Brad Johnson: Climate bill floods ag country with money

The new federal Inflation Reduction Act might best be described as dumping cash from an airplane and hoping whoever picks it up does something good with it.

The Inflation Reduction Act passed the U.S. Senate 51-50 and soon will be passed by the House. Most agree it has little to do with reducing inflation. It is a climate change energy bill with a secondary focus on health care.

Oh, yes, it also provides funding for about 87,000 new Internal Revenue Service agents who likely will audit a lot of unsuspecting average taxpayers.

While passed with opposition from South Dakota’s Senators and likely U.S. Rep. Dusty Johnson, the bill will funnel a lot of money into our state’s agricultural industry.

About $369 billion was earmarked to address climate change, including investments in agriculture and rural renewable energy, such as ethanol.

According to the Congressional Research Service the bill earmarks about $40 billion for agricultural conservation, forestry and renewable energy.

It provides $8.45 billion for the Environmental Quality Incentives Program and $6.75 billion for the Regional Conservation Partnership Program.

It allocates $3.25 billion for the Conservation Stewardship Program and $1.4 billion for the Agricultural Conservation Easement Program. Another $1 billion would go to boost USDA conservation technical assistance.

USDA's Natural Resources Conservation Service would receive $300 million to quantify carbon sequestration and emissions on farmland.

To put it in perspective, it essentially adds 230% to the agricultural conservation programs baseline (FY 2023 through 2026). For example, the Environmental Quality Incentives Program would total $16.55 billion (FY 2023 – 2026) instead of the current $8.1 billion over that period.

Much of that money will incentivize conservation practices which should have positive effects on the state’s water quality and enhance wildlife and pheasant and wildlife populations.

The bill also is a huge win for the state’s bio-fuel industry as it enhances tax incentives for alternative fuels. “Hundreds of millions of dollars would also be available to provide grants to increase the sale and use of agricultural commodity-based fuels,” according to the National Law Review.

The bill includes “$9.7 billion in grants and loans to rural electric cooperatives to buy renewable energy, renewable energy systems, carbon capture and storage systems, and make energy efficiency improvements on generation and transmission systems,” according to an Aug. 8 article on the Great American Insurance Group’s website.

“The Rural Energy for America Program would get $1.72 billion to promote energy efficiency and renewable energy for farmers and other rural small businesses.

“Another $1 billion would go for "Section 317" loans for electric generation from renewable energy resources for rural and nonrural power companies. This includes solar, wind, hydropower, biomass, or geothermal. The federal government would cover up to 50% of the loans for such projects.

“Biofuels would see another $500 million to develop blender pumps and other infrastructure to increase the blends of biofuels above 10% blend levels for ethanol and 20% for biodiesel blends.”

In spite of the good things for South Dakota’s agriculture industry, Sen. John Thune, R-S.D., questioned the bill’s vague spending categories.

“Sixty billion dollars for environmental justice grants. What does that mean?” Thune asked at an Aug. 5 press conference. “The American people are going to try to figure this out. One point nine billion dollars for canopy coverage—canopy coverage—in urban areas. I’m sure that’s on the hearts and minds of every American. Thirty billion dollars in a climate slush fund that can be used for Democrat-favorite projects. The point is, this is a big tax increase on job creators in this country that isn’t going to do anything to address the inflation crisis in this country.”

Undoubtedly, the provisions carry great complexity and will be difficult to navigate.

“For businesses involved in the energy industry,” the National Law Review said, “the IRA and the administrative processes that will be necessary to carry out its many mandates bear careful scrutiny because they are likely to profoundly affect how the industry does business, both by increasing the regulatory and tax burden faced by the industry and by creating major new business opportunities to obtain federal support for expanded industrial activity.”

In other words, the cash shower is likely to be interspersed with some rocks.

Brad Johnson is a Watertown businessman and journalist who is active in state and local affairs

This article originally appeared on Watertown Public Opinion: Brad Johnson column Climate bill floods ag country with money