While passage last summer of the American Clean Energy and Security Act by the House of Representatives calls for establishing a cap-and-trade program to limit greenhouse gases, it’s expected to have a serious financial impact for farmers. However, the financial penalties will be much lower for continuous no-tillers.

Based on 2005 levels, this federal legislation calls for reducing greenhouse gas emissions by 17% by 2020 and by 83% by 2050.

The bill would establish an absolute cap on emissions and allow trading of emission permits and allowances by growers. Farmers and ranchers would be able to earn offsets for various conservation and carbon-conserving practices and sell the credits to refiners, utilities or other firms subject to the cap on greenhouse gas emissions.

Higher Production Costs

A study by Informa Economics for the National Corn Growers Association (NCGA) indicates corn growers can expect increased production costs.

For corn, the bill’s impact will add $3.81 per acre to annual production costs by 2020. Once fertilizer allowances are phased out from 2025 to 2035, the impact will rise to nearly $50 per acre.

For soybeans, the impact by 2020 is estimated at $2.02 per acre and later increases to $11 per acre. Wheat production costs by 2020 will increase by $2.67 per acre and nearly $21 per acre by 2035.

No-Till Offsets

The bill allows for a $35-per-acre offset credit for adopting no-till by 2025 since no-till leads to more carbon sequestration than other tillage systems. While pasture and forestland can also qualify…