Washington Insider -- Monday

By DTN's Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Editor's note: There will be no Washington Insider column on Tuesday. Have a great Independence Day!

Trump to Renegotiate US-Korea Free Trade Agreement

President Donald Trump has instructed his team to prepare to renegotiate the U.S.-Korea Free Trade Agreement, a White House spokeswoman said Friday. "At the direction of the president, Ambassador [Robert] Lighthizer is calling a special joint committee meeting to begin the process of renegotiating and amending the deal," White House spokeswoman Sarah Huckabee Sanders told reporters.

Further details were not available, but Trump said at the White House Friday morning that the two countries were going to address trade irritants. "Our teams are going to get to work on these issues and they're going to sign a deal that's great for South Korea and great for the United States," Trump said. Reaction on the Hill was a degree of surprise.

"I'm a little surprised by the decision to renegotiate our Korea trade agreement when there is such urgency for us to address America's absence in the larger Asia-Pacific region," House Ways and Means Committee Chairman Kevin Brady, R., Texas, said in a statement. He noted Trump would need to follow the procedures in the 2015 trade promotion authority – the White House needs to give Congress 90 days notice before negotiating trade agreements.

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EPA Pulled Back RFS Announcement Due to Brazil, Argentina: Reports

Reports have surfaced that South American biofuels are the reason why the Environmental Protection Agency (EPA) pulled an announcement of Renewable Fuel Standard (RFS) volume requirements. Concerns that refiners will import ethanol from Brazil and biodiesel from Argentina to fulfill RFS volume requirements helped lead EPA Administrator Scott Pruitt to reconsider quotas for those fuels, according to several reports and sources. A coming announcement may include lowering the targets so refiners can rely mostly on U.S.-made biodiesel and corn ethanol.

Until the pullback, EPA had sent the White House Office of Management and Budget (OMB) proposed quotas that would have required the use of 15 billion gallons of conventional corn-based renewable fuel. But some reports indicate the new concerns are causing the agency to rethink that approach.

Meanwhile, biodiesel producers have filed a trade complaint against imports from Argentina and Indonesia, asking the government to impose tariffs to counter what they say are unfair subsidies and dumping. However, the U.S. trade decision will take a while to be announced and that could delay EPA's RFS announcement longer than initially thought.

Should the U.S. government announce measures to restrict imports, the price of credits tracking compliance with RFS mandates would "drive up consumer cost significantly," said Mike McAdams, president of the Advanced Biofuels Association. "If you want to stick it to the consumer, Mr. Administrator, just roll back the number for imported fuels with your misguided America-first policy," McAdams, whose members include Brazilian-based producers, said in an interview with Bloomberg BNA. "You need imports to satisfy targets."

The RFS allows refiners to use imports to help satisfy mandates and make up for domestic shortfalls. The U.S. imported 36 million gallons of ethanol from Brazil last year, down from more than 400 million gallons in 2012, according to the Energy Information Administration (EIA). U.S. distillers produced a record 15.3 billion gallons of ethanol in 2016, it noted.

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Washington Insider: Possible Regional US Impacts of Climate Change

There are few topics more controversial than climate change, its causes and its implications. Thus, while numerous official actions recently had focused on challenging conventional studies on the topic, the New York Times last week printed some of the results of a study recently published in the journal Science that discusses the extent to which a warming climate could affect different parts of the United States very differently.

The study analyzes the economic harm that climate change could inflict on the United States during the coming century and it emphasizes these impacts could prove highly unequal: states in the Northeast and West could fare relatively well, while parts of the Midwest and Southeast would be especially hard hit.

Over all, the researchers estimate that the nation could face damages worth 0.7% of gross domestic product per year by the 2080s for every 1 degree Fahrenheit rise in global temperature. Still, that number, the researchers argue, obscures wide variations: The worst-hit counties, mainly in states that already have warm climates, like Arizona or Texas, could see losses worth 10% to 20% of GDP or more if emissions continue to rise unchecked.

“The reason for that is fairly well understood: A rise in temperatures is a lot more damaging if you’re living in a place that’s already hot,” said Solomon Hsiang, a professor of public policy at the University of California, Berkeley, and a lead author of the study. “You see a similar pattern internationally, where countries in the tropics are more heavily impacted by climate change,” he said. “But this is the first study to show that same pattern of inequality in the United States.”

The greatest economic impact would come from a projected increase in heat wave deaths as temperatures soar, which is why states like Alabama and Georgia would face higher risks while the cooler Northeast would not. The projected increase in heat-related deaths by the end of this century could be roughly equivalent to the number of Americans killed annually in auto accidents, the study says.

Higher temperatures could also lead to steep increases in energy costs in parts of the country, as utilities may need to overbuild their grids to compensate for heavier air-conditioning use in hot months. And higher sea levels along the coasts would make flooding from future hurricanes far more destructive.

The authors avoided delving into politics, the Times says, but they warned that “climate change tends to increase pre-existing inequality.” Some of the poorest regions of the country could see the largest economic losses, particularly in the Southeast. That pattern would hold even if the world’s nations cut emissions drastically, though the overall economic losses would be considerably lower.

Predicting the costs of climate change is a fraught task, the Times admits, one that has bedeviled researchers for years. They have to grapple with uncertainty involving population growth, future levels of greenhouse-gas emissions, the effect of those emissions on the Earth’s climate and the economic damage higher temperatures may cause.

The current work, led by the Climate Impact Lab, a group of scientists, economists and computational experts, took advantage of a wealth of recent research on how high temperatures can affect the economy. And the researchers harnessed advances in computing to scale global climate models down to individual counties in the United States.

“Past models had only looked at the United States as a single region,” said Robert E. Kopp, a climate scientist at Rutgers and a lead author of the study. This misses the entire story of how climate change would create this large transfer of wealth between states.”

Still, there are limitations to this study, too. It relies heavily on research showing how hot weather has caused economic losses in the past. But society and technology will change a lot over the next 80 years, and people may find novel ways to adapt to steadily rising temperatures, said Robert S. Pindyck, an economist at the Massachusetts Institute of Technology who was not involved with this study. And the model does not account for the effects of future migration within the United States that could reduce the country’s overall economic losses, said Matthew E. Kahn, an economist at the University of Southern California.

Other outside experts also cautioned that the study may have underestimated certain kinds of damages, including calamities that are harder to tally, such as the loss of valuable ecosystems like Florida’s coral reefs, or increased flows of refugees from other countries facing their own climate challenges.

“That’s the hope, that this research can help prevent many of these outcomes,” said Trevor Houser, a co-author of the paper who helps direct the Climate Impact Lab. “If cities take action to prevent heat wave deaths by building cooling centers, then costs would be lower than we project. But I wouldn’t see that as a failure of prediction — that’s a policy success.”

So, it will be interesting to see if the study stands up well to the very tough vetting it can expect from official sources in the government, and what proposals come in efforts to mitigate change. Still, it and others like it likely will create a healthy conversation about the science; and about, what it all means. This is a debate producers should watch closely as it evolves, Washington Insider believes.

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