Remarks as prepared for delivery:
Mr. Chairman, thank you for holding today's hearing to review carbon markets. In July, I requested this hearing, along with legislative hearings on several proposed climate bills within our jurisdiction. Unfortunately, it seems many Members and stakeholders feel rushed to move legislation on carbon markets without Congress thoroughly vetting the issue. Honestly, I would have preferred a hearing on the many issues the Committee should be addressing, such as Farm Bill implementation, oversight of Covid relief, or simply a general audience with the Secretary of Agriculture or other USDA officials.
I have repeatedly said I support the private marketplace and feel comfortable to let it potentially grow into a means of supporting farmers' journey to more sustainable practices OR ultimately let it fail if the economics do not work for farmers and ranchers. But with the Senate's insistence on instituting what is essentially a new regulatory regime through the Growing Climate Solutions Act, that body is forcing the House to evaluate the efficacy of these markets now. Without government intervention, the marketplace could answer questions of permanence, science, or fairness of the markets. If we provide market information through a USDA website, as the Growing Climate Solutions Act requires, the government becomes a certifier of middlemen. We need to be more diligent in our oversight of these markets and its players now before we legislate in this space.
As farm groups across the spectrum have lavished praise on these markets, we only now are hearing from participants about the enormous length and complexity of contracts and the meager prices farmers receive through these markets. The markets are woefully inadequate in covering even the basic implementation cost of carbon-sequestering practices. One example presented in a recent report by the National Sustainable Agriculture Coalition (NSAC) is especially telling. The Natural Resources Conservation Service (NRCS) will pay a producer $53.41 per acre over five years to implement cover crops through EQIP. Still, the current price in the Indigo Agriculture carbon market is $3.30 per acre. By passing the Growing Climate Solutions Act, Congress is implicitly supporting these minuscule prices.
Additionally, there has been very little discussion on the effect of these markets on the socially disadvantaged community. Most carbon markets prioritize large operations to gain economies of scale. Again, as noted in NSAC's report, Nori requires a minimum of 1,000 acres enrolled to qualify. Giving more resources to the largest and most innovative farms seems regressive when Congress and the Administration are trying to ensure socially disadvantaged farmers, who overwhelmingly operate smaller farms, are treated fairly.
Another problem I see is stakeholders, including the Food and Agriculture Climate Alliance, continue to suggest policy proposals to make up for the inequities of the carbon marketplace that is incredibly small compared to our current Farm Bill conservation programs. Policy suggestions such as payments for early adopters, a carbon bank to increase the price and demand of credits, and the carbon bank to help with other racial, regional, and economic disparities again illustrate the need to evaluate these markets.
I recognize the landscape of this subject has changed over the last decade, but I think it behooves us to remember that during the 111th Congress, we debated Cap and Trade. At first, farmers and ranchers were sold on the opportunity to find new markets from trading sequestered carbon. We all saw how that could have ended, with minimal opportunity for row crops to participate and a rise in the cost of inputs.
I sincerely wish USDA was here to testify, as Republicans suggested to the Majority, to answer questions on these markets. If they were invited to testify today, USDA would tell us the top three barriers to entry for agricultural producers participating in private carbon markets are lack of demand, confusion in the marketplace, and high transaction costs with very little benefit for farmers. We would hear from 2013 through June 2020, just less than 140 million carbon credits were verified across all industries in the United States. Of those credits, about 2.5 million—less than two percent—came from the agriculture sector. So here we are, discussing a market that provides a few million dollars a year to U.S. producers that do not cover the costs of their activities, compared to current Farm Bill conservation programs that provide nearly $6 billion per year in incentives and cost share.
I ask my colleagues; do we understand the complicated process landowners must go through to generate and become profitable in a carbon market? Do we have a sense of what is happening in the private sector and the markets currently? Why is there so much focus on carbon sequestration and not on other environmental service markets? Why should USDA resources be diverted from proven conservation programs to stand up carbon markets, as proposed in related legislation?
I want to thank the Chairman for allowing witnesses with diverse opinions to testify on these markets, unlike the Senate Agriculture Committee, who only permitted witnesses favorable to the Growing Climate Solutions Act, ensuring the narrative of no concerns with these markets was upheld. I look forward to a more robust conversation, but again, I want to make clear this subject and the related legislation deserve much more scrutiny than this one hearing.
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