Summary

The Energy Tax Prevention Act of 2011 is a bipartisan bill that prohibits the Environmental Protection Agency (EPA) from regulating greenhouse gases to address climate change. The Fertilizer Institute (TFI) supports this legislation because it believes that Congress, not the EPA, is better equipped to develop a comprehensive energy plan that will lead the United States towards energy independence.

Background

In March, Senate Environment and Public Works Committee ranking member James Inhofe (R-Okla.), House Energy and Commerce Committee Chairman Fred Upton (R-Mich.), House Agriculture Committee ranking member Collin Peterson (D-Minn.) and Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.) introduced the Energy Tax Prevention Act of 2011(S. 482/H.R. 910). This bipartisan legislation aims to block EPA from regulating greenhouse gases (GHG) to address climate change.

Shortly after the bill’s introduction, TFI announced its support for the measure, commending Congressional leaders for taking necessary action to ensure that EPA does not overstep the authority it was granted under the Clean Air Act.

By way of background, the fertilizer industry is an important element of the American economy, ensuring a ready supply of high-quality food for American consumers. Fertilizer production, however, depends heavily upon energy and, in particular, natural gas. The cost of natural gas—the basis for nitrogen fertilizer production—accounts for 70 to 90 percent of the production costs of nitrogen fertilizer—a critical product. For this reason, the fertilizer industry is one of the industries most vulnerable to climate change regulations. U.S. fertilizer manufacturers also face stiff competition from overseas production.

The United States is the largest nitrogen fertilizer import market in the world with its farmers relying on imports for about half their annual nitrogen supply. Much of this imported nitrogen comes from countries such as Russia, Venezuela and Trinidad, which seem unlikely to enact their own climate-based restrictions. If EPA was to impose additional burdens on American fertilizer producers, the market share from these countries would likely grow, costing American jobs and resulting in no net environmental benefits as production in these countries faces much lower levels of environmental regulation and no limits on CO2.

On April 7, the U.S. House of Representatives voted to pass H.R. 910. However, the Senate version of the bill, S. 482, was voted down a few days later. It is unclear at this time if or when the Senate may revisit this issue.