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

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

3. 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.

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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