Big Banks vs. Iowa Farms: Ag Community Plows Through Net-Zero Nonsense

This article was published in The Gazette.

The cost of Biden’s climate policies may be coming to a farm near you.

State agriculture officials from twelve states, including Iowa’s own Secretary of Agriculture Mike Naig, recently signed a joint letter to six of the country’s largest investment banks expressing concerns over the banks’ support for net-zero banking practices promoted by the United Nations and climate-control activists. The reported concerns are legitimate, and ag officials are right to worry on behalf of American farmers and the households and consumers they help feed.

President Biden misguidedly recommitted the United States to the Paris Climate Accords and has pursued many of the climate-control policies previously sought by the failed Green New Deal. The administration hopes to reduce future domestic oil and natural gas supplies, make chemical feedstocks for fertilizers and pesticides more expensive, and track carbon emissions from farm to fork by requiring banks and agricultural investors to file environmental, social, governance (ESG) reports with the U.S. Securities and Exchange Commission.

The purported goal of these and similar efforts is for American industry to join Europe’s ill-fated parade toward net-zero greenhouse gas emissions within the decade. As The Buckeye Institute’s new policy report explains, Europe has been marching to this tune for some time. The consequences have been economically devastating for farms and factories, and there is no reason to expect better results here at home.

Europe’s cap-and-trade schemes limiting emissions made energy production more expensive. The added costs were ultimately passed along to consumers who saw residential and industrial energy prices rise 131 and 59 percent, respectively, between January 2021 and January 2022. Similar policies targeting manufacturing and chemical industries helped convince some German companies to leave Europe. The EU responded with higher tariffs and carbon taxes designed to prevent foreign-based firms from importing fertilizers and chemicals manufactured more affordably elsewhere. Once again, European farmers and consumers were made to pay.

And then come the banks and the well-warranted concerns raised by Secretary Naig and his co-signers. The United Nations’ Net-Zero Banking Alliance (NZBA) asks member banks—including six of America’s largest—to require customers to measure, monitor, and share greenhouse gas emissions from their factories, farms, and business operations.

There is no return on investment when Iowa farmers are forced to comply with initiatives like this one. As an Iowa farmer told us, “The scary outcome of these proposals is that the government will dictate how you run your farm and how you raise your crop.” These mandates prescribe more spending and cause more headaches, but they do not deliver any corresponding revenue benefit to producers.

As the joint letter to the big banks warns, “[a]chieving net-zero greenhouse gas emissions in agriculture requires a complete overhaul of on-farm infrastructure—one of the goals of the NZBA. This would have a catastrophic impact on our farmers. Proposed net-zero roadmaps describe dramatic, impractical, and costly changes to American farming and ranching operations such as switching to electric machinery and equipment; installing on-site solar panels and wind turbines; moving to organic fertilizer; altering rice-field irrigation systems; and slashing U.S. ruminant meat consumption in half, costing millions of livestock jobs.”


The Buckeye Institute modeled the impact of carbon pricing for a typical U.S. corn farm under the Biden administration’s proposed climate-control regime and expects expenses for diesel fuel, propane, and nitrogen-based fertilizers to spike $65,000 per year—or 34 percent—to cover the operation’s social cost of carbon emissions.

And those costs won’t stay down on the farm either. Americans already spend more on food now than they have in 30 years, but—here, as in Europe—farms will share these higher costs with grocers, restaurants, and consumers. The average family of four will watch its household grocery bill climb another 15 percent, or $1,300 per year.

State agriculture officials are certainly right to worry about net-zero banking, an anti-farm environmentalist agenda, and the pernicious effects for farmers, families, and the U.S. economy. It is a good start for states to follow Iowa’s lead and stand up and say something now before it is too late.

Robert Alt is President and Chief Executive Officer of The Buckeye Institute.

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