Peterson emerges as obstacle to major energy and climate legislation

Ethanol plant
REUTERS/Rick Wilking
Some members of Congress worry the enthanol industry could be hurt by new energy legislation.

WASHINGTON, D.C. — As a major energy and climate bill winds its way through Congress, Rep. Collin Peterson has emerged as a pivotal player and a potential roadblock to the legislation that the Minnesota Democrat says could hurt farmers, ranchers and biofuel producers around the country.

“If they don’t fix this, there isn’t going to be a bill,” Peterson said in an interview with MinnPost.

The chair of the House Agriculture Committee, who has never been shy about speaking his piece, has voiced concern over a draft of the bill that passed out of the Energy and Commerce Committee last week — a version Peterson and other members of his panel call unacceptable and say ignores the significant affect the legislation would have on agriculture.

“They either have to deal with us, or they can’t pass this,” he said.

By “us,” Peterson means about 40 Democrats — all the Democrats on the Agriculture Committee plus about 15 more — who would represent a critical voting bloc if the bill receives little or no Republican backing, as is expected.

Rep. Collin Peterson
Rep. Collin Peterson

Before Peterson’s group can support the bill, known as the American Clean Energy and Security Act, they have said that they want to see more offsets for farmers, a larger role for the U.S. Department of Agriculture, changes in requirements for renewable fuels and alterations to carbon footprint calculations for biofuel operations.

Without these considerations, they say America’s agriculture and biofuel industries will be hobbled by increased fuel and feed costs and unfair competition from abroad, where farmers and ranchers will not have to abide by the same rules.

‘Incomplete and imperfect’
Their concerns not only serve to underscore the very preliminary stage of the negotiations, but also highlight the myriad complications of instituting a cap-and-trade system — one that is seeking to invent an entirely new market, which may attempt to weigh the carbon effects of tilling a field against removing grasslands against forest destruction and increased farming in other countries.

“The bill is incomplete and imperfect,” said Rep. Stephanie Herseth, Sandlin, D-S.D., who sits on the Agriculture Committee. “Specifically, the bill is very short on the role of agriculture so clearly more has to be done.”

Not surprisingly, behind the obstinate representatives is an angry agriculture lobby. So far, no large farm groups have endorsed the bill and the American Farm Bureau and the National Corn Growers Association have officially opposed it.

“There really isn’t anything for ag in this bill,” said Richard Krause, senior director of Congressional relations for the American Farm Bureau. “We really think that ag can play a key role in any kind of carbon reduction scheme, so we would just like to see that recognized.”

Krause said that he would like to see the inclusion of agricultural offset options — or steps that farmers and ranchers can take to earn credits and defray increased costs — that might include different tilling practices, fertilizer management or other carbon sequestration measures.

Greg Schwarz, who is a corn farmer and ethanol producer in Minnesota, said that he is withholding judgment until there is a final bill, but that the potential for increased costs was worrisome.

“We are more concerned that the fuel prices that we pay to farm will be affected,” Schwarz said.

“As the cost for production increases, there will be no one else to pass it off to except the consumers,” said Brian Kletscher, the chief executive officer at Highwater Ethanol LLC., a new ethanol plant in Minnesota.

According to the Minnesota Department of Agriculture, the state has about 18 operating ethanol plants producing about 850 million gallons a year. There are at least three more plants that are expected to go online soon, which would add about 250 million gallons a year to Minnesota’s output.

‘Indirect’ land use
Another major concern for biofuel producers and farmers in Minnesota and across the country is the inclusion of “indirect” land use in carbon footprint calculations.

Indirect land use refers to an industry’s potential peripheral carbon impact.

Following a 2007 energy law, the Environmental Protection Agency (EPA) is using indirect land use predictions in the United States and abroad to determine the carbon emissions of various biofuel industries.

So, if demand for ethanol rises and farmers start turning trees or a grassland into a corn fields, the resulting carbon emission increase or decrease would be included. Or, if the value of corn rises and that causes other countries to turn forests or grasslands into crop fields, that would also be included.

Farm-state lawmakers, however, have called the EPA’s predictions speculation, saying that the unproven models render an unfair portrait of the industry. They also say that if such factors are going to be taken into consideration for biofuel production, they also need to be considered when calculating the carbon footprint of gasoline production to have a clearer perspective.

“If it is good for the goose it is good for the gander,” said Ralph Groschen, senior marking specialist for the Minnesota Department of Agriculture. “They didn’t apply the same rigor or creative or forward looking to gasoline or diesel.”

Peterson, along with the ranking member of the House Agriculture Committee, Frank Lucas, R-Okla., recently introduced separate legislation that would eliminate the requirement that the EPA take indirect land use into consideration for advanced biofuels.

Still, environmental groups say that this argument is largely illusionary because a majority of the country’s biofuel plants were grandfathered in under the 2007 energy law, so the indirect land use calculations do not apply to them.

But some environmental groups are advocating that the new legislation change that and apply indirect land use to all biofuel operations regardless of when they were constructed.

“If the point of the bill is to reduce greenhouse gas emissions, then it seems rather odd to exempt the vast majority of the industry from meeting greenhouse gas emission standards,” said Craig Cox, the Midwest vice president for the Environmental Working Group. Cox also served as a former USDA undersecretary for natural resources.

Cox argues that without taking indirect land use into consideration, it is impossible to get a complete picture of how the emerging biofuel industries will really affect greenhouse gas emissions and the world’s resources.

“It is frustrating to see Chairman Peterson threatening to hold the bill hostage in yet another attempt to help prop up the corn ethanol industry,” Cox said.

Minnesota ranked fifth in the nation for farm subsidies from 1995-2006, according to the Environmental Working Group’s farm subsidy database.

Rep. Tim Walz
Rep. Tim Walz

The two crops that garnered the most federal dollars were corn and soybeans. Of the $10.3 billion in subsidies that went to Minnesota from 1995-06, Peterson’s Seventh District received about 50 percent of the money, while the First District, represented by Democratic Rep. Tim Walz took about 35 percent.

Potential backlash
“I think that we [ethanol producers] have been very successful… and sometimes when you become successful, you do fall under criticism,” said Schwarz.

Groschen worries that the potential backlash to that success could stifle further development.

“Hell, there is not a perfect fuel,” said Groschen. “But, ethanol and biodiesel are at least renewable and they are the first step in the process.”

Rural lawmakers have also taken issue with what types of materials can qualify for incentives under the renewable fuel standard. While the climate bill eases some of those restrictions, Agriculture Committee members like Herseth Sandlin say it doesn’t go far enough.

“They are seeking again to institute unrealistic standards for the renewable energy standard,” said Herseth Sandlin.

Herseth Sandlin introduced a bill this year that would allow the use of woody biomass, such as slash piles, from federal lands and private forests to be included. Meanwhile, environmental groups have rallied against the inclusion of such materials contesting that it will open the door to the destruction of the country’s national forests.

But, in South Dakota, Herseth Sandlin sees areas like the Black Hills National Forest as potential reservoirs of cleaner fuel. Without access to it, Herseth Sandlin says, South Dakota may be at a disadvantage in the new market.

“It would inhibit western state’s, like South Dakota, ability to participate because of the vast amount of slash that wouldn’t count.”

Peterson and Walz have also supported increasing the biomass definition.

“I think there is obviously going to be some pain in the transition,” said Walz. “My goal is to make sure that it doesn’t fall disproportionately on the Midwest.”

Kevin Brook, who is managing director of ClearView Energy Partners in Washington and a longtime energy analyst, had a slightly different take on the unfolding climate and energy drama. He emphasized that the ethanol program began as an energy security program and under that mission had done very well.

“The ethanol program was an energy security policy and it worked,” Brook said. “It was not a greenhouse gas abatement policy, and it can’t be. It seems like the two sides haven’t reached that rational consensus.”

Whether they ever reach a consensus or not, Brook said that congressional leaders and the administration would likely need to face the reality that they will need Peterson and his crew, and their counterparts in the Senate, on board to pass any climate or energy legislation.

According to Brook, about 30 states — a significant voting bloc — now have vested interest in making sure ethanol succeeds.

“You are not going to get through the U.S. Senate without cars, coal and corn on board,” said Brook. “You can leave crude to the side, but you can’t do it without corn.”

Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.

Comments (24)

  1. Submitted by Steve Titterud on 06/01/2009 - 02:36 am.

    RE: “As the cost for production increases, there will be no one else to pass it off to except the consumers,” attributed to the CEO of Highwater Ethanol.

    Who the heck else is supposed to pay for it?

    Guess who paid for the increased cost of food CAUSED by diversion of corn to ethanol production? (See http://www.cbo.gov/ftpdocs/100xx/doc10057/04-08-Ethanol.pdf)

    According to the Environmental Working Group, the corn ethanol industry received $3 billion in tax credits in 2007, and it is estimated to hit $5 billion in 2010.

    This ethanol industry is TERRIFIED of a free marketplace. Apparently their business models won’t work in a free marketplace.

    It’s time to wean this industry off the dole. They must do what every other business does when their environment changes – adapt. If they simply can’t adapt, I’d say they have a lousy business model. Subsidizing them forever is just plain counterproductive.

  2. Submitted by Jeff Klein on 06/01/2009 - 04:37 am.

    While I appreciate Mr. Peterson’s attempts to protect his constituency – attempts which I am sure are in the best of intentions – I’m concerned that the full weight of the energy issues at stake are going to clobber us while we squabble amongst ourselves. Sad truth as it may be, we can’t keep pushing stupid ideas like corn ethanol just because they temporarily provide jobs to some people. We’ll pay in the long run.

  3. Submitted by Glenn Mesaros on 06/01/2009 - 08:27 am.

    William Tucker writes in his just released book, “Terrestrial Energy”:

    Last week Time ran a feature story on backyard windmills, the latest green craze. The story described the adventures of Doug Morrell, a Coopersville, Michigan maverick who has installed a 55-foot device on his farm. Here’s the exact quote from the magazine:On days with decent wind – which occur frequently enough, since he can feel the breeze from Lake Michigan – the $16,000 Swift wind turbine can generate 1.5 kilowatts (kW) an hour, i.e., enough to power the average lightbulb for 15 hours.

    Did you read that. $16,000 to power a single lightbulb!? And we’re supposed to get excited about this? Then the article goes on to complain that such backyard versions are not a part of the general subsidy being given to large wind farms of the Boone Pickens variety.

    I’m getting a really queasy feeling about all this wind stuff. The nation is about to launch into a whole orgy of “renewable energy” construction without the slightest awareness of what it’s buying into. People think we’re going to achieve energy independence by putting up wind farms. Boone Pickens thinks we’re going to cut our oil imports. President-elect Obama thinks we’re going to create jobs and pull the nation out of a recession. But all we’re going to end up doing is littering the countryside with a bunch of industrial monstrosities that produce very little useful energy. It already takes 125 square miles to equal the output of one 1000-megawatt power plant. But windmills are only generating electricity about one-quarter of the times. That means you need 500 square miles and even that has to be backed up by conventional sources in case the wind dies down across several states.

    I think the country needs a basic lesson in physics. You can’t power an electrical grid with intermittent sources. The requirements for storage are immense – you essentially have to double capacity and even then no real technology has emerged. All this started off with “Small is Beautiful.” Now we’re talking about covering whole states with windmill farms and building an entirely new electrical grid to move all this elusive energy around.

    On the other hand, Hyperion, a California company, just introduced a 70-MW nuclear reactor the size of a gazebo that can power a city of 15,000. And it wouldn’t require any new transmission lines. Is it possible that nuclear is really “small and beautiful?”

  4. Submitted by Jeff Klein on 06/01/2009 - 11:49 am.

    While I have no problem nuclear power, Glenn’s comment is incredibly misleading.

    He states, “$16,000 Swift wind turbine can generate 1.5 kilowatts (kW) an hour, i.e., enough to power the average light bulb for 15 hours.”

    In a way that’s not convoluted, that’s 1.5 kW continuously, enough to power 15 100 Watt light bulbs ANY TIME IT’S REASONABLY WINDY. I have CFLS that use considerably less; I have little need to continuously power a hundred light bulbs. 1.5 kW isn’t an altogether unreasonable power usage for an energy-conscious household, which means that the owner of this $16,000 wind turbine – a one time cost – can probably produce most of the power he uses. Considering that’s less than the cost of an average new car, I’d say it’s a relative bargain.

    Not to mention that while it would be fun to have your own windmill, it’s much more efficient to have big wind farms, which I recall already provide something like 4-5% of Minnesota’s power – not a shabby number when most of them have been built relatively recently. Imagine what you could do if you redirected all the money from ethanol.

  5. Submitted by Bernice Vetsch on 06/01/2009 - 01:11 pm.

    I become more convinced every day that the essential correction Washington MUST make is to render toothless the lobbyists who come with millions of dollars in hand by passing legislation that requires public funding of all federal-level elections.

    Just look at the insurance industry lobby, the national Chamber of Commerce, and others whose interests lie in protecting profits rather than in truly reforming our health care system. Paul Krugman reported a week ago Friday that their lobbyists are descending in droves upon Washington in an attempt to get Congress to remove the public option from the president’s/Daschle/s/otherwise-insurance-industry-friendly bill.

    The industry considers it “unfair” competition that could actually lead to –horrors–publicly funded/privately delivered/$400-billion-per-year- cheaper single-payer health care that leaves no one out. It has also contributed hundreds upon hundreds of thousands of dollars to committees like those Mr. Baucus runs, where it seems to have done them a lot of good.

  6. Submitted by david granneman on 06/01/2009 - 01:23 pm.

    hello all
    info from the following article:

    http://www.energytribune.com/articles.cfm?aid=1029
    Wind Power Exposed: The Renewable Energy Source is Expensive, Unreliable and Won’t Save Natural Gas.

    Ofgem, which regulates the U.K.’s electricity and gas markets, has already expressed its concern at the burgeoning tab being picked up by the British taxpayer which, they claim, is “grossly distorting the market” while hiding the real cost of wind power. In the past year alone, prices for electricity and natural gas in the U.K. have risen twice as fast as the European Union average according to figures released in November by the Organization for Economic Cooperation and Development. While 15 percent energy price rises were experienced across the E.U., in the U.K. gas and electricity prices rose by a staggering 29.7 percent. Ofgem believes wind subsidy has been a prime factor and questions the logic when, for all the public investment, wind produces a mere 1.3 percent of the U.K.’s energy needs.

  7. Anonymous Submitted by Anonymous on 06/01/2009 - 01:31 pm.

    Glenn do you want to volunteer your backyard for the waste from that nuclear plant? We’ll only need it for 10,000 years or so.

  8. Submitted by david granneman on 06/01/2009 - 01:33 pm.

    politicians are like blood hounds. they can follow a money trail all the way back to big money lobbyists. the only way renuewables such as windmills and ethanol producers can survive is with big subsidies from government. the only way politicians can survive is with big contributions from big money lobbyists. the only losser to this game is the TAXPAYERS.

  9. Submitted by Larry Wall on 06/01/2009 - 01:57 pm.

    Mr. Mesaros

    The average incandescent light bulb in a home dissipates about 60 watts. A fluorescent bulb of equivalent luminosity dissipates a bit less than 15 watts. A 1500-watt generator (same as 1.5kw) can light 100 of these bulbs.

    I know of no home light bulb that dissipates as much as 1.5kw.

    My 2500 sq ft home consumes on average about 1,000 kilowatt-hours per month. In terms of a steady state consumption rate, that is equivalent to dissipating about 1,400 watts (1.4kw) each hour of the month.

    However, I do not have a steady state home consumption rate usage. When I run a space heater, water heater, air conditioner, cooking stove, or clothes dryer the wattage dissipation at the time may elevate to as high as 5,000 watts. And at night when my family is asleep, the wattage dissipation is probably only about 300-500 watts.

    So a 1.5kw home wind generator will not handle my peak-usage rate. That fact, as well as your valid point about the wind not blowing all the time, is the principal limiter on home wind energy.

    However, it can help supply energy on a national electrical grid – such that we may need fewer and fewer new-built conventional power plants to come on line. But for the reasons mentioned, I agree that wind alone can never be the only source of electrical power.

    I also would like to take a long look at more nuclear facilities. New reactor designs have helped to reduce the risks associated with meltdowns, etc. We just need to get serious about finding a satisfactory remedy for storage of radioactive waste, and make sure that the planet’s supply of available U-238 is adequate for our long-term needs. And if a good hard look shows strong feasibility, we should seriously consider additional nuclear facilities.

  10. Submitted by Eric Ferguson on 06/01/2009 - 02:10 pm.

    The charge that one energy source or another gets subsidized while others don’t is ridiculous since all of them get subsidized. Some comments have made the charge at wind power, but ethanol has been getting direct subsidies. Solar has tax credits. Nuclear has government insurance because the private market won’t touch it. Oil and coal depend on cheap leases of government land, and everything that pollutes counts on someone else covering the cost of coping with their pollution.

  11. Submitted by Jeff Klein on 06/01/2009 - 02:11 pm.

    In defense of nuclear, I’d rather have a finite and contained amount of pollutant to deal with than uncontained carbon dioxide warming the planet.

    Of course, with wind you have neither. In terms of cost, the Energy Information Administration cites for 2006 average cost “per unit of energy produced was estimated in 2006 to be comparable to the cost of new generating capacity in the United States for coal and natural gas: wind cost was estimated at $55.80 per MWh, coal at $53.10/MWh and natural gas at $52.50.” More expensive, yes, but the margin is quite small.

    References on the Wikipedia page (http://en.wikipedia.org/wiki/Wind_power) as well as a fairly good discussion of intermittency.

  12. Submitted by david granneman on 06/01/2009 - 02:45 pm.

    hello
    worryed about nuclear waste – you have been listening too many environmentalists.
    spent nuclear material can be put into what is called a breeder reactor.
    The fast breeder or fast breeder reactor (FBR) is a fast neutron reactor designed to breed fuel by producing more fissile material than it consumes.
    since a normal reactor only uses about 1% of the fussionable material a breeder reconcentrates the material so it can be used over and over again ensuring fuel for reators for centurys.

    have you ever flown out west. from an airliner at 5 miles high going 500 miles per hours you travel for hours over land that does not even have a roads or civilization. don’t tell me you can not find a place in this vast area to handle nuclear waste will little or no risk to anybody.

  13. Submitted by Dan Hintz on 06/01/2009 - 03:28 pm.

    I am open to the idea of expanding the use of nuclear power, but you guys aren’t going to win anyone over by lying about wind power, mocking environmentalists, and dismissing concerns about nuclear waste.

  14. Submitted by Robert Moffitt on 06/01/2009 - 03:58 pm.

    Echoing what Dan just said, you really have to discuss energy in terms of power generation and transportation fuels.

    The article is about ethanol, a transportation fuel. It was nothing to do with nukes, coal or wind turbines.

    Right now, our choices for transporation fuels are pretty limited. There are the petroluem-based fuels we have used for 100 years, and there are the other choices (biofuels, CNG/propane, electric, electric hybrid) each with pros and cons, but ALL are less polluting than oil-burners.

    Everything else heats/cools our buildings or keeps the lights on — they don’t make our wheels roll.

  15. Submitted by Bernice Vetsch on 06/01/2009 - 05:16 pm.

    While France is often held up as a fine example of safe, clean nuclear power and recycling plants, it often has waste-escape problems that endanger its citizens. It partially solves its dilemma about where to locate some of its waste by shipping it to Russia.

    Google— French nuclear power waste problems

    Energy from rooftops covered with solar panels and both large and small wind towers/farms only cost more now. As we deplete oil, coal and gas and their prices rise, renewables will become cheaper in comparison.

    Nuclear ain’t safe and coal ain’t clean.

  16. Submitted by Richard Callahan on 06/01/2009 - 05:23 pm.

    My opinion of nuclear energy has changed over the last couple of years. I think the threat of global warming is far more serious in the long term and the only practical short term solution is lots of modern nuclear reactors.

    The nuclear hazardous waste can be stored safely for a couple hundred years and dealt with later. It’s better we deal with global warming today and let a future generation deal with the nuclear waste.

  17. Submitted by Jeff Klein on 06/01/2009 - 05:39 pm.

    Electric cars, Bob. It’s happening.

  18. Submitted by david granneman on 06/01/2009 - 07:52 pm.

    hello all

    NASA: Sun cycle ‘lowest since 1928’…

    JUNE: ‘Freeze watch’ issued for many parts of New York…

    do you global warming believers think these two headlines have any thing in common or do you think it is just a mere coincidence.

    GLOBAL WARMING IS A HOAX PERPETUATED BY PEOPLE OUT TO DESTROY OUR PROSPERITY AND OUR WAY OF LIFE.

  19. Submitted by david granneman on 06/01/2009 - 08:59 pm.

    hello all

    ” but you guys aren’t going to win anyone over by lying about wind power, mocking environmentalists, and dismissing concerns about nuclear waste. ”

    i am not trying to win over environmentalists as i know to them global warming is not an opinion, but rather a RELIGION with mother earth as their god. they believe mother earth needs them to save it, eventhought it has survived 5 billion years without their help. i know long ago they closed their minds to any evidence that may harm their religion. i am hoping to reach the people with truely open minds who will seriously consider the evidence before saying GLOBAL WARMING IS A DONE DEAL.

  20. Submitted by rolf westgard on 06/02/2009 - 04:13 am.

    There’s a reason the two largest independent ethanol producers are bankrupt. Even with massive government subsidies, making transportation fuel from corn doesn’t make economic or environmental sense. The raw corn for a gallon of ethanol costs as much as the gallon sells for.
    Not to mention all that nitrogen and phosphorous from fertilizing new land heading down the Mississippi, creating dead zones in fresh and salt water. Using 5% ethanol to replace MTBE makes sense; any more is just a scam.

  21. Submitted by Robert Moffitt on 06/02/2009 - 12:23 pm.

    I mentioned electric, jeff.

    It’s happening?!? Where?

    Other than the annual exhibit at the Living Green Expo, I mean…and our project.

  22. Submitted by Dan Hintz on 06/02/2009 - 01:06 pm.

    “There are the petroluem-based fuels we have used for 100 years, and there are the other choices (biofuels, CNG/propane, electric, electric hybrid) each with pros and cons, but ALL are less polluting than oil-burners.”

    That isn’t true, and why this is an issue in the first place. Corn ethanol is worse for the environment than oil. It was a stupid idea from the beginning and no one other than those with a vested interest (like Peterson) considers corn ethanol to be any kind of solution.

  23. Submitted by James Hamilton on 06/02/2009 - 08:53 pm.

    The only thing that seems likely to last longer than nuclear waste is the search for a place to put it. Google “nuclear waste disposal proposals” and you’ll find propaganda from both sides as well as the occasional objective site.

    One informative industry site is:

    http://www.world-nuclear.org/

    This page is particularly worth reading:

    http://www.world-nuclear.org/info/inf60.html

    A few quotations:

    HLW [High Level Waste]is accumulating at about 12,000 tonnes a year worldwide. High-level wastes are highly radioactive for a long time so must be isolated from people for thousands of years while their radiation levels drop.

    High-level waste sufficiently radioactive to require both shielding and cooling,
    generates >2 kW/m 3 of heat and has a high level of long-lived alpha-emitting isotopes.

    High-level Waste (HLW) contains the fission products and transuranic elements generated in the reactor core which are highly radioactive and hot. High-level waste accounts for over 95% of the total radioactivity produced though the actual amount of material is low, 25-30 tonnes of spent fuel. or three cubic metres per year of vitrified waste for a typical large nuclear reactor (1000 MWe, light water type).

    There are two types of high level waste, fission products and transuranics separated from the spent fuel and the spent fuel elements themselves from the reactor core when they are not reprocessed. Both types of HLW must be treated prior to disposal. * * * In either case however there is a cooling period of 20 to 50 years between removal from the reactor and disposal, with the conditioned spent fuel or conditioned HLW being retained in interim storage. This is because the level of radioactivity and heat from the used fuel fall rapidly in these years down to about one thousandth of the level at discharge in 40 years.

  24. Submitted by Gregory Lang on 06/03/2009 - 01:05 am.

    “Doing the math” on that $16,000 1500 watt windmill. A poster said 25% output. Historically, wind generators have delivered less than half the “nameplate” output over a 24/7/365 time period.

    Let’s be generous and go with the 25% nameplate “round the clock”. Let’s also be generous and value the electricity at ten cents per kilowatt hour. Around half of the electric bill is distribution, billing and administration so this is a generous figure.

    Basically this windmill would average 9KWH per day or ninety-cents per day off the electric bill. In a 365 day year that would be $328.50. That is 47.8 year “payback” using raw amortization ($16K divided by $328.50) or slightly more than 2%. That is before insurance, maintainance, repair, wear and tear, ect.

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