Executive Summary
Federal policymakers are pursuing expensive climate-control and emissions policies that have largely failed in Europe—and the American farm and household will be required to pay for them.
President Trump withdrew the United States from the ideological Paris Climate Accords that burden U.S. industry with strident carbon emissions reduction efforts theoretically designed to reach unreachable emissions objectives. President Biden rejoined the accords on his first day in office, and his administration has pursued a quixotic goal of “net-zero” carbon emissions by regulation and legislation ever since.
After recommitting the United States to the net-zero climate-control agenda, the president and Congress revived significant misguided features of the once-failed “Green New Deal” through the Inflation Reduction Act. Then, the Biden administration used executive power to restrict oil and natural gas supply, make chemical feedstocks more expensive to buy and produce, and enlisted the Securities Exchange Commission to require new “environmental, social, governance” or ESG reports to track carbon emissions from farm to table. These federal initiatives and requirements will prove expensive and economically destructive here—just as they have been in Europe.
To better appreciate the true costs that American farms and households will likely pay for the Biden administration’s net-zero policies and objectives, The Buckeye Institute’s Economic Research Center developed a model corn farm that must play by the government’s new carbon emissions rules. The farm’s operational costs, as expected, all rose significantly. Diesel fuel needed for trucks, tractors, and combines became more expensive. As did propane needed to power grain dryers and heat barns. And prices for the nitrogen fertilizer needed to grow crops rose, too.
The economic model then traced how those additional operating costs affected food prices for the American consumer. Once again, prices rose to compensate farmers for the government’s actions. The results are predictable and unsurprising, but many U.S. policymakers seem unwilling to address or even acknowledge them. That has to change, or the United States will face dire economic consequences instead.
Complying with net-zero emissions policies and corporate ESG reporting requirements will increase prices of farm inputs, the costs of which will ultimately be passed onto consumers at grocery stores and restaurants.(1) Farmers will see costs rise by at least 34 percent.
Pricing in food’s carbon emissions will increase an American family of four’s household grocery bills $1,300 per year.
Carbon emission intensive foods like cheese and beef could increase more than 70 percent per pound.
Price Increases of U.S. Groceries
Corrective action can be taken at every level. President Biden is unlikely to decommit the U.S. from the Paris Climate Accords he just rejoined, but the next president can and should. Republicans in Congress can pursue meaningful bipartisan collaboration with Democrats from energy-producing and agricultural states to tap the brakes on runaway spending and net-zero regulations.
State legislatures can limit some of the ill effects of ESG-minded activists by ensuring fair insurance and lending practices for businesses and farms. And U.S. shareholders can vigilantly hold corporate leaders and boards accountable for poor ESG-guided investment decisions and mandates that needlessly raise producer costs and consumer prices. Without taking remedial steps to fix the problems being perpetrated by international agreements and federal climate-control rules, the American economy, businesses, farms, and consumers will pay the price, and that price must be understood.
(1) Emily Joner and Michael A. Toman, Agricultural Greenhouse Gas Emissions 101, Resources for the Future, September 8, 2023.
See the attached PDF for the full report from The Buckeye Institute.