Parratt & Associates Scoping Biorefineries: Temperate Biomass Value Chains

7.2 The Role of Government

The words of President Obama in June, 2010 in response to the Gulf of Mexico oil spill brings to the fore a significant opportunity for governments to act to provide development of bio-based industries;

For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked – not only by oil lobbyists, but also by a lack of political courage and candor.²³⁵

In Chapter 2 trends of global significance were noted that will drive change in the way business and communities operate. Specifically, risks associated with energy security, food security and climate change will have major impacts on the way we do business and the way communities develop and interact. These drivers require government to create a policy environment that facilitates change. Chapters 2 and 6 describe how bio-products and biorefineries are at early stages of development. The Clean Energy Council has argued that government intervention and support is necessary to see the sustainable establishment of a clean energy industry (including biomass transformation). As, stated by the WEF, ‘no single industry or company is capable of managing this phase of development independently’²³⁶. The complexity for entrepreneurs, industrialists, governments and the community to deal with is noted in the following;

Emerging bioelectricity and biofuel value chains (read biomass value chains) require reference to and compliance with this array of policies, legislation and regulations from Australia’s three levels of government, often with additional industry specific codes of practice, agreements and requirements. This makes for a complex policy environment. However, the large number of policies, regulations etc. through the value chain indicates that there are many building blocks in place for a bioenergy sustainability framework, if they could be systematically aligned and synthesised²³⁷.

Herein lay an opportunity for government to assist in the development of the biomass value chain, alignment and synthesis of policies and regulations. The government (State and Commonwealth) policy and legislative responses to climate change, energy and food security, if enacted quickly will enable business expand and communities to embrace biorefineries, green manufacturing and the bio-economy. The simple threat of risks to food and energy security and climate change appear insufficient community and business need incentives to act.

1. Changing the Industrial landscape

By Australia moving toward utilisation of the majority of its biomass onshore and the consequential development of new industry off a rural and regional base will cause the underlying fundamental industrial landscape to change. The move to biomass as the primary source of carbon and more sustainable bio-products for the chemical, materials and plastics industries could reshape manufacturing and revive rural communities.

In Chapter 3 logistics is noted as key limiting factor to capturing value adding to biomass through bio-products. This suggests that biomass transformation facilities will need to be within reasonable distances of the source of biomass (approximately 100-200kms). Regional growth off the back of biomass growth, storage and transport would be expected (much the same as proposed by the Gunn’s scenario for Bell Bay Mill). Location of biorefineries at regional ports would add a significant dimension to the development and restructuring of industry. There are clear examples of locations where significant biomass trading already occurs in temperate zones in Australia (Bunbury, Eden, Geelong, Portland and at various sites in Tasmania). Data presented in Chapters 3 and 4 indicate that bioproducts, including fuel could offset a growing deficit in the importation of oil and chemicals. However, establishing a number of biorefineries of scale is not without business and environmental risks.

2. Sustainability

Data presented in Chapters 2 and 6 indicates that biorefineries and the application of industrial biotechnology could significantly impact on the production of Greenhouse Gas (GHG) emissions. The magnitude of the global reductions, according to the WWF could be 207Mt CO₂e from biofuels, 282Mt CO₂e from bio-based materials production and 376MtCO₂e from closing the loop opportunities by 2030.

However, careful consideration needs to be given to the implementation strategies for biorefineries in Australia. Inter-government coordination and commitment is perceived as a critical step in the development of whole of government and whole of country approach to creating sustainability frameworks and criteria. Recent studies in Australia and internationally recognise the need for the policy initiatives to have a broader long-term vision to enable certainty for business and the community to foster development. The 2010 ACTU and ACF report recognises the opportunities to create 50,000 new green jobs in Australia through the application of sustainable principles to existing and new manufacturing. However, this can only occur if all the relationships between food, energy and water are considered within a national sustainability framework that is consistent with international standards.

The WEF proposed two important criteria necessary for bio-based industry regulation and development; Certification and Assessment to Help Combat Land-use Change and Total GHG Emissions Criteria. Recent work by the RIRDC adds support to these propositions. Arguably the introduction of the proposed CRPS and the recent changes to the RET legislation will facilitate some transition to reduced GHG emissions. There are however, limitations to both the CPRS and RET in relation to biomass value chains. On the face of it, the legislation does not provide incentives for the use of biomass other than for energy production. The Legislation neglects the benefits from the transition to bio-based products for reduced GHG emissions and capturing the benefits of all aspects of the value chain from biomass transformation.

The Commonwealth Departments of Climate Change and Energy Efficiency; Agriculture, Forests and Fisheries; and Environment, Water, Heritage and the Arts have partial jurisdiction over elements of the value chain. Whilst recognising the opportunities for biorefinery development there was recognition of some of the challenges ranging from the introduction of sustainability criteria potentially becoming a barrier to trade through to risks from introduced energy crops, demands on water and indirect land use change. Whilst there is acceptance for the need for careful development of sustainability criteria and evaluation of the impacts along the supply chain the response is one of ‘wait and see’ rather than proactive development of appropriate policy.

3. Market Opportunities

Government’s role in creating market opportunities is considerable. Government procurement contracts can serve to provide a financial and an ethical imperative for the development of biobased products. In recent months several State governments have introduced mandates for the production of renewable energy or provided assured contracts for the delivery of power. Mandates and incentives help create markets to support industry development. To assist bridging the gap between high costs of entry and capital and the delivery of returns that benefit the general community. The development of building programs, such as the Victorian-Melbourne City Council 1200 Green Building program will stimulate the development of new bio-based materials and help drive innovation by encouraging consortia to invest and innovate into new products and services.

Innovation, research and training programs provide the service industries with a stimulus to deliver new products, new technologies and new services that will underpin the development of biomass value chains. The creation of additional training requirements at the TAFE and University level (Chapter 6) will provide a market opportunity for the education and services sector. The projected training demand by the ACF-ACTU and the Clean Energy Council could be well below the requirement if biomass value chains are implemented.

4. National and International Collaboration

As stated above, the role of government in overcoming challenges and creating opportunities for biomass value chains extends into how it operates to facilitate the change to biobased economies. Intergovernmental processes, such as Council of Australian Governments provide an avenue to examine opportunities for harmonisation of legislation and policy there are perceptions within industry, the community and government departments that co-ordination and collaboration could be improved. The development and implementation of Regional Forest Agreements and the current negotiations on Tasmanian native forest with the broader community are examples of effective policy and coordination in action.

Implementation of whole of value chain strategies require whole of government strategies to deliver an environment for effective collaboration, consultation and commitment. To optimise the opportunities for biomass and bio-based product value chains barriers to access to technology, science and policy development need to be tackled. Government support for the development and adoption of appropriate and independent product life-cycle analysis and low carbon fuel standards are important for business and for the community.

At the international level establishing appropriate and enforceable sustainability frameworks are necessary to provide a license to operate for biomass value chain development. Concerns with barriers to trade must be addressed internationally, not just locally. DAFF and DEWHA officers indicated the need to ensure compliance with certification but were also aware of the difficulties with auditing forest product certification currently.