><span><span>This is less a critique of Nazareth’s article than a recommendation that the TSVCM should not rely on DLT to interface NDC registries and voluntary market registries, as she suggests: “<span><span>DLT gives all involved parties the advantages of transparency, immutability, and avoiding the need for a central arbiter (or political negotiation and agreement).” Even if existing sensor and satellite technologies could accurately measure emissions avoidance, reductions and removals at project scale, the application of corresponding adjustments to avoid double counting would remain a fraught political negotiation, if only for this reason: “Carbon credits can have low environmental integrity, and they will become increasingly difficult to source as countries need to ‘keep’ their reductions to meet domestic targets.</span></span><span><span>”<sup>8</sup></span></span></span></span></span></span></p> <p><span><span><span><span><span><span>The developing countries supplying the vast majority of TSVCM envisioned offset and avoidance project credits need to retain at least some of those credits for their own NDC reporting. This diplomatic need is not considered in the phase II consultation analysis.  The TSCVM is excessively circumspect about the relation between the scaling up of voluntary markets and the results of the UNFCCC Article 6 negotiation. The TSCVM Technical Annex should include a “deep dive” into Article 6 negotiations and recommend that TSVCM members read other “deep dives” to better understand the positions of all Parties to the negotiations and how the resulting compromises may affect hoped for TSVCM outcomes.<sup>9</sup></span></span></span></span></span></span></p> <p><span><span><span><span><span><span>TSVCM members may believe it is smart diplomacy to delay negotiating an agreement on Article 6.8 (“non-market mechanisms,” i.e., direct funding of climate action for developing countries) until the rest of Article 6 is first agreed on terms that would help enable and legitimize the scaling of voluntary carbon markets. All UNFCCC members will have to suffer the costs of the accelerating climate crisis, albeit inequitably, if Article 6.8 continues to remain unnegotiated pending agreement on the rest of the Article: “</span></span></span><span>Parties have made good-faith submissions with constructive suggestions on enabling ambition, governance, and use of proceeds in Article 6.8, but for the most part these contributions have been sidelined in favor of a negotiating agenda fixed on the creation of carbon markets and ITMOs [Internationally Transferred Mitigation Outcomes].”<sup>10</sup></span><span> Smart climate diplomacy would be a scenario in which the TVSCM members who are also members of the International Emissions Trading Association would lobby their governments to allow Article 6.8 to be negotiated and agreed as a separate article so that more adequate and urgently required climate finance can be mobilized for mitigation and adaptation projects and planning programs in developing countries.</span></span></span></span></p> <p><em>To continue reading the comment letter and endnotes, <a href="https://www.iatp.org/sites/default/files/2021-06/TSVCM%20consultation%20comment%20IATP%206.21.21.pdf">please download a PDF</a>. </em></p> </div> </div> Mon, 21 Jun 2021 22:06:34 +0000 Cecelia Heffron 44586 at https://www.iatp.org IATP comment to USDA on supply chains for the production of agricultural commodities and food products https://www.iatp.org/iatp-comment-usda-supply-chains-production <div data-history-node-id="44584" class="node node--type-document node--view-mode-rss no-field-teaser-image title-not-empty ds-1col clearfix"> <div class="field field--name-field-author field--type-entity-reference field--label-above"> <div class="field--label">Author</div> <div class="field__items"> <div class="field--item"><a href="/about/staff/ben-lilliston" hreflang="en">Ben Lilliston</a></div> <div class="field--item"><a href="/about/staff/michael-happ" hreflang="en">Michael Happ</a></div> <div class="field--item"><a href="/about/staff/dr-steve-suppan" hreflang="en">Dr. Steve Suppan</a></div> <div class="field--item"><a href="/about/staff/sharon-anglin-treat" hreflang="en">Sharon Anglin Treat</a></div> <div class="field--item"><a href="/about/staff/karen-hansen-kuhn" hreflang="en">Karen Hansen-Kuhn</a></div> </div> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong><a href="https://www.iatp.org/sites/default/files/2021-06/IATP%20USDA%20supply%20chain%20comment%202021.pdf">Download a PDF of the comment</a>. </strong></p> <p>The Institute for Agriculture and Trade Policy (IATP) thanks the USDA for seeking input on how to strengthen and secure agriculture and food supply chains. IATP is a 35-year-old non-profit 501(c)3 organization based in Minneapolis, Minnesota. IATP works to ensure fair and sustainable food, farm and trade systems.</p> <p>Major disruptions to our food system from the COVID-19 crisis, severe climate-related events (including the current drought), and recent trade fights have made clear the fragility of our food and agriculture supply chains. These disruptions come on the heels of seven straight years of low prices (although prices have risen somewhat in recent months) for farmers, often below the cost of production, and rising debt and farm bankruptcies. A series of antitrust, bid rigging and price-fixing investigations, particularly in raw milk and poultry, reveal an agricultural marketplace that is controlled by a handful of global companies to the detriment of farmers and consumers.</p> <p>Our current food supply chains are the result of deliberate policy choices made within the Farm Bill, trade, labor, health, environmental, antitrust and competition policies and enforcement. To make supply chains more resilient will require a clear-eyed view of what outcomes we want, and what policy changes are necessary to get there. IATP believes there are clear vulnerabilities to long (often global), highly concentrated supply chains controlled by multinational companies that are not motivated by the public interest. A more decentralized system, with more redundancy combined with regional or local ownership, can be more accountable to public interest goals for a fair, environmentally sustainable, healthy food system.</p> <p>IATP’s comment below focuses on the need to address excess corporate concentration within the food and agriculture sector; the inherent risks of large-scale confined animal feeding operations (CAFO) to supply meat, poultry and milk; the necessity to expand workers’ rights and empowerment for stronger supply chains; and reforms to farm policy programs to emphasize resilience.</p> <p>In nearly every sector of our food system, a handful of large corporations control much of the production, processing and distribution.<sup>1</sup> Many of these corporations are multinational companies, with operations and subsidiaries that may or may not support U.S. food system policy priorities. There are significant risks to granting control of food supply chains to multinational companies (including those with U.S. headquarters) that have a fundamentally different set of priorities than those of any nation, region or community. The recent COVID-19 related disruptions revealed some of the vulnerabilities of this type of system.</p> <p>Many of the questions asked in the federal register notice cover overlapping issues. To avoid repetition by going question by question, we responded to multiple questions at once, outlining here what we see as key supply chain challenges and opportunities to build a more resilient food system supply chain.</p> <p><strong>Supply chain secrecy</strong> — Almost from the outset of the pandemic outbreak, meat companies, particularly global pork giant Smithfield, demanded that meat processing plants be exempted from public health restrictions that could have limited their operations, warning of potential U.S. supermarket meat shortages. Other global meat companies, including JBS, Cargill and Tyson joined this call. President Donald Trump signed an Executive Order ordering the packing plants to operate at the risk of spreading the COVID-19 contagion from plant workers to their families and communities. Even if we were to accept the questionable premise that the availability of meat supplies must override public health protection considerations, in this case, there was no clear data or evidence that an actual U.S. meat shortage existed.</p> <p>The USDA National Agricultural Statistics Service (NASS) issues monthly reports on Cold Storage surveys of commercial and public warehouses for meat (and dozens of other commodities) — which provides some information on how much meat is available in the U.S. It does not provide company specific cold storage data or how much a particular company may have in cold storage in another country that could be imported into the U.S. In February 2020, cold storage data showed the U.S. had 650 million pounds of frozen pork, up from 500 million pounds in 2017. While levels of pork in cold storage dropped throughout 2020, levels never reached below 400 million pounds in cold storage.<sup>2</sup> Those supplies in cold storage could have been used to allow companies to slow processing lines and provide additional protective equipment and testing for workers. But it turned out these global companies, who had aggressively lobbied to keep their operations open, had another objective — to expand exports.</p> <p>National level export data later indicated that while these companies were warning of shortages, they were also exporting large quantities of meat, including to China.<sup>3</sup> Overall, U.S. agriculture exports had its second highest level on record in 2020, and pork exports were up 11%.<sup>4</sup> And of course, with integrated operations in multiple countries including Mexico and Canada, these companies always had the option of importing meat from their other operations to address any shortages. It turned out that the meatpacking plant workers, largely immigrants and refugees, were risking their health and that of their families and communities not just to fill U.S. supermarkets, but also to expand foreign sales during a crisis. The meat supply chain “managed” the COVID-19 shock, not by slowing down production or using U.S. cold storage supplies, but by risking the health of its workers and their communities.</p> <p><em>Recommendation</em>: The lack of reliable, transparent information about the U.S. meat supply during the pandemic was alarming and revealed an enormous vulnerability. The USDA should examine whether its Cold Storage survey data is adequate to assess meat supplies for the nation, what percentage of meat in storage and production is headed for export, and what additional information is needed to better understand supplies and associated risk. The U.S. must develop with public input a policy for the use of Cold Storage supply as part of an overall food policy to apply during presidentially declared National Emergencies. Because public health experts anticipate future pandemics, the U.S. must never again endanger its public health by allowing food companies to maximize production for export and to receive federal protection from liability from harm to worker and community health, and the economic consequences of that harm. </p> <p><strong>Multiple risks of concentrated production</strong> — Several additional issues emerged from the COVID-19 crisis about the risks of highly concentrated market share meat production. While pandemic-related shutdowns of meatpacking plants clearly affected workers, it also affected the large-scale concentrated animal feeding operation (CAFO) system that supplies livestock to those plants. Both farmers and animals paid a price and remain vulnerable if new shutdowns were to occur. A massive culling of millions of poultry and hogs was necessary when processing plants closed even for a few weeks.<sup>5</sup> There was nowhere else for these producers to take their animals because most small and mid-sized meat processing plants were run out business over the last several decades by these global companies. The loss of small and mid-sized processing plants hurts larger CAFO producers, but it also hurts smaller scale producers, who during COVID-19 were often closed out of their traditional processors. These smaller scale producers now can face wait times of over a year to get their animals to the processor, incurring more feeding costs and animal health risks during the prolonged wait.</p> <p>Numerous risks to our concentrated meat supply chain remain. Recently, poultry markets appeared to see shortages attributed to worker-related disruptions (caused in large part by concerns over low pay and poor working conditions),<sup>6</sup> and extreme weather events in the southern U.S.<sup>7</sup> The U.S. beef industry is now facing challenges with a major drought hitting 60% of the nation’s cow herd, necessitating tough decisions about culling cattle as they struggle to find water and pasture.<sup>8</sup> And JBS, the largest meat producer in the U.S., was recently hit by a cyber-attack forcing the closure of all of its beef packing plants and many of its pork and poultry plants as well.<sup>9</sup> JBS controls 20% of U.S. beef production.<sup>10</sup></p> <p><em>Recommendation</em>: The USDA can play a major role in building more resilient supply chains by diversifying meat processing capacity specifically by supporting small to mid-sized processors to get established and grow in all federal states. A processing resilience grant program, outlined in the Agriculture Resilience Act, would be a good start.<sup>11</sup> A COVID-19 outbreak, food contamination spread or climate-related weather event should not cripple an entire supply chain due to meatpacking oligopolies.</p> <p><em>To continue reading the comment and IATP's recommendations, please <a href="https://www.iatp.org/sites/default/files/2021-06/IATP%20USDA%20supply%20chain%20comment%202021.pdf">click here</a>. </em></p> <p> </p> </div> </div> Mon, 21 Jun 2021 21:01:32 +0000 Cecelia Heffron 44584 at https://www.iatp.org There could be billions of dollars coming for conservation: What does that mean for rural communities? https://www.iatp.org/there-could-be-billions-coming-for-conservation <span>There could be billions of dollars coming for conservation: What does that mean for rural communities?</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Mon, 06/14/2021 - 09:29</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span>Congress and the Biden administration are working on a sweeping infrastructure package known as the American Jobs Plan. This package is a once-in-a-lifetime opportunity to fix what’s broken in the United States, create good-paying jobs, combat the climate crisis and invest in rural places. In order to be truly transformative for farm country, specific investments need to be made. </span></p></div> Mon, 14 Jun 2021 14:29:39 +0000 Cecelia Heffron 44581 at https://www.iatp.org IATP Input Letter on SEC Climate Change Disclosures https://www.iatp.org/documents/iatp-input-letter-sec-climate-change-disclosures <div data-history-node-id="44583" class="node node--type-document node--view-mode-rss field-primary-category-trade has-field-primary-category no-field-teaser-image title-not-empty ds-1col clearfix"> <div class="field field--name-field-author field--type-entity-reference field--label-above"> <div class="field--label">Author</div> <div class="field__items"> <div class="field--item"><a href="/about/staff/dr-steve-suppan" hreflang="en">Dr. Steve Suppan</a></div> </div> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><strong><a href="https://www.iatp.org/sites/default/files/2021-06/SEC%20disclosure%20input%20IATP%206.13.21%20Final.pdf">Download a PDF of the comment letter</a>. </strong></p> <p><span><span><span>The Institute for Agriculture and Trade Policy (IATP)<sup>1</sup> appreciates this opportunity to respond to some of the questions posed by the SEC in Acting Chair Alison Herren Lee’s March 15 request for public input.<sup>2</sup> We do so as the SEC faces opposition rooted in what the late, great climate economist Frank Ackerman called in 2008 “the fear that overly ambitious climate initiatives could hurt the economy. Economists emphasizing that fear have, in effect, replaced the climate skeptics as the intellectual enablers of inaction.”<sup>3</sup></span></span></span></p> <p><span><span><span>This fear can be translated into a Business as Usual claim that “overly ambitious” climate disclosure may hurt SEC listed companies and/or put them at a competitive disadvantage with firms in other jurisdictions not subject to disclosure requirements. Such a fear may be disguised in the all-purpose anti-regulatory claim that climate risk disclosures in the line items of 10-K and 10-Q SEC reporting forms, and other financial statements will be “unduly burdensome and costly” for SEC listed firms. We will not adapt here Dr. Ackerman’s four principles to improve climate economics to improving SEC climate disclosures. But we do advise the SEC to review these principles, particularly to ensure that the future of our grandchildren is not discounted in regulatory abuse of cost-benefit analysis, in which valid analysis is only that which has short-term monetary expression.<sup>4</sup></span></span></span></p> <p><span><span><span>Investor demand for information from climate related and ESG disclosures has been called “the new normal.” According to the results of a survey by “Ernst &amp; Young, 91% of institutional investors consider nonfinancial performance core to their investment decision making process over the past year [2020].”<sup>5</sup> </span><span>The SEC must not succumb to political and issuer lobbying to limit climate and ESG disclosures only to those that have a</span> <span>material impact on a firm’s quarterly or annual financial statement. To adapt a balance sheet approach to disclosure will deprive investors, auditors, insurers and other interested parties of both quantitative and qualitative information about how SEC registrants (and eventually private equity and closely held firms) are changing their policies, production practices, human capital management, portfolio and capital allocations to meet the short, medium and long-term physical and transitional risks of climate change.</span> </span></span></p> <p><span><span><span>If the SEC allows its registrants to remain in the 20th century world of climate economic skepticism and to mollify investor demands for granular ESG and climate information with promises to become sustainable, U.S. investors may well choose to trade on platforms in jurisdictions with more comprehensive and comparable disclosure requirements. If investors cannot compare issuer disclosures, they may move their investments to jurisdictions that better protect investors by ensuring that they have access to comprehensive, comparable and reliable disclosure information. No matter how up-to-date financial trading technology is, trading algorithms will not prevent disruption of markets and capital formation by firms that are unprepared to adapt to climate and ESG related adversity on small and large scales over the short and long terms.</span> </span></span></p> <p><span><span><span>Finally, disclosure must be standardized, comparable, reliable and mandatory because a large share of SEC registrant climate commitments, just measured in GHG reduction commitments, are weak to non-existent. For example, according to Institutional Shareholder Services, “<span><span>Just over a third of the 500 companies in the S&amp;P 500 stock index have set ambitious targets, it found, while 215 had no target at all. The rest had weak targets.”<sup>6</sup> </span></span>The following comment and responses to SEC questions comprise a general comment and responses, plus responses that concern disclosure requirements that apply specifically to agribusiness and food processing companies.</span></span></span></p> <p><span><span><span><em><span>General comment</span></em></span></span></span></p> <p><span><span><span><span>IATP generally supports granular, standardized, comparable and mandatory disclosure of climate-related risks to the SEC. We believe that existing rules should be amended and amplified to accommodate climate and ESG disclosures, rather than creating a new and separate rule.<sup>7</sup> We agree that “</span><span><span><span>the current path of climate disclosure will not provide the transparency that an increasing number of investors are seeking and, indeed, a properly functioning market requires—consistency of disclosures across time, comparability of disclosures across companies, and reliability of the information that is disclosed.”<sup>8</sup></span></span></span><span> Banks that finance SEC registered firms prefer a SEC standardized climate risk reporting, so they are not forced to choose among or synthesize their clients’ voluntary reporting standards when reporting the banks’ own climate physical and transition risks from consolidated audit trails. </span></span></span></span></p> <p><span><span><span><span>The SEC should review the work of the voluntary climate financial and ESG standards initiatives to determine which elements of those standards might be incorporated into a proposed SEC disclosure rule.<sup>9</sup> All disclosures to the SEC and in audited financial reports should be overseen by the reporting firm’s Chief Financial Officer, attested to by the CFO and audited independently. The oversight process, attestation and auditors report could be included in item 9a, “Controls and Procedures” of the 10-K report. To reiterate, we support standardized and mandatory disclosure requirements with five multi-part recommendations. We conclude this comment with a mini-case study of disclosure issues for the meatpacking and dairy processing industries. </span></span></span></span></p> <p><span><span><span><em><span>First recommendation: Build SEC capacity to evaluate disclosures of long-term physical and transitional risks based on long-term climate modeling </span></em></span></span></span></p> <p><span><span><span><span>The likelihood of and costs from climate change related weather events at the firm level can be estimated over a short term (e.g. 1-3 years) with the use of accounting and actuarial data.<sup>10</sup> However, reporting estimated physical and transition risks over the longer term rely on climate modeling that is subject to variables and uncertainties that cannot be quantified with the degree of certainty that investors and other market actors demand. A group of climate modelers recently warned, “</span><span>Calls for the integration of climate science into risk disclosure and decision-making across many levels of economic activity has leap-frogged the current capabilities of climate science and climate models by at least a decade.”<sup>11</sup></span><span> This warning does not mean that the SEC should wait a decade for climate science and modeling to catch up to the demands of business for geo-spatially and temporally specific climate information for the SEC to initiate and finalize a rulemaking on climate disclosures. It does mean that the SEC needs in-house climate modeling expertise to evaluate whether the longer-term plans of a firm are adequate to mitigate its longer-term risks estimated by reporting entities according to their use of climate models.  </span></span></span></span></p> <p><span><span><span><span>For example, climate science has described the geo-physical “tipping points” that will result in abrupt or irreversible changes to global and regional climates.<sup>12</sup> However, modeling how, when and to what extent those changes will impact corporate and financial sector assets and supply chains is subject to a number of climate scenarios, variables and uncertainties. The Commission should consider phasing in the reporting of longer-term physical and transitional risks to take into account the computer modeling capacity of reporting firms to estimate their firm level operational, credit, liability and market risks.<sup>13</sup> The Commission could also develop criteria to enable issuers to report longer-term risks and projects to mitigate and adapt to climate change with differentiated confidence levels similar to those consensus scientific reports, such as those of the International Panel on Climate Change.  </span></span></span></span></p> <p><em>To continue reading IATP's recommendations and view the footnotes, please <a href="https://www.iatp.org/sites/default/files/2021-06/SEC%20disclosure%20input%20IATP%206.13.21%20Final.pdf">download a PDF of the comment letter</a>. </em></p> </div> <div class="field field--name-field-primary-category field--type-entity-reference field--label-above"> <div class="field--label">Primary category</div> <div class="field--item"><a href="/trade2" hreflang="en">Trade</a></div> </div> </div> Sun, 13 Jun 2021 16:20:49 +0000 Cecelia Heffron 44583 at https://www.iatp.org IATP Comments on Recommendations for Integrating Climate Information into MEPA Program Requirements https://www.iatp.org/iatp-comments-integrating-climate-information-mepa <div data-history-node-id="44569" class="node node--type-document node--view-mode-rss field-primary-category-climate-change has-field-primary-category no-field-teaser-image title-not-empty ds-1col clearfix"> <div class="field field--name-field-author field--type-entity-reference field--label-above"> <div class="field--label">Author</div> <div class="field__items"> <div class="field--item"><a href="/about/staff/ben-lilliston" hreflang="en">Ben Lilliston</a></div> </div> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><em>To read the full comment, <a href="https://www.iatp.org/sites/default/files/2021-06/IATP%20EQB%20ERIS%20comment.pdf">download a PDF of the comment</a>.</em></p> <p>The Institute for Agriculture and Trade Policy (IATP) thanks the Environmental Quality Board (EQB) for the opportunity to comment on the draft recommendations for integrating climate change information into Minnesota Environmental Policy Act (MEPA) program requirements.</p> <p>IATP is a 35-year-old organization based in Minneapolis. We work at the local, state, national and international levels to create fair and sustainable agriculture and trade systems. IATP was born in response to the family farm crisis of the 1980s, and we continue to pursue policy solutions that benefit family farmers, rural communities and the climate.</p> <p>The Environmental Protection Agency (EPA) reports that agriculture accounts for 10% of the country’s greenhouse gas (GHG) emissions, and a 2019 MPCA report says that agriculture accounts for approximately one-quarter of Minnesota’s GHG emissions. As one of the largest agricultural states in the country, Minnesota must take action to reduce agriculture’s climate footprint. The EQB’s effort to integrate climate change into environmental review is one of the first in the country and can set an important precedent for how state governments respond to agriculture’s contribution to the climate crisis.</p> <p>We want to thank the EQB for this process and for putting forth these proposed changes to require all projects to consider climate change as part of Environmental Review. They are critical to guide state agencies and future climate policy in the state. And essential if the state is going to meet its climate goals.</p> <h3>Minnesota is missing the mark on the Next Generation Energy Act</h3> <p>Minnesota’s Next Generation Energy Act requires the state to reduce GHGs by 80% between 2005 and 2050. Minnesota missed the Act’s goal of a 15% reduction by 2015 and is far off-track from meeting the 2025 goal of reducing emissions by 30%. Since 2005, Minnesota’s emissions have only reduced 8%. Worse, emissions since 2016 actually have been increasing, signaling that strong and additional efforts are needed to reduce Minnesota’s GHG emissions.</p> <p>While most other sectors, like electricity, are reducing emissions, agriculture and forestry emissions (the state combines the two) are flat and in recent years have risen. Agriculture is the highest source in the state of two potent GHGs, methane and nitrous oxide. In MPCA’s January report to the state legislature updating data on the state’s GHGs, the agency reported that since 2005 methane emissions from animal agriculture have increased 15% in the state, and nitrous oxide emissions related to both manure and synthetic fertilizer use have increased 12%. The MPCA reports that methane and nitrous oxide emissions sourced to feedlots, fertilizers linked to feed production, manure, manure soil application, ruminants and runoff all increased from 2005 to 2018. Much of this increase in emissions is linked to the state’s continued approval of permits for new and expanding feedlots.</p> <p>Over the last several decades, Minnesota has seen significant losses in the number of pork, dairy and beef producers — even as the number of animals has increased. According to the latest USDA Agriculture Census, Minnesota lost 130 hog producers from 2012 to 2017, but the annual number of hogs produced in the state grew by 850,000. The state lost 16% of its dairy farms from 2016-2019, while dairy herd size grew 16% over the same period, according to the Minnesota Department of Agriculture (MDA). The shift toward large-scale confined operations has steadily reduced the number of farmers, while taking animals off pasture. Since 2012, Minnesota experienced a 27% loss of pasture land.</p> <p><strong>To continue reading the comment and footnotes, please <a href="https://www.iatp.org/sites/default/files/2021-06/IATP%20EQB%20ERIS%20comment.pdf">download the PDF</a>. </strong></p> <p> </p></div> <div class="field field--name-field-primary-category field--type-entity-reference field--label-above"> <div class="field--label">Primary category</div> <div class="field--item"><a href="/issues/climate-change" hreflang="en">Climate Change</a></div> </div> </div> Wed, 09 Jun 2021 21:41:37 +0000 Cecelia Heffron 44569 at https://www.iatp.org The climate benefits of Canada’s dairy supply management program https://www.iatp.org/climate-benefits-canadas-dairy-supply-management <span>The climate benefits of Canada’s dairy supply management program</span> <span><span lang="" about="/user/34897" typeof="schema:Person" property="schema:name" datatype="">Cecelia Heffron</span></span> <span>Mon, 05/17/2021 - 14:14</span> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>This week U.S. Trade Representative (USTR) Katherine Tai will meet with her counterparts from Canada and Mexico at the first U.S.-Mexico-Canada Agreement Free Trade Commission meeting, covering a range of issues from labor rights to softwood lumber to the very different ways our countries manage dairy supplies (or leave it to the whims of corporate-led markets).</p> </div> Mon, 17 May 2021 19:14:33 +0000 Cecelia Heffron 44563 at https://www.iatp.org