Risk-focused bio-fuel law the weeds case study Prof Paul Martin and Elodie LeGal Australian Centre for Agriculture and Law

Biofuels and farm carbon? Carbon credited biomass $ Carbon credited fuel $ Pyrolysis and sequestration

The 2nd Generation ideal/biofuel. carbon market aspiration Emissions managed within production systems, to conserve fossil fuel, reduce fertiliser use, increase vegetation and reduce clearing; and Improve soil structure and on-farm eco-services (water, biodiversity, salt) a contribution to the farm budget.

Climate Action Grant project, October 2009 Advantages of 2nd Gen. Multiple, high volume alternative feedstocks Woody biomass (trees, thinnings, coppice) Other biomass (stubble and stalk, waste) Potential specialist crops (saltbush, artichoke) Integrate-able with other values Farm production systems Habitat and eco-services Waste reduction (land restoration, waste) Multiple input/process/output options. Climate Action Grant project, October 2009

Alternative credits cycle Rotation 1 Rotation 2 Acrrue credits } Avoided fossil fuel Sequestered carbon Rotation 1 Rotation 2 Acrrue credits Replace credits Percentage sequestration Establish, grow, harvest Establish, grow, harvest Mature 5

Biofuel / biofuel policy risk Economic risks Subsidy / mandate distortion Input competition effects Investment risks (pre-paradigmatic, price driven sector with high capital cost) Social risks Displacement and monopolisation Nth/Sth inequities Political risks Policy distortion and agency Carbon market mis-design Environmental risks Transport path dependence Monocultures and biodiversity Invasive species Contribution to environmental jurisprudence? Moving from risk-naïve regulation to more risk-sophisticated designs

Framing the risks/rules issue For every complex problem, there is a solution that is simple, neat, and wrong. Henry Louis Mencken Insanity: doing the same thing over and over again and expecting different results. Albert Einstein The sleight of hand in policy making

A biofuels weeds risks strategy Elements in the proposal Industry leadership in assuming the risk Improving decision capacity Industry certification and accreditation schemes An industry risk management programme Targeted weeds risk strategy (example) Pathways, transactions and interventions

Instrumental distinction Conventional instruments Regulation – behaviour contingent punishment Market – trade contingent reward Composite – contingencies and decision factors Risk focused instruments Focused upon decisions about (& pricing) Hazard incidence (Probability and scale) Hazard impact (Robustness) Recovery (Resilience) Examples Insurance policies Risk evaluation and notification Contingent liabilities Deposits and bonds Risk-pooling Impact-based penalties

Specifics of the weeds risk strategy See handout (and paper) for details Multi-instrument approach Mirroring private risk markets Advantages Less restrictive for the industry during its uncertain stage Far more protective in reality than naïve barrier strategies Research issues: Detailed design and institutions. Policy risk issues. Choice theory problems and adoption. Implications: Sophisticated risk regulation in NRM