THE UNIVERSITY OF Thesis/Dissertation Sheet

Surname or Family name: Dong First name: Bo

Abbreviation for degree as given in the University calendar: PhD

School: School of Physical, Environmental and Mathematical Sciences Faculty: UNSW Canberra (PEMS)

Title: Understanding Policy Drivers and Evidence-based Policy-making in Australia and China: the Experience

Abstract 350 words maximum:

Biofuels, with potential environmental, social and economic benefits, have obtained significant research and policy attentions worldwide. Research and policy investment in is disproportionate to the size of the industry. These started abruptly in 2001 and ended in controversy in Australia and were phased out quietly in China. This research aims to enhance the understanding of biofuel policy drivers and evidence-based policy-making by investigating the research-policy interface in Australia and China. With researchers and policymakers’ active participation, the study probes rationalities for the governments’ intervention in biofuel development, identifies the factors considered by policymakers and efficient channels for policymakers to access biofuel research outputs. Conducting semi-structured interviews and questionnaire surveys with biofuel policymakers and researchers in Australia and China, bilingually, provided multi-perspectives and valuable data. This triangulated with academic and government publications, enabled a comprehensive understanding of a complex and dynamic system, and ensured the research findings’ reliability and validity. Comparison provided a deeper understanding of the policy drivers and the barriers to evidence-based biofuel policy-making in practice. In brief, the study found that besides research outputs, biofuels’ market performance, lobbying from incumbent industries and the government’s short-term policy goals are also influential factors in Australia’s biofuel policy-making process. Instead of struggling with the issue of contestability of evidence, centralised Chinese Government appears to provide it simpler, based on its unified policy targets and top-down decision-making process. Researchers complained that ideologies and political factors were the fundamental barriers for evidence-based biofuel policy- making in Australia. While the majority of policymakers in both countries stated biofuel research was not the only input of policy-making. They were concerned about the reliability of research and emphasised that research timing and language need to fit into the policy world. This study is the first comparative analysis of evidence-based biofuel policy-making in Australia and China. It provided a microcosm of the policy-evidence and policy-politics world. Parallel studies in other renewable energy policies in different nations would test the wider applicability of the study findings.

Declaration relating to disposition of project thesis/dissertation I hereby grant to the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or in part in the University libraries in all forms of media, now or here after known, subject to the provisions of the Copyright Act 1968. I retain all property rights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation.

I also authorise University Microfilms to use the 350 word abstract of my thesis in Dissertation Abstracts International (this is applicable to doctoral theses only).

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FOR OFFICE USE ONLY Date of completion of requirements for Award:

Understanding Policy Drivers and Evidence- based Policy-making in Australia and China: the Biofuel Experience

Bo Dong

A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy

School of Physical, Environmental and Mathematical Sciences University of New South Wales, Canberra

February 2018

Originality Statement

‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project’s design and conception or in style, presentation and linguistic expression is acknowledged.’

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i Copyright Statement

‘I hereby grant the University of New South Wales or its agents the right to archive and to make available my thesis or dissertation in whole or part in the University libraries in all forms of media, now or here after known, subject to the provisions of the Copyright Act 1968. I retain all proprietary rights, such as patent rights. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation. I also authorise University Microfilms to use the 350 word abstract of my thesis in Dissertation Abstract International (this is applicable to doctoral theses only). I have either used no substantial portions of copyright material in my thesis or I have obtained permission to use copyright material; where permission has not been granted I have applied/will apply for a partial restriction of the digital copy of my thesis or dissertation.’

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ii Authenticity Statement

‘I certify that the Library deposit digital copy is a direct equivalent of the final officially approved version of my thesis. No emendation of content has occurred and if there are any minor variations in formatting, they are the result of the conversion to digital format.’

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iii Acknowledgements

I would like to express my deepest sense of gratitude to my supervisor, Associate Professor Stuart Pearson. His patient instruction, valuable advice and insightful comments supported and inspired me through this PhD journey. Without his help, the completion of this thesis would be impossible.

My appreciation goes to UNSW for the scholarship support and to the School of Physical, Environmental and Mathematical Sciences for a place in their postgraduate program. I appreciate the kind help and encouragement from Head of School, Professor Warrick Lawson, and Ms Vera Berra from the Student Administrative Service. Their supports allowed me to adjust myself and buffered the pressures at the last stage of my thesis writing.

I have to admit that writing in English is quite a challenge for me. I am very lucky to have my supervisor’s patient help with the revision one time after another, from the framework of chapters to detailed wording in sentences. I also wish to express my special thanks to Ms Anne Isaac from ALL Unit, UNSW, Canberra. Her greatest understanding and generous contribution in the proofreading during the last 5 months of thesis completion equipped me with the basic training in English writing, which will benefit my further work.

I am also grateful to Professor Ma Yingjie in Ocean University of China. She helped me to contact the interviewees in China and made the fieldwork in China possible and smoother. She always has my research topic in mind. Whenever she reads the news about China’s policies or industry information, she shared with me.

My research has been benefited from first-hand information from the interviews with the researchers and policymakers in biofuel field in Australia and China. I appreciate the generous share of their precious time and knowledge. Their passions and enthusiasms in research and policy-making are infectious, which will always encourage me to pursue that of my mine.

iv Thank you also to many colleges and friends, Ms Shengnan Chen, Mrs Amanda Putri, Ms Xi Li, Ms Beibei Chen and Mr Maozeng Jiang. I cherish every pleasant and unforgettable moment we had, which makes this journey alive and worthwhile.

Last but not least, I express the deepest appreciation which words cannot express to my family. Thank you all for the unconditional love and support through this whole process. I also thank my partner, Wei Lu. His constant and keen input made this journey more enjoyable and makes me see the future more clearly.

v

Abstract

Biofuels, with potential environmental, social and economic benefits, have obtained significant research and policy attentions worldwide. Research and policy investment in biofuels is disproportionate to the size of the industry. These started abruptly in 2001 and ended in controversy in Australia and were phased out quietly in China.

This research aims to enhance the understanding of biofuel policy drivers and evidence-based policy-making by investigating the research-policy interface in Australia and China. With researchers and policymakers’ active participation, the study probes rationalities for the governments’ intervention in biofuel development, identifies the factors considered by policymakers and efficient channels for policymakers to access biofuel research outputs.

Conducting semi-structured interviews and questionnaire surveys with biofuel policymakers and researchers in Australia and China, bilingually, provided multi- perspectives and valuable data. This triangulated with academic and government publications, enabled a comprehensive understanding of a complex and dynamic system, and ensured the research findings’ reliability and validity. Comparison provided a deeper understanding of the policy drivers and the barriers to evidence- based biofuel policy-making in practice.

In brief, the study found that besides research outputs, biofuels’ market performance, lobbying from incumbent industries and the government’s short-term policy goals are also influential factors in Australia’s biofuel policy-making process. Instead of struggling with the issue of contestability of evidence, centralised Chinese Government appears to provide it simpler, based on its unified policy targets and top-down decision-making process. Researchers complained that ideologies and political factors were the fundamental barriers for evidence-based biofuel policy-making in Australia. While the majority of policymakers in both countries stated biofuel research was not the only input of policy-making. They were concerned about the reliability of research and emphasised that research timing and language need to fit into the policy world.

vii This study is the first comparative analysis of evidence-based biofuel policy-making in Australia and China. It provided a microcosm of the policy-evidence and policy-politics world. Parallel studies of other renewable energy policies in different nations would test the wider applicability of the study findings.

viii Table of Contents

Originality Statement ...... i

Copyright Statement...... ii

Authenticity Statement ...... iii

Acknowledgements ...... iv

Abstract ...... vii

Table of Contents ...... ix

List of Figures ...... xv

List of Tables ...... xviii

Abbreviations ...... xx

Chapter 1 Introduction ...... 1

1.1 Background to the study ...... 1

1.1.1 Drivers of biofuel policies in Australia and China ...... 1

1.1.2 Significance of research evidence in biofuel policy-making ...... 3

1.2 Research design ...... 4

1.2.1 Conceptual framework...... 4

1.2.2 Research aim and research questions ...... 12

1.2.3 Research method and its rationale ...... 13

1.2.4 Data collection and analytic methods...... 14

1.3 Importance of this study ...... 15

1.4 Thesis structure ...... 16

Chapter 2 Background...... 19

2.1 Biofuels in this research ...... 19

2.2 Biofuel development in Australia ...... 20

2.2.1 Biofuel consumption in Australia’s transportation sector ...... 20

ix 2.2.2 Australia’s industries ...... 23

2.2.3 Australia’s industries ...... 26

2.3 Biofuel development in China ...... 27

2.3.1 Biofuel consumption in China’s transportation sector ...... 27

2.3.2 China’s ethanol industries ...... 30

2.3.3 China’s biodiesel industries ...... 32

2.4 Biofuel policies in Australia ...... 3 4

2.4.1 Biofuel policies before the ratification of the Kyoto Protocol (1990-2008) .. 34

2.4.2 Ratifying Kyoto protocol – more positive actions (2008-2013) ...... 40

2.4.3 New approaches for the new commitment (2013 -- 2015) ...... 45

2.4.4 Summary of Australian biofuel policies ...... 49

2.5 Biofuel policies in China ...... 51

2.6 Classification of Research Agencies on biofuel in Australia ...... 55

2.6.1 Publicly Funded Research Agencies (PFRAs) ...... 56

2.6.2 Research funding agencies ...... 56

2.6.3 Government-business joint research funding agencies ...... 57

2.6.4 Universities ...... 58

2.6.5 Summary of Australian research agencies ...... 58

2.7 Summary ...... 60

Chapter 3 Literature Review ...... 61

3.1 Introduction ...... 61

3.2 The rationality embedded in government policies ...... 62

3.3 Ideologies embodied in economy and environment in Australia and China .. 64

3.3.1 Ideology ...... 64

3.3.2 Political ideologies in contemporary Australia and China ...... 65

3.3.3 Different ideologies on economic growth and environmental protection ... 67

x 3.4 Justifications for and concerns about government intervention in biofuel development ...... 69

3.4.1 Market failures justify government interventions ...... 70

3.4.2 Biofuels’ externalities cause market failures ...... 71

3.4.3 Research investments in biofuel field ...... 71

3.4.4 Controversial subsidises for infant industries ...... 72

3.4.5 Government failures contradict government intervention ...... 74

3.5 Drivers of biofuel policies ...... 76

3.5.1 Climate change mitigation ...... 76

3.5.2 National energy security ...... 79

3.5.3 Regional development ...... 82

3.6 Impacts of Biofuel Policies ...... 8 3

3.7 Evidence-based policy-making in the field of biofuel ...... 85

3.7.1 The concept of research evidence-based policy-making ...... 86

3.7.2 Different models of research use in policy-making ...... 87

3.7.3 Different models of policy-making...... 91

3.7.4 Barriers in evidence-based policy-making ...... 96

3.8 Summary ...... 99

Chapter 4 Methodology ...... 101

4.1 Introduction ...... 101

4.2 Research design ...... 102

4.3 Data collection ...... 103

4.3.1 Ethical considerations ...... 103

4.3.2 Sampling for surveys ...... 104

4.3.3 Semi-structured interview surveys ...... 109

4.3.4 Questionnaire surveys ...... 111

xi 4.4 Data analysis ...... 112

4.4.1 Approach for interview data analysis ...... 113

4.4.2 Approach for the questionnaire data analysis ...... 115

4.5 Summary ...... 120

Chapter 5 Results ...... 121

5.1 Introduction ...... 121

5.2 Rationality of government intervention in biofuel development ...... 121

5.2.1 Arguments given by respondents against to intervention ...... 122

5.2.2 Arguments given by respondents to support government intervention .... 127

5.2.3 Rational circumstances given by respondents for government intervention ...... 131

5.2.4 Comparing Australia and China: whether the government should intervene in the biofuel industry ...... 131

5.3 Drivers of biofuel policies in Australia and China...... 133

5.3.1 Carbon emission reduction ...... 134

5.3.2 National energy security ...... 136

5.3.3 Development of local economy ...... 138

5.3.4 Income generation for farmers ...... 140

5.3.5 Local air pollution ...... 141

5.3.6 The political dimension of drivers ...... 141

5.3.7 International drivers ...... 147

5.3.8 Comparison with China on the drivers of biofuel policies ...... 148

5.4 The biofuel policy-making process and policymakers’ key considerations 152

5.4.1 The Policy-making process in Australia ...... 152

5.4.2 Skipped steps in the policy-making process ...... 157

5.4.3 Example of biofuel policy-making process _ E85 Fuel Quality Standard ..... 158

xii 5.4.4 Examples of biofuel related policy-making _ National Climate Change and Commercial Forestry Action Plan 2009-2012 ...... 162

5.4.5 Important factors considered by policymakers in the policy-making process ...... 163

5.4.6 The Role of Research Outputs to the policy-making process ...... 168

5.4.7 Comparison with China on the biofuel policy-making process ...... 172

5.5 Evidence-based policy-making in biofuel field ...... 174

5.5.1 Policymakers and Researchers’ attitude to ‘evidence’ in Australia ...... 174

5.5.2 Prediction on biofuel research investment in future...... 177

5.5.3 Dose research drive policy or does policy decide the direction of research? ...... 178

5.5.4 Whether policy-making is evidence-based ...... 181

5.5.5 How do biofuel policymakers use research evidence...... 190

5.5.6 Biofuel knowledge needed by policymakers ...... 196

5.5.7 Information channels used when making policy in Australia ...... 199

5.5.8 Reasons for mismatches between policymakers’ expectations of research and actual research outputs ...... 204

5.5.9 Comparison with China’s evidence-based policy-making ...... 212

5.6 Summary ...... 219

Chapter 6 Discussion...... 221

6.1 Introduction ...... 221

6.2 Multi-dimensional rationalities of government intervention in biofuel development ...... 221

6.3 The ‘real’ biofuel policy drivers in Australia ...... 228

6.4 The extent to which biofuel policy-making was evidence-based ...... 238

6.4.1 Australian Narrative 1: absence of research evidence to justify the biofuel policies before 2001 ...... 239

xiii 6.4.2 Australian Narrative 2: communication with the Australian Government on the research for the 350 Million Litre Target ...... 241

6.4.3 Chinese Narrative: apparent harmonious findings ...... 244

6.5 Suggestions to improve evidence-based policy-making ...... 249

6.5.1 Obstacles to evidence-based biofuel policy-making – from the policymakers’ perspective ...... 250

6.5.2 Suggestions for biofuel researchers ...... 258

6.6 Summary ...... 266

Chapter 7 Conclusion ...... 271

7.1 Returning to the study aims and research questions ...... 271

7.2 Rationalities of governments’ intervention in biofuel development ...... 272

7.3 Drivers of biofuel policies ...... 275

7.4 There was a lack of research evidence used in biofuel policy-making ...... 278

7.5 Improving evidence-based policy-making in biofuel ...... 279

7.6 Summary ...... 283

Appendix 1 Background (supplementary content) ...... 285

Appendix 2 Discussion Guide ...... 291

Appendix 3 Questionnaire ...... 297

Appendix 4 Consent Form ...... 309

Appendix 5 Major results of well-recognised biofuel research in Australia .... 311

References ...... 315

xiv List of Figures

Figure 1.1 Conceptual framework with the research questions located in...... 8

Figure 2.1 Energy consumed for transportation in Australia, by fuel types, shown as a percentage (2013-14) ...... 21

Figure 2.2 Australian Biofuel production from 2004 to 2015 ...... 24

Figure 2.3 China’s Biofuel production from 2003 to 2015 ...... 30

Figure 2.4 Grant payments of Ethanol Production Grants Program (EPGP), 2002-03 to 2013-14 ...... 47

Figure 2.5 ARENA’s funding, by energy type, shown as percentages ...... 49

Figure 2.6 Summary of biofuel policies from 1990 to 2015 ...... 50

Figure 2.7 Categorising principles of different types of research ...... 59

Figure 3.1 a. Life-cycle GHG emissions per kilometre from the use of ethanol blends from various feedstocks and unleaded petrol (ULP) in a light passenger car. Upstream begins with production; Tailpipe begins at the bowser...... 78

Figure 3.2 Models of research utilisation ...... 88

Figure 3.3 Policy cycle ...... 92

Figure 4.1 Research design ...... 102

Figure 4.2 An excerpt of a transcript in a Word document ...... 113

Figure 4.3 An excerpt of ‘Level-3’ coding in the coding system ...... 113

Figure 4.4 An excerpt with an overview of the coding system ...... 114

Figure 4.5 Example of bar charts to show Likert scale questions’ results ...... 117

Figure 4.6 Example chart of the results obtained from ranking questions in relation to Q1: What are the important drivers of biofuel policy in Australia? ...... 119

Figure 5.1 Responses to Likert Scale Statement L4: The Australian Government should not intervene in biofuel development...... 122

Figure 5.2 Responses to Likert Scale Statement L7: 2nd and 3rd generation biofuel should get more support (economically and technically) from government...... 128

xv Figure 5.3 Responses to Likert Scale Statement L4: In Australia/China, the government should not intervene in biofuel development...... 132

Figure 5.4 Results of ranking question Q1 (comparing policymakers and researchers): What are the important drivers of biofuel policies in Australia? ...... 134

Figure 5.5 The result of ranking question Q1 (comparing Australia and China): What are the important drivers of biofuel policies in Australia/China?...... 149

Figure 5.6 Institutional structure of policy-making and the policy-making process in Australia ...... 154

Figure 5.7 Results of ranking question Q4 (comparing policymakers and researchers): What are the important factors in biofuel policy-making process in Australia? ...... 165

Figure 5.8 Responses to Likert Scale Statement L9: Australian biofuel policymakers are willing to find research evidence to assist their policy-making process...... 175

Figure 5.9 Responses to Likert Scale Statement L16: Biofuel policymakers can always get very helpful advice or evidence from research in Australia...... 175

Figure 5.10 Responses to Likert Scale Statement L15: There will be more biofuel research investment from the Australian Government in the future...... 178

Figure 5.11 Responses to Likert Scale Statement L23: There are always results from the research investment programs that can drive the need for biofuel policy changes in Australia...... 179

Figure 5.12 Responses to Likert Scale Statement L28: Policymakers can control the direction of the biofuel research investment in Australia...... 180

Figure 5.13 Responses to Likert Scale Statement L8: Australian biofuel policy-making should be evidenced-based...... 181

Figure 5.14 Responses to Likert Scale Statement L29: Biofuel policy-making cannot be convincing without adopting research outputs in Australia...... 182

Figure 5.15 Responses to Likert Scale Statement L30: Biofuel policies based on research results are more appropriate, effective and efficient...... 183

Figure 5.16 Responses to Likert Scale Statement L13: Biofuel policy is always based on specific results of research investment projects in Australia...... 184

xvi Figure 5.17 Responses to Likert Scale Statement L25: Biofuel policies are exactly based on the available research results in Australia...... 184

Figure 5.18 Responses to Likert Scale Statement L11: In Australia, biofuel research investment is the most efficient way to get relevant information and knowledge for the policy-making...... 191

Figure 5.19 Responses to Likert Scale Statement L12: In Australia, biofuel policymakers use the results of research directly as answers for policy problems...... 192

Figure 5.20 Responses to Likert Scale Statement L17: In Australia, biofuel policymakers shape their ideas from research results in their policy-making process...... 192

Figure 5.21 Results of ranking question Q6: The types of knowledge that policymakers expect to know the best from biofuel research...... 197

Figure 5.22 Results of ranking question Q5: What are the most frequently used channels when biofuel policymakers trying to get information? ...... 200

Figure 5.23 Responses to Likert Scale Statement L22: Research outputs always match policymakers’ initial expectation of the research investment...... 205

Figure 5.24 Results of ranking question Q10: Most important reasons that cause mismatches between biofuel policymakers’ initial expectations and the outputs of the biofuel research...... 206

Figure 5.25 Responses to Likert Scale Statement L14: Before agencies make a biofuel research investment, they knew clearly what information was needed...... 207

xvii List of Tables

Table 1.1 Key to the icons in the conceptual framework ...... 9

Table 2.1 Petrol consumption and ethanol production for transportation in Australia from 2004-05 to 2014-15 ...... 22

Table 2.2 Diesel consumption and biodiesel production in the transport sector in Australia from 2004-05 to 2014-15 ...... 23

Table 2.3 Production capacity (million litres) of major ethanol plants in Australia, by location and feedstock, in 2014 ...... 25

Table 2.4 Production capacity (million litres) of biodiesel plants in Australia, by location and feedstock, in 2014 ...... 27

Table 2.5 Petrol consumption and ethanol production in the transport sector in China (2003-2015) ...... 28

Table 2.6 Diesel consumption and biodiesel production in the transport sector in China (2006-2015) ...... 29

Table 2.7 Productions of Four initial major food based ethanol producers in China in 2008 ...... 31

Table 2.8 Productions of major non-food based ethanol producers in China in 2008... 32

Table 2.9 EPGP grant recipients and amounts (AUD), 2002-03 to 2007-08 ...... 39

Table 2.10 EPGP grant recipients and amounts (AUD), 2008-09 to 2013-14 ...... 42

Table 2.11 Effective fuel-tax rates for ethanol decided in Ethanol Production Grants Program (EPGP), 2002–2015 ...... 43

Table 2.12 ARENA’s investment in biofuel projects before September 2013 ...... 45

Table 2.13 ARENA’s investment in biofuel projects from September 2013 to September 2015 ...... 48

Table 2.14 China’s biofuel policies (in chronological sequence) ...... 54

Table 4.1 Institutes and agencies in Australia and China and number of respondents107

Table 4.2 Profiles of respondents in Australia and China and their identifying codes . 108

xviii Table 4.3 A 5×2 contingency table for L1 in the questionnaire survey ...... 115

Table 4.4 Sample size summary ...... 116

Table 5.1 Supplementary influential factors considered in policy-making process prioritised by individual respondents ...... 168

Table 5.2 Supplementary aspects of “needed-to-know” knowledge prioritised by individual respondents ...... 199

Table 5.3 Supplementary communication channels frequently used by biofuel policymakers trying to obtain information ...... 203

Table 5.4 Political reasons supplemented by respondents to Q10 ...... 211

Table 6.1 Results themes and corresponding discussion items ...... 221

Table 6.2 Synthesis of respondents’ arguments on the rationality of government intervention in biofuel development ...... 222

Table 6.3 Well-recognised biofuel reports mentioned by Australian policymaker respondents ...... 230

Table 6.4 Policy brief results of well-recognised biofuel research in Australia ...... 232

Table 6.5 Summarised results of recent authorised and government commissioned impact assessment of EPGP ...... 234

xix Abbreviations

ABARE Australian Bureau of Agricultural and Resource Economics

ABARES Australian Bureau of Agricultural and Resource Economics and Sciences

ACF Australian Conservation Foundation

ACRE Australian Centre for Renewable Energy

ARENA Australian Renewable Energy Agency

ANAO Australian National Audit Office

ARC Australian Research Council

ASTM American Society for Testing and Materials

BCGP Biofuels Capital Grants Programs

BREE Bureau of Resources and Energy Economics

BTRE Bureau of Transport and Regional Economics

CEBRA Centre of Excellence for Biosecurity Risk Analysis

COAG Council of Australian Governments

CPPCC Chinese People's Political Consultative Conference

CPRS Carbon Pollution Reduction Scheme

CRCs Cooperative Research Centers

CSIRO Commonwealth Scientific and Industrial Research Organisation

DSTO Defence Science and Technology Organisation

EGCS Energy Grants Credits Scheme

EPBS Ethanol Production Bounty Scheme

EPGP Ethanol Production Grant Program

EPGP Ethanol Production Grant Program

ETS Emission Trade Scheme

GGAP Greenhouse Gas Abatement Program

GHG greenhouse gas

GRDC Grains R&D Corporation

IEA International Energy Agency

xx IFQC the International Fuel Quality Centre

IISD International Institute for Sustainable Development

ILUC indirect land use change

IPRs intellectual property rights

LCA life cycle assessments

LUC direct land use change

ML unit of ‘million litre’

MoF Ministry of Finance in China

MoST Ministry of Science and Technology in China

MRI Medical Research Institutes

NDRC Energy Research Institute of National Development and Reform Commission

NEA National Energy Administration in China

NHMRC National Health and Medical Research Council

NNSFC National Natural Science Foundation of China

NPC National People’s Congress

NRDC National Development and Reform Commission

NSW New South Wales

R&D research and investment

RECP Renewable Energy Commercialisation Program

REDI Renewable Energy Development Initiative

RDCs Research and Development Corporations

RET Renewable Energy Target

RIRDC Rural Industries Research and Development Corporation

UNFCCC United Nations Framework Convention on Climate Change

xxi Chapter 1 Introduction

1.1 Background to the study

1.1.1 Drivers of biofuel policies in Australia and China

The international community, informed by the available evidence, has made greenhouse gas (GHG) emissions a matter of government policies and action; and acknowledging the complexity and uncertainty of many trade-offs has helped nations take unprecedented policy positions (IPCC 2014).

In Australia and in China, around 90 per cent of the total energy consumption comes from fossil fuels. This heavy reliance on fossil fuels as an energy source has caused high carbon emissions in both countries. Carbon emissions from the burning of these fuels contributes 78 per cent of total greenhouse gas (GHG) emissions in Australia and 80 per cent in China (Australian Government Department of Industry and Science 2015b; Chen et al. 2015). This shows Australia to be the highest per capita emitter and China the largest emitter in the world (Curran 2012; Liu 2015; Qi et al. 2014). In view of these figures, both nations made promises to further reduce their carbon emissions at the Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. The Australian Government pledged that by 2030 it would reduce its emissions by between 26 and 28 per cent compared with 2005 emission rates (Australian Government Department of Environment 2015). Similarly, the Chinese government increased its goal of lowering carbon intensity by between 60 and 65 per cent by 2030 compared with 2005 (C2ES 2015). These ambitious commitments require supportive policies, such as China’s 12th Five Year Plan, which prioritised reducing energy intensity (using standard coal equivalent per unit GDP as the indicator) and increasing the use of renewable energy (Williams 2014).

Australia is endowed with abundant fossil-fuel resources; however, its oil production does not meet domestic needs and this situation is exacerbated by the fact that oil accounts for a major proportion (30 per cent in 2015) of the country’s total energy consumption (Hua et al. 2016). China, the second largest oil consumer in the world,

1 also does not meet its oil demand from domestic sources either because of the size of its population and its rapid economic growth (Zhao et al. 2015). In 2014, Australia imported 91 per cent of its domestic oil consumption and China imported 63 per cent (Blackburn 2014). Dependence on imported oil is the key indicator of energy security. The high dependence on imported oil by China and by Australia shows that both countries are facing a potential threat of energy insecurity (Zha 2006).

For Australia and China, increasing the use of renewable energy is a key policy objective for mitigating climate change and for securing a sustainable energy supply (Hua et al. 2016). Biofuels are proposed as one of the solutions to these problems with three major potential benefits: a higher degree of fuel security, lower carbon emission, and desirable economic outcomes for rural sectors (Puri et al. 2012). These benefits are also recognised as the three official drivers of biofuel policies, not only by Australia and China, but also by the dominant biofuel producers in the world, such as Brazil, the United States and the European Union (Ackrill & Kay 2014).

Driven by these potential benefits, policymakers in Australia and China have subsidised biofuel industries relatively actively and on a large scale relative to the scale of the biofuel industries. However, investments in policies that support for biofuels in both nations have declined. The indirect subsidy of excise exemption on biofuels in Australia and the direct subsidy of biofuel production in China are diminishing (Ren et al. 2015; Webb 2014). For example, the Ethanol Production Grant Program (EPGP) for domestic ethanol production in Australia, started in 2002 and invested AUD895 million in total (ANAO 2015b) before ending in 2015; and the policy of Special Development Plan for Denatured Fuel Ethanol and Bioethanol for Automobiles in China was established in 2001 and called off in 2005 (Ren et al. 2015).

The mismatch between the need for increasing the use of biofuels and the reality of diminishing policy support for biofuels in Australia and China has apparently escaped investigation by previous researchers and the reasons for this remain unclear. Exploring what actually drives biofuel policies in both countries will close the knowledge gap in this aspect of biofuel policy.

2 1.1.2 Significance of research evidence in biofuel policy-making

Policy goals are not easy to achieve, especially when policymakers cannot see all the information available to help with the policy-making. They also cannot foresee the contextual factors of implementation (Head 2010). An evidence-based approach can facilitate policy-making so that the chance of realising policy goals can be maximised and uncertainties minimised. It is widely accepted that policy-making based on evidence derived through systematic evaluation of credible research or information is the best practice (Nutley 2003; Productivity Commission 2010). A key contribution that evidence-based policy-making makes is to reduce the uncertainties and risks in decision-making by applying robust tests of the evidence available and then using that evidence to anticipate the future (Sharman & Holmes 2010). A former Australian prime minister, Kevin Rudd, once stressed the importance of evidence-based policy-making in his speech to senior public servants in April 2008:

Policy design and policy evaluation should be driven by analysis of all the available options, and not by ideology. …We’re interested in facts, not fads. (Productivity Commission 2010)}

Evidence-based policy-making in the biofuel field is challenging; complexities and uncertainties abound in biofuel development. Different stakeholders, industries, researchers and policymakers, have different views, judgements and values. This leads to different definitions of ‘evidence’. Biofuel policymakers being involved with different beliefs or political ideologies can set differing priorities in their policy agenda or come to different conclusions on biofuel policies (Parsons 2002).

In addition, the contentious research outputs for biofuels that are made from different feedstocks make biofuel issues complicated. A review of biofuel research and trials shows that biofuels have positive and negative effects (Humpenöder et al. 2013; Kim et al. 2013; Menten et al. 2013; Mohr & Raman 2013; Petersen et al. 2015; Sims et al. 2010; Thompson & Meyer 2013). First-generation biofuels, the type produced from food-based feedstocks, such as and sugar, have disadvantages such as the extensive use of arable land, negative effects on world food prices and on ,

3 limited energy yields, and sometimes, poor life-cycle GHG emission reduction (Humpenöder et al. 2013; Kim et al. 2013).

Less controversially, second-generation biofuels, produced from non-food based feedstocks, such as organic waste and wood, are often seen as a more sustainable energy source that avoids some of the problems that first-generation biofuels cause. However, there are still some potential disadvantages that can follow from the development of second-generation biofuels. For instance, the production of second- generation biofuels has led to competition for land used for conservation, animal feed and forestry (Thompson & Meyer 2013). Moreover, there is controversy about biofuels’ overall contribution to the carbon balance because of the unclear consequences of indirect land use change (ILUC) (Menten et al. 2013). A third adverse outcome could be its low net energy output because of the offset from breaking down the lignocellulosic material and the logistics of moving the feedstocks (Petersen et al. 2015).

Driven by these complexities and uncertainties in biofuel development and its importance in dealing with a global problem, and being responsive to national and government decisions and commitment, policymakers need researchers’ analytical support, as well as long-term and realistic-scenario information to inform their decisions (Head 2015). However, there is a dearth of research to identify and evaluate the influence of biofuel-related research on evidence-based policy-making in Australia and China.To analyse how well biofuel research has informed biofuel policy-making is an important and novel aspect of this study. The comparison between biofuel policymakers and researchers’ expressed views is likely to be an effective way of identifying and evaluating the impacts of research outputs on biofuel policy-making in practice.

1.2 Research design

1.2.1 Conceptual framework

This research used a conceptual framework as a methodological strategy to develop the research design. Such a conceptual framework underpins the logic of research questions and helps the researcher choose the research method that will achieve clear and meaningful research results (Hall 2008; Shields & Rangarajan 2013). In the process 4 of building the conceptual framework used in this research, the author identified and set boundaries to the concepts, and made assumptions about the framework within which the concepts played integral roles and interacted with each other (Maxwell 2013; Miles & Huberman 1994). The framework provides for a process of empirical observation to test the ideal assumptions of biofuel policy-making being research evidence based. By understanding the gaps between the ideal assumptions and the rational reality in biofuel policy-making, this research will enable answers to the questions; “What works in a particular situation?” and “How can it be improved?”

Key concepts in this framework

The elements that comprise the conceptual framework are terms that describe ideas related to the research questions. These key concepts are defined below.

‘Biofuel policies’ in this research are defined as decisions about biofuels that are articulated in the form of mandates, financial incentives, fuel standards and programs on a national level. The comparison is designed between two countries: Australia and China. Australian policy examples include the 350 Million Litre Target by 2010, the Ethanol Production Grants Program, Energy Grants (Cleaner Fuels) Scheme, and fuel quality standards for E10, E85 and biodiesel; and typical Chinese examples are the Pilot Testing Program and the Expanded Pilot Testing of biofuels.

‘Drivers of biofuel policies’ are the pressures, forces and intentions that cause Australia to act, to intervene, to invest in and to develop its biofuel industry, and to decide which sources to rely on in setting biofuel-related policies.

‘Policymakers’ knowledge needs’ is one of the important concepts in this framework. Published research, existing statistics, stakeholder consultations, previous policy evaluations, and political strategies are all knowledge seen as evidence relevant to policy-making, and are fundamentally defined as the evidence used in evidence-based policy-making (Head 2015; Nutley 2003). This research considers the factors that drive the use of one type of knowledge: research evidence, specially the biofuel research outputs that can be recognised or adopted by biofuel policymakers. One of the new contributions this research makes is to discover the policymakers’ knowledge needs

5 and whether the significant biofuel-related research outputs that they identified match the articulated biofuel policy drivers.

For the purposes of this thesis, the term ‘biofuel policymakers’ refers to government officials who work in those departments that have developed particular biofuel policies. Considering that government officials’ positions can change suddenly, it is challenging to be able to track-down and contact the original and the final decision-makers of past biofuel policies. Therefore, such government officials are identified as ‘biofuel policymakers’, for the time that they are (or were) in charge of one specific division (or branch or unit) in the government department where a particular biofuel policy was developed. These agents are able to provide their comprehensive understanding of biofuel policies developed in their department, including the drivers and the history of the development of the policies. The federal government departments in Australia that deal with biofuel policies are the Department of Agriculture, the Department of the Environment and the Department of Industry. In China, the related biofuel policy- making departments are the National Development and Reform Commission, the National Energy Administration, and the Ministry of Finance.

‘Biofuel researchers’ are the researchers who work in the research agencies that do research on biofuels. These agencies are supported by funding from governments, from industry or from both. In this study, the research agencies include universities, the CSIRO, ABARES, the RIRDC and the GRDC in Australia; and energy related departments of the Chinese Academy of Sciences in China.

Development of the conceptual framework

The conceptual framework of this study is presented in Figure 1.1. In this figure, the icons with different shapes and colours represent different concepts. These icons and their matching concepts are displayed in Table 1.1.

The present research is confined to the interaction between biofuel policymakers and researchers. Given the scope of the study, the framework boundary is set between policymakers and researchers and is shown with the dashed green frame in Figure 1.1. In this frame, policymakers’ activities are represented by the blue squares on the left-

6 side of the figure and the researchers’ activities are represented by the red squares on the right-side of the figure.

The conceptual framework is formed by the interactive concepts within the research boundary. The posited interaction among the concepts is represented by different coloured dashed arrows in Figure 1.1. The exploration process of this research is stated in the dashed purple squares in the conceptual framework

7 Figure 1.1 Conceptual framework with the research questions located in Is it rational for governments to intervene in biofuel Government’s intervention in biofuel development development?

What are the drivers of Government’s policy decision-making biofuel policies in Australia and China?

Policy-making Research Research investment What are the

Identification of the outputs of initial expectations of policymakers’ knowledge needed for well-recognised biofuel policy-making biofuel research Policy- Demonstr and how can Market oriented Early ation & transfer them to commerci research research uptake alization the policymakers?

Explicit policy- Implicit policy-oriented oriented outputs research outputs What factors do policymakers consider in biofuel policy- Adoption of the making needed/expected Knowledge transfer processes?

research outputs in Outputs from research investment the biofuel policy- making process

How can policymakers and researchers improve evidence-based biofuel policy- making?

Evaluation of how the Improvement for future research investment Preparation for evidence influences further research biofuel research based on investment policy- policymakers’ making feedback

8 Table 1.1 Key to the icons in the conceptual framework

Icons Concepts the icons represent

Orange squares Drivers of biofuel policy and biofuel research investment policy

The core research questions which are located in the Dashed Purple squares frame

Dashed green frame The research boundary (scope of the project)

Blue squares Policymakers’ activities (left side of the frame)

Blue arrows Policy-making process

Red squares Researchers’ activities (right side of the frame)

Red arrows Research process

Dashed purple arrows Interaction between policy-making and research activities

Black clockwise arrow The first part of this hypothesised interaction model: policy-research interaction

Black anti-clockwise arrow The second part of this hypothesised interaction model: impact assessment

9

The initial question prompting this research project was “What are the drivers of biofuel policies in Australia and China?” To answer this question, the rationality of government’s intervention in biofuels needs to be clear in the first place. If it is not rational for the government to intervene at all, there is no need for the exploration of the drivers. One way for government to intervene in biofuel development is through research investment. The next goal of this research is to evaluate the impacts of research outputs on policy-making. The starting point of this evaluation is to find answers to the question: “What are outputs of policymakers’ well-recognised biofuel research and how can them be transferred to the policymakers?” By identifying the matches and gaps between researchers and policymakers’ responses, this research will be able to make recommendations on how to improve the impacts of research outputs on biofuel policy-making. The first part of the hypothesised interaction model between biofuel policymakers and researchers is shown as the black clockwise arrow.

There are many factors involved in the policy development process and research outputs are but one many (Bogenschneider & Corbett 2010; Dhaliwal & Tulloch 2012; Stone et al. 2001). In Figure 1.1, the dashed green frame symbolizes that the research focus is on the interaction between policymakers and researchers, although there are other factors that impact on policy-making process, which need to be considered. To assess the position research evidence among all the factors in biofuel policy-making processes, the survey in this research asks, “What factors do policymakers consider in biofuel policy-making processes?”

The hypothesised interaction begins with the policymakers, who make research investments according to the information they seek. There are mainly two types of research projects. One is policy-oriented research, which can provide explicit information for policy-making; the other is business-oriented research, which can provide some implicit policy-informing outputs that support the development of technology at different stages along the innovation chain, that is, from the early research stage to the demonstration and commercialization stages, and eventually to the market uptake stage. All these research outputs may be transferred back to inform policy-making and be used as evidence to support.

11 The last research question is “How can policymakers and researcher improve evidence- based biofuel policy-making?” In order to identify research impacts, the author would determine whether the explicit and implicit policy-oriented information could be well adopted in the policy-making process; and whether the impacts could be reconstructed by a narrative through the whole evidence-based policy-making cycle. If the information were not well adopted, then the reasons for this would be analysed through additional research. Based on this assessment of research impacts, the author would be able to provide some recommendations for government’s future biofuel research investment policy. This process represented in the second section of the hypothesised interaction model between policy-making and research investment, shown as the anti-clockwise circular arrow in Figure 1.1.

1.2.2 Research aim and research questions

The overall aim of this research is to make reliable interpretations of biofuel policy drivers and to improve the understanding of evidence-based policy-making by investigating the research–policy interface in Australia and China, using biofuels as an example. This research aim is articulated into the following questions:

x Is it rational for governments to intervene in biofuel development? x What are the drivers of biofuel policies in Australia and China? x To what extent is biofuel policy-making based on research outputs? x How can we improve evidence-based biofuel policy-making?

Specifically, this research contributes in-depth knowledge about why governments intervened in the industry with biofuel policies that included funding biofuel- associated research, and with subsidies and targets. Interrogating the drivers of biofuel policies can help to discover whether the policy-making is evidence-based, by ascertaining whether the outcomes of the policies matched the policy drivers and finding whether policy-oriented research investments were made before the biofuel policy decisions. To improve evidence-based policy-making for biofuel requires a more comprehensive framework to understand policymakers’ knowledge needs and whether, and how, biofuel research outputs would influence policy-making, based on the insights provided by biofuel policymakers and researchers.

12 1.2.3 Research method and its rationale

Achieving the research aim requires two sets of comparative analyses: one to compare biofuel policymakers and researchers’ opinions within Australia, and the other is a cross-national comparison of Australian and Chinese respondents’ opinions. The comparative analyses use data from semi-structured interviews with biofuel policymakers and researchers in Australia and China, and questionnaires that were completed by those interviewed. In addition, data from scientific papers, investment and research program reports, government policy documents and media reporting were collected to verify the reliability and validity of the data from the interviews and questionnaires (Bryman 2008; Chen 2014b; Meagher et al. 2008; Molas-Gallart et al. 2000).

Two challenges in pursuing this research aim help explain the rationale of the chosen research methods. The first one is the complex nature of the research topic. Policy- making is complex and rarely open or well-documented (Head 2015). Policies are informed by many factors in the Westminster parliamentary system (Australia) and in a centrally controlled government system (China). The drivers of policy-making and the factors contributing to policy outcomes are often unclear, especially for outsiders such as those conducting research and trying to inform policymakers about their research (Brownson et al. 2006; Schut et al. 2013). Therefore, the complexity of evidence-based policy-making defies simple or complicated system approaches, such as spreadsheet quantitative evaluations and predictions with mathematical models in the first instance. Instead, they require a systematic expert-based approach to understand the system and the problems, such as interviews with experts or insiders in the specific biofuel research field, which can help develop a credible analytical framework (Kurtz & Snowden 2003).

Second, discovering the impacts of research on policy-making is difficult because the policies are dynamic, uneven in space and time, and involve indirect and intangible impacts and are delivered through a complex web (Lavis et al. 2003; Meagher et al. 2008; Molas-Gallart et al. 2000). Previous evaluations and assessments have discovered a diversity of pathways through which research outputs influence policy- making. These can be broadly grouped into two routes. One is the ‘instrumental route’, 13 whereby policymakers systematically and directly seek out research to find answers to policy problems and to identify in advance undesirable policy outcomes (Davies et al. 2005). The other is the ‘conceptual route’, which refers to a more nebulous set of indirect impact, with ideas shaping and improving knowledge, and improving problem identification, agenda setting, policy development and evaluation during the whole policy-making process (Haynes et al. 2011; Meagher et al. 2008; Molas-Gallart et al. 2000; Spilsbury & Nasi 2006). The subtle impacts on biofuel policy-making through the conceptual pathways are particularly difficult to articulate, track and evaluate. However, experts and those involved directly in both research and policy-making can have deep and longer-term influences on biofuel policy-making (Head 2015).

The complexity of evidence-based policy-making and the difficulty in tracing completely the research–policy interaction makes it appropriate to use expert elicitation, and to speak directly to biofuel policymakers and researchers (Argyrous 2009; Mackie 2015). Future quantitative analysis may be possible using the framework developed in this study.

1.2.4 Data collection and analytic methods

For interviews in Australia, a census of all the major agencies involved in biofuel policy- making and research was used to find potential participants for a purposive sampling data collection process. The comparative analyses of responses of Australian policymakers and researchers can provide a better understanding of biofuel policy drivers and evidence-based biofuel policy-making in Australia. On the one hand, the practitioners’ or insiders’ perspectives can reveal or collect together the facts of policy- making and research adoption, which has been rarely fully documented in academic research (Mackie 2015). On the other hand, the gaps identified by comparing these two groups can help to bridge the research and policy worlds, and improve the adoption of research evidence.

Additionally, the comparison of Australia and China at a national scale is designed to facilitate the analysis of biofuel policy drivers and evidence-based biofuel policy- making in Australia. Most interviews with Australian participants included a discussion of specific biofuel policy-making and research projects in Australia; whereas the 14 interviews in China were more focused on experiences and problems on a general level of biofuel policy-making and research, which was designed to facilitate the national comparative analysis in the study.

Hua et al.(2016) have shown that a national comparison of renewable energy is legitimate and able to make a significant contribution to knowledge about generic policy-making. Moreover, one country’s insights on policy responses to problems, such as climate mitigation commitments made internationally, are less valuable and limiting than the knowledge gained from comparing different countries (Garnaut 2011). There are three reasons for making a cross-national comparison. First, the essential context of biofuel policy-making relating to the overarching energy policies and climate change policies can be detected better by multination analyses. Second, solving energy and environmental problems that have consistency with underlying drivers, including biofuel policy-making, requires national consistency in policy responses (Mackie 2015). Third, state or local government energy policies usually follow national policies, especially in China, and research investment is most often applied nationally in both countries. Therefore, it is appropriate to analyse the national origins and drivers of biofuel policy-making.

1.3 Importance of this study

For policymakers who are actually involved in policy-making, the drivers of policies are much clearer, but also more dynamic, complicated and complex than they appear to ‘outsiders’, such as researchers (Bogenschneider & Corbett 2010). Exploring the drivers of biofuel policies is the first step to understanding the nature of biofuel policy-making. Interrogating the biofuel research outputs for claimed biofuel policy drivers could facilitate judgement of the extent to which biofuel policy-making is based on research evidence.

Previous research is peppered with complaints by scientists that policy is not evidence- based are frequent (Burton 2006; Choi et al. 2005; Hall 2012), and these complaints are often partial and connected to a claim that scientists’ evidence has been inadequately-considered (Bogenschneider & Corbett 2010; Khodr & Uherova Hasbani 2013). The deep difference between research and policy-making is covered in more

15 detail later. Without understanding the features of each other’s work, researchers may continue to conclude that their prolific papers with wistful observations that “policymakers should consider” their discoveries and modelled results, while policymakers may continue to observe that research outputs can be extremely limited and partial in application (Nutley 2003). Researchers’ failure to understand policy needs and, conversely, policymakers’ investment in the wrong projects constitute a waste of money and, more critically, of time and human resources. Biofuel policy- making especially needs research evidence to inform it because it has a complex web of interests and multifaceted impacts on the economy, the environment and society.

This research will contribute new insights into the drivers of biofuel policies, and make recommendations to improve the impacts of biofuel research on policy-making. These are derived from empirical analysis of the published data, from the different opinions of Australian and Chinese biofuel policymakers and researchers, and also from the knowledge that was garnered by the author during the research.

1.4 Thesis structure

The thesis is structured as introduction, background, literature review, methodology, results, discussion and conclusions.

Attached to the timeline of Australia’s ratification of the Kyoto Protocol, Chapter 2 synthesises a record of Australia’s biofuel policy changes and demonstrates the positive correlation between the Australian Government’s support for biofuels and its commitments to climate change mitigation. Chronologically, it also introduces China’s biofuel policies. This is the preliminary exploration of the biofuel drivers as deduced from the policy changes in Australia and China. This research also introduces a detailed classification of biofuel related research agencies in Australia, which were used to gather, through a purposive sample, the most informed views on biofuel research and policies.

Chapter 3 provides a review of the literature on how rationality is embedded in government policies; how ideology and policy are used to influence economic growth and environmental protection; the narratives supporting or arguing against

16 government intervention in biofuel development are made with reference to the literature. Based on the understanding of the above topics from the literature, and to facilitate the exploration of the major research questions, this chapter also reviews the published evidence for drivers of biofuel policies and the impacts of biofuel development; reviews the debated concept of evidence-based policy-making, different models of research use and policy-making; and finally reviews suggestions in the literature about how to improve evidence-based policy-making in general. This review is to position the reader to make more sense of the context, research method and findings.

Chapter 4 explains the research methods, including the conceptual framework of an ideal way of biofuel policy-making, which becomes a hypothesis to facilitate identifying gaps between reality and the ideal; the empirical approach to reality that comes from a comparison of responses from biofuel researchers and policymakers in Australia and China; triangulation of different methods that include semi-structured interviews, questionnaire surveys, the literature, and government documents; data analysis methods with both qualitative and quantitative approaches provide a wide and reliable evidence base.

Chapter 5 describes the research findings based on four themes.

x Rationality of governments’ intervention in biofuel development x Drivers of biofuel policies x The biofuel policy-making process and policymakers’ key considerations x Evidence-based policy-making in the biofuel field

These four themes of the findings cover the answers to the research questions. This chapter shows the findings using a comparative approach with charts, tables and selected quotes.

Chapter 6 discusses the major research results, linking the findings from the fieldwork to the related literature. The discussion gives the author’s judgement on the rationality of government intervention in biofuel development; interrogates the ‘real’ biofuel policy drivers in Australia and China; and improves the understanding of the evidence-

17 based biofuel policy-making. Finally, yet importantly, based on the defects and obstacles in implementing evidence-based biofuel policy-making in practice, this chapter provides suggestions on how to improve the present situation of evidence- based policy-making in Australia and China.

Chapter 7 summarises the key findings of this research according to each theme, highlights the contribution and significance of this research, and also acknowledges the need for specific future research.

18 Chapter 2 Background

2.1 Biofuels in this research

The ‘biofuel’ that is the subject of this research comprises the two main types of liquid biofuel, ethanol and biodiesel, which are made from biomass produced by living organisms that are known as feedstocks. As noted in Chapter 1, there are three different generations of biofuels, and their names reflect the different feedstocks and are suggestive of evolutionary improvement.

First-generation ethanol is produced through and distillation of the sugar and starch from crops that include sugar cane, , maize, sorghum and . First-generation biodiesel is produced through the transesterification reaction of the oil or fat from feedstocks, such as , , , oilseeds and used (Ackrill & Kay 2014).

In contrast to first-generation biofuel from food materials, the major and distinct advantage of second-generation biofuels is that they are produced from inedible feedstocks, which means there is no direct competition with food crops for resources (Puri et al. 2012). Second-generation ethanol can be produced from lignocellulosic biomass, including that from trees, sawdust, , and switch grass. The techniques to process these feedstocks are hydrolysis to break down the lignocellulosic biomass into sugar, then fermentation and distillation to convert sugar to ethanol. Industrial waste, such as tyres, can also be used to produce second-generation ethanol. The industrial waste can be transferred into through a gasification process by breaking down the biomass, and the syngas can be further transformed to ethanol through fermentation or the Fischer-Tropsch process. The key difference between first and second-generation biodiesel is the feedstocks and their evolved markets, rather than the processing techniques (ABLMARC 2013). The production of second- generation biodiesel avoids any perception of competing with conventional vegetable oil on price or land use or other inputs; instead, it uses non-food plant materials, such

19 as jatropha and pongamia that can be grown on marginal land, which reduces competition with food crops for land (ABLMARC 2013; L.E.K. Consulting 2011).

Third-generation biofuel refers specifically to ethanol and biodiesel produced from algae, clearly not competing with food or land or other inputs. Algae generates higher yields with lower energy input than other types of feedstocks and the oil produced from it can be easily refined to (Hannon et al. 2010). Moreover, algae can be used to produce ethanol directly through genetic modification (Ackrill & Kay 2014). This new category, highly prospective and not yet ready for the market, is called third- generation biofuel.

These biofuels are drop-in options meaning that fuel ethanol can be used as a substitute or a replacement for petrol and biodiesel can be used as a replacement for diesel fuel (Biofuels Association of Australia 2013). Fuel ethanol is usually blended with petrol with a 10 per cent or 85 per cent concentration, and the blended types of petrol are marked as E10 and E85 in the market. Biodiesel can be blended with fossil diesel fuel with a range of concentrations; 2 per cent, 5 per cent, 20 per cent and 100 per cent, and these blended diesel fuels are respectively marked as B2, B5, B20 and B100 in distribution (Puri et al. 2012).

2.2 Biofuel development in Australia

2.2.1 Biofuel consumption in Australia’s transportation sector

In this research, the focus is on transport fuels, specifically fuel ethanol and biodiesel. Liquid biofuels are not very suitable for household use. Natural gas and LPG are cheaper than ethanol and biodiesel for household energy use. In addition, household appliances are mainly designed for grid-based electricity. Ethanol is suitable for spark ignition used in transport vehicles with petrol engines. Therefore, ethanol is mainly used for transport (Wang 2006). Fuel ethanol can be used as a supplement to petrol and be blended at the rate of 10 per cent or 85 per cent. Slightly different from ethanol, biodiesel can totally replace diesel fuel (there is no need for blending), but its relatively high price prevents it being used widely (Voegele 2015). Biodiesel can be used as a replacement and as a supplement to diesel fuel for transport. It is usually

20 blended at the rate of 5 per cent or 20 per cent and sometimes can be used as 100 per cent biodiesel for diesel engines (Ackrill & Kay 2014).

Energy consumed by Australia’s transport sector is a relatively high proportion of all energy consumption, outstripping the energy supplied by the electricity sector, and, since 2013-14, transport is the largest energy-using sector. Energy for transport accounted for around 25 per cent of all energy used in 2000 and this proportion increased to about 27 per cent by 2013. This increase in energy for transport for private and business purposes can largely be explained by population and economic growth, which has led to a rise in private vehicle ownership (Australian Government Department of Industry and Science 2015c).

The use of biofuel for transport comprised a very small proportion of total fuel use, only 0.53 per cent in 2013-14 (see Figure 2.1). Fossil fuel dominates the transport sector’s consumption; petrol and diesel fuel being almost 75 per cent of all energy used by the transport sector in Australia (see Figure 2.1), followed by aviation turbine fuel (19 per cent), liquefied petroleum gas (3.29 per cent), fuel oil (1.95 per cent) and electricity (1.08 per cent).

Figure 2.1 Energy consumed for transportation in Australia, by fuel types, shown as a percentage (2013-14)

Auto gasoline-unleaded 38.85% Automotive diesel oil 34.36% Aviation turbine fuel 18.91% LPG 3.29% Fuel oil 1.95% Electricity 1.08% Natural gas 0.84% Liquid/Gas Biofuels 0.53% Aviation gasoline 0.15% Petroleum products n.e.c. 0.03% 0.00% 5.00%10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%

Source: Australian Government Department of Industry and Science (2015a) Table F

While petrol has traditionally been the dominant fuel type used in Australia’s transport sector, Table 2.1 shows that its consumption for transport has decreased slowly over

21 the past decade, dropping from 20,051 million litres (ML) in 2004–05 to 18,193 million litres in 2014–15. This is mainly because the number of vehicles that run on petrol has decreased and the number of diesel-engine vehicles has increased (Australian Government Department of Industry and Science 2014). On the other hand, the data in Table 2.1 indicate that ethanol production gradually increased over the past decade from 23 million litres in 2004–05 to 256 million litres in 2014–15. However, according to the data in Table 2.1, the contribution of ethanol to petrol-ethanol blends is a minor proportion. Fuel ethanol for blending with petrol only accounted for 0.11 per cent of total petrol consumption in 2004–05. After a decade’s development, the proportion was still only 1.41 per cent in 2014–15.

Table 2.1 Petrol consumption and ethanol production for transportation in Australia from 2004-05 to 2014-15

Supply of Fuel Petrol consumption Rate of petrol Fuel Ethanol Ethanol to in Transport Sector Consumption in the Production blend with (ML) Transport Sector (ML) petrol (%) 2004-05 20,051 -- 23 0.11% 2005-06 19,966 -0.42% 40 0.20% 2006-07 19,134 -4.17% 83.6 0.44% 2007-08 19,342 1.09% 149 0.77% 2008-09 19,323 -0.10% 203.5 1.05% 2009-10 18,830 -2.55% 275.1 1.46% 2010-11 18,725 -0.56% 318.8 1.70% 2011-12 18,803 0.42% 306.3 1.63% 2012-13 18,845 0.22% 283.9 1.51% 2013-14 18,741 -0.55% 269 1.44% 2014-15 18,193 -2.92% 256 1.41%

Source: Batten and O'Connell (2007), O'Connell and RIRDC (2007), Biofuels Taskforce (2005), Australian Government Department of Industry and Science (2015a)

The data displayed in Table 2.2 shows that diesel fuel consumption for transport has steadily increased from 2004–05 to 2014–15 as the number of all registered diesel- powered light vehicles, buses and road transport fleets has increased by 40 per cent between 2006 and 2012 (The Conversation 2012). This increase has largely contributed to the boom in diesel fuel use in the transport sector (REneweconomy 2014). However,

22 in this context of booming diesel consumption, the supply of biodiesel has not increased at a similar rate. There were 3.12 million litres of biodiesel produced in 2004–05 accounting for 0.02 per cent of the supply for diesel blending in 2014–15 (see Table 2.2). After a decade’s development, biodiesel production has slowly increased, reaching 65 million litres in 2014–15, although this only contributed 0.28 per cent to the total consumption of diesel fuel.

Table 2.2 Diesel consumption and biodiesel production in the transport sector in Australia from 2004-05 to 2014-15

Diesel Rate of diesel Biodiesel Supply of consumption in the consumption in the Production biodiesel to transportation transportation blend with sector (ML) sector (ML) diesel fuel (%) 2004-05 14,461 -- 3.12 0.02% 2005-06 15,186 5.01% 14.06 0.09% 2006-07 15,804 4.07% 21 0.13% 2007-08 17,027 7.74% 54 0.32% 2008-09 18,244 7.15% 50 0.27% 2009-10 18,587 1.88% 85 0.46% 2010-11 19,044 2.46% 85 0.45% 2011-12 20,054 5.30% 80 0.40% 2012-13 21,643 7.92% 51 0.24% 2013-14 22,628 4.55% 62 0.27% 2014-15 23,014 1.71% 65 0.28%

Source: ABLMARC (2013), BREE (2014c), Farrell (2015); REneweconomy (2014); Australian Government Department of Industry and Science (2015a)

2.2.2 Australia’s ethanol industries

The official data on Australia’s fuel ethanol production are only available from financial year 2004–05 onwards. The initial production of ethanol was only 23 million litres per year in 2004–05. The biofuel industry started to develop with the introduction of a policy of excise exemption and setting a target of 350 million litres by 2010. Fuel ethanol in Australia reached its peak in 2010–11 with the production of 319 million litres (see Figure 2.2). It dropped slightly after that, and production in 2014–15 was

23

256 million litres (Table 2.1). There are demand and supply reasons for the reduction in ethanol consumption in the transport sector. Consumers worry about potential damage to their vehicle engines by using ethanol-blended petrol (Biofuels Taskforce 2005). The price difference between regular unleaded petrol and E10 was too small to lead to more E10 consumption, considering that the energy content of E10 is 3 per cent lower than that of regular petrol. In view of these circumstances, along with oil prices decreasing in recent years, service stations have reduced the number of E10 pumps that have served to promote the purchase of E10 (Farrell 2015).

Figure 2.2 Australian Biofuel production from 2004 to 2015

350 300 250 200 150 Fuel Ethanol 100 Million litres litres Million Biodiesel 50 0

Sources: Batten and O'Connell (2007), O'Connell and RIRDC (2007), Biofuels Taskforce (2005), ABLMARC (2013), BREE (2014c), Farrell (2015).

The commercial sale of fuel ethanol for Australia’s domestic market is mainly from first-generation biofuel sources, such as sugar cane, sorghum, and wheat. There are three major and well established ethanol producers in Australia. One is the Manildra Group in Nowra, New South Wales (NSW), which uses waste starch from flour milling to produce ethanol. This company was established in 1991 and its annual production capacity is 300 million litres (ABLMARC 2013; Farrell 2015).

Another two ethanol producers are Dalby Bio Refinery Ltd in Dalby, Queensland, and Sucrogen Ltd in Sarina, Queensland. Dalby Bio Refinery uses sorghum and Sucrogen uses sugar cane. Their annual production capacity is about 80 million litres (ABLMARC 2013; Farrell 2015). Three companies, Mackay Sugar Ltd, Austcane Energy Ltd and North Queensland Bio-Energy Corporation Ltd in Queensland, have recently entered

24 the fuel ethanol market. Their production capacity ranges from 70 million litres to 100 million litres annually (ABLMARC 2013). Their predicted production capacity will be 700 million litres in 2017. However, there is a distinct difference between the actual production and potential production. One reason is that there is no national biofuel blending mandate for the transport fuel market. Therefore, some companies are reluctant to invest in new capacity or to implement fully their current capacity (Quirke et al. 2008).

Table 2.3 Production capacity (million litres) of major ethanol plants in Australia, by location and feedstock, in 2014

Ethanol plants Installed Location Feedstock capacity Manildra Group 300 NSW Wheat Dalby Bio Refinery Ltd 80 QLD Sorghum Sucrogen Ltd 80 QLD Sugar cane Mackay Sugar Ltd 60 QLD Molasses Austcane Energy Ltd 100 QLD Sugar Juice, molasses North Queensland Bio-Energy 70 QLD Sugar Juice, Corporation Ltd molasses Total capacity (ML/year) 700

Sources: ABLMARC (2013); Farrell (2015).

Unlike first-generation biofuel that is traded on a commercial scale, second-generation ethanol has only been successful at the demonstration stage in Australia. There has been significant research and development investment for second-generation ethanol technology. Potential feedstocks for second-generation ethanol in Australia are lignocellulosic materials from crop residues, grasses, farm and forestry crops and forest residues, etc. (Quirke et al. 2008). Australia’s authoritative research agency, the Commonwealth Scientific and Industrial Research Organization (CSIRO) has predicted that if all potential feedstocks for second-generation ethanol were used well, ethanol production could account for 1.4 times of the total petrol consumption in transport sectors (O'Connell & RIRDC 2007). Therefore, there is a significant possibility for second-generation ethanol to be produced on a commercial stage. 25

Third-generation biofuels derived from algae are mainly at the demonstration stage or even at the early research stage, which precedes the demonstration and commercial stages. However, several Australian universities and companies are developing and producing third-generation biofuels using algae. For example, James Cook University has a research team on the Macroalgal Biofuels and Bioproducts Project that is to research, develop and demonstrate the viability of macroalgal biomass as a feedstock for renewable fuels and bio-products; the University of Melbourne has attracted research funding from ARENA and is committed to research on ‘the production of biofuel from microalgae’; and Muradel Pty Ltd, which is at the demonstration stage of biofuel from microalgae, has also obtained funding from ARENA and intends to demonstrate how to commercialise advances in biofuel from microalgae(ARENA 2015a).

2.2.3 Australia’s biodiesel industries

Biodiesel production is smaller in scale compared with ethanol production in Australia. It accounts for a very minor proportion of Australia’s transport sector’s total fuel consumption. The initial biodiesel production was 3.12 million litres in 2004–05 and reached its peak in 2011 with a production of 85 million litres. Currently, production has dropped slightly to 65 million litres per year. The proportion of biodiesel that can be supplied to blend with fossil diesel fuel has been minimal. It was 0.02 per cent in 2004–5 and only 0.28 per cent in 2014–15 (see Table 2.2).

Biodiesel may be blended with diesel fuel and sold. In Australia, B5 is sold unlabelled because it is identical to normal diesel, but B20 is labelled as a fuel for commercial operations (Farrell 2015). Unlike ethanol, the most biodiesel is sold to commercial customers for transport or mining. Only 25 per cent of biodiesel is sold to individuals through service stations (Gowen & Specialist 2013).

The most feasible feedstock for commercial biodiesel production is oil-based material, such as tallow, used cooking oil, vegetable oil and palm oil (ABLMARC 2013). There are seven major plants in Australia producing biodiesel and all are producing first- generation biodiesel, using oil-based feedstock (see Table 2.4). Of these seven

26 biodiesel plants, only Territory Biofuels Pty Ltd’s production capacity is over 100 million litres. The other six plants have relatively small capacities (Farrell 2015). However, real production is lower than the possible production capacity because some plants have chosen to reduce or cease producing biodiesel because of unstable feedstock supply and the doubts about the security of long-term cooperation with distributors and oil refiners (Farrell 2014).

Table 2.4 Production capacity (million litres) of biodiesel plants in Australia, by location and feedstock, in 2014

Installed Biodiesel plants Location Feedstock capacity ARFuels Barnawartha Ltd 60 VIC Tallow, used cooking oil ARFuels Largs Bay Pty Ltd 45 SA Tallow, used cooking oil ARF Picton Ltd 45 WA Tallow, used cooking oil Biodiesel Industries Pty Ltd 20 NSW Used cooking oil, vegetable oil EcoTech Biodiesel Pty Ltd 30 QLD Tallow, used cooking oil Macquarie Oil Co. 15 TAS Poppy oil, waste vegetable Territory Biofuels Ltd 140 NT Palm oil, tallow, waste oil Total capacity (ML/year) 360

Sources: Farrell (2015); ABLMARC (2013)

2.3 Biofuel development in China

2.3.1 Biofuel consumption in China’s transportation sector

Energy consumed for transport in China accounts for less than 10 per cent of total energy consumption, a figure that has not changed much since 2000. In 2000, the percentage of the transport sector’s energy consumption was 7.72 per cent of the country’s total energy consumption and it increased slightly to 8.71 per cent in 2012 (Energy Statistics Division of the National Bureau of Statistics 2012; National Bureau of Statistics of China 2014).

In the transport sector, fossil fuels have been the major source of energy so far, and research has predicted that fossil fuels would still dominate the transport fuel market until at least 2050 (Zhang & Chen 2015). The liquid fossil fuels (mainly petrol and diesel

27 fuel) made up 91 per cent of transport fuel consumption in 2010 and Zhang and Chen (2015) predicted that the percentage would slightly decrease to 87 per cent in 2050.

There has been a rapid increase in petrol consumption for transport, from 54,836 million litres to 151,927 million litres between 2003 and 2015, with an average 9 per cent annual rate of increase that spiked between 2010 and 2012 (Table 2.5). On the other hand, ethanol, which could be a supplement to petrol, is produced on quite a small scale. Ethanol for the transport sector has grown from 25.3 million litres in 2003 to 2914 million litres in 2015 (Table 2.5). From the beginning of the fuel-ethanol industry, the expansion of ethanol production has been significant. However, the proportion provided by the fuel-ethanol supplement in petrol consumption has still been minor. The highest percentage was 2.6 per cent in 2009 and it dropped to 1.71 per cent in 2015 (Table 2.5).

Table 2.5 Petrol consumption and ethanol production in the transport sector in China (2003- 2015)

Petrol consumption Increasing rate of Fuel Ethanol Supply of in the transport petrol consumption Production Fuel Ethanol in transport sector sector (ML) (ML) to blend with petrol (%) 2003 54836.18 -- 25.3 0.05% 2004 63308.22 15.45% 380.1 0.60% 2005 65803.41 3.94% 1165.6 1.77% 2006 70909.85 7.76% 1647.1 2.32% 2007 74623.62 5.24% 1736 2.33% 2008 83385.8 11.74% 2002 2.40% 2009 83733.97 0.42% 2179 2.60% 2010 93772.76 11.99% 2128 2.27% 2011 103962.4 10.87% 2255 2.17% 2012 117314.6 12.84% 2509 2.14% 2013 127713.2 8.86% 2635 2.06% 2014 139104 8.92% 2787 2.00% 2015 151927.4 9.22% 2914 1.92%

Sources: Index Mundi (2015); Statista (2015); EIA (2015)

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Recording data about biodiesel production in China started in 2006 (GSI 2008). The diesel fuel consumption in the transport sector was 138,744 million litres in 2006 and it increased to 234,651 million litres in 2015 (Table 2.6). Diesel fuel dominates transport fuel consumption, outpacing petrol. Diesel fuel consumption increased with a rate of 13.24 per cent until 2013, reaching a peak in 2011. Despite the slowing of economic growth and decreasing coal and other mining production, diesel fuel consumption has continued to rise, but at a markedly lower rate and it finally started to decrease in 2013 (EIA 2015). Biodiesel production is more scattered and smaller in scale than that of ethanol in government-designated plants. Biodiesel production increased from 273 million litres in 2006 to 1141 million litres in 2015 (Table 2.6), but biodiesel production remains on a micro scale, given that diesel fuel is the major fuel used in China’s transport sector. Biodiesel provided 0.2 per cent only of the transport fuel supplement for diesel fuel in 2006 and the percentage had only grown to 0.59 per cent in 2015, not much difference in comparison with 2006 (Table 2.6).

Table 2.6 Diesel consumption and biodiesel production in the transport sector in China (2006- 2015)

Diesel consumption Increasing rate of the Biodiesel Supply of in transport sector diesel consumption production biodiesel to (ML) in transport sector (ML) blend within diesel (%)

2006 138744.2 -- 273 0.20% 2007 142283.9 2.55% 352 0.25% 2008 152322.7 7.06% 534 0.35% 2009 159518.1 4.72% 591 0.37% 2010 170079.2 6.62% 568 0.33% 2011 192593.9 13.24% 738 0.38% 2012 202632.7 5.21% 909 0.45% 2013 201646.3 -0.49% 1079 0.54% 2014 200253.6 -0.69% 1133 0.57% 2015 192844.22 -3.7% 1141 0.59%

Sources: Breaking News (2015); Lawrence Berkeley National Laboratory (LBNL) (2014); Bloomberg Business (2015)

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2.3.2 China’s ethanol industries

China started to develop its fuel ethanol industry in 2001. The direct cause of this development was the need to utilise surplus stale grain that had been kept in storage (Qiu et al. 2012). Before 2002, there was no official documentation about the production of ethanol (Latner et al. 2007). Ethanol production in China grew at a very fast rate from 2003 to 2015, from 25.3 million litres to 2914 million litres (Anderson- Sprecher & Ji 2015) (shown in Figure 2.3).

Figure 2.3 China’s Biofuel production from 2003 to 2015

4000 3000 2000 1000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fuel Ethanol Biodiesel

Sources: Latner et al. (2007);Anderson-Sprecher and Ji (2015)

The government’s advocacy of fuel ethanol began during the implementation of its Tenth Five Year Plan (2001–2005). In 2001, the government established a 250 million litre capacity, test ethanol plant, Tianguan Fuel Ethanol Co., in Henan Province. After this pilot ethanol plant, another three state-owned plants were established between 2002 and 2004 to produce fuel ethanol for motor vehicles (Han 2013). As shown in Table 2.7, they are the Jilin Fuel Ethanol Co. Ltd in Jilin Province, Anhui BBCA Biochemical Co. Ltd in Anhui province, and COFCO Bio-energy (Zhaodong) Co. Ltd in Heilongjiang Province. The main feedstock they initially used was stale maize and wheat (GSI 2008). However, with such stored stale grain running out in 2005, these four plants switched to fresh grain and now mainly produce first-generation ethanol from maize and wheat.

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Table 2.7 Productions of Four initial major food based ethanol producers in China in 2008

Actual Production Main Production Fuel ethanol factories Location capacity (million feedstock (million litres/year) adopted litres/year) Henan Wheat & Tianguan Group Co. Ltd 571.5 558.8 Province Maize Jilin Fuel Ethanol Co. Ltd Jilin Province 635 571.5 Maize COFCO Bio-energy Heilongjiang (Zhaodong) Co. Ltd Province 508 177.8 Maize Anhui BBCA Anhui Biochemical Co. Ltd Province 406.4 406.4 Maize

Source: Qiu et al. (2012); GSI (2008)

After 2006, when stores of stale grain had depleted, the government applied controls to the production of food-crop-based ethanol to avoid the risk of increased food prices (Chen et al.). The government started to encourage the production of ethanol from other feedstocks, such as , sweet sorghum, sweet , and sugar cane, and it also advocated moving production to the lignocellulosic-based ethanol stage. For example, in 2007, a new plant, the Guangxi COFCO Bioenergy Co. Ltd in Guangxi Province, was approved by the government and was the world’s first plant to use cassava to produce fuel ethanol (Qiu et al. 2012). Since 2008, ZTE Energy has investigated the possibility of using sweet sorghum stalks as a feedstock for fuel- ethanol production. The company’s production target was reached in 2010. By 2015, its production of ethanol reached 101.6 million litres. A similar sized plant, Shandong Longlive, in Shandong Province, used corncobs to produce ethanol and the company’s production also reached 100 million litres per year by 2015.To a lesser extent than the previous two plants mentioned, the Siyi Ethanol Company, in Heilongjiang Province, has been using sweet sorghum for fuel ethanol and its annual production is 60 million litres. Table 2.8 shows the major fuel-ethanol plants that use materials other than food based as feedstocks in China in 2008.

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Table 2.8 Productions of major non-food based ethanol producers in China in 2008

Production Main feedstock Fuel ethanol factories Location capacity adopted (ML/year) Guangxi COFCO Bio-energy Guangxi Province Co. Ltd 254 Cassava Sweet sorghum ZTE Energy Co. Inner Mongolia 101 stalks Shandong Shandong Long Live Province 100 Corncob Heilongjiang Siyi Ethanol Company Province 60 Sweet sorghum

Sources: Anderson-Sprecher and Jiang (2014); Anderson-Sprecher and Ji (2015); Qiu et al. (2012)

The national government uses a ‘closed operation mode’ to run the ethanol industry. This means that plants are approved by the government and their production is planned by the government. The most important feature of this ‘closed operation mode’ is the government’s mandate of the adoption of ethanol blended with other fuels in designated provinces and cities. The mandate requires the state-owned petrol companies in these mandated locations to purchase ethanol from these designated ethanol plants and blend the ethanol with petrol they sell there. Until 2015, the ten provinces that implement the mandatory use of E10 province-wide include Hilongjiang Province, Jilin Province, Liaoning Province, Henan Province, Anhui Province, Guangxin Province. There are 27 pilot cities in Inner Mongolia Province, Hebei Province, Shandong Province, Jiangsu Province and Hubei Province where the blend mandates are implemented (ABLMARC 2013; Anderson-Sprecher & Ji 2015).

2.3.3 China’s biodiesel industries

China’s biodiesel industry is relatively small when compared to the fuel-ethanol industry (Qiu et al. 2012). The availability of feedstock for biodiesel production has limited the development of a biodiesel industry in China. From the technological perspective, feedstocks for first-generation biofuel production include vegetable oils, residue from fat refining, and waste cooking oil (Chen et al. 2015). However, China is a net importer of edible vegetable oils and also a net importer of material for edible oil

32 production, for example, China is the largest importer of soybeans for oil production and for animal feed (Latner et al. 2006; Qiu et al. 2012). Therefore, it is not economical to produce biodiesel from edible oil-based feedstocks. Moreover, the domestic supply of waste cooking oil and residues from fat refining is not stable and this has fundamentally influenced biodiesel production (GSI 2008). Additionally, the government has tended not to promote the use of biodiesel from edible oil as a transport fuel. Besides the limited feedstock supply, there was no clear biodiesel- focused policy to support and regulate the biodiesel industry until 2010, when the Standardization of Administration of China announced a ‘Blended Fuel Standard for B5’ to regulate the biodiesel market and also to improve the distribution of biodiesel throughout the transport fuel system (Scott & Jiang 2013).

In addition to the inconsistency on the supply side, the demand for biodiesel is also weak. Unlike ethanol’s ‘closed operation system’, the government has not ever promulgated any mandate for biodiesel usage because the scale of biodiesel production is small. That is to say, China has not distributed biodiesel through service stations. To date, biodiesel is mainly used in several small cities and rural areas (Scott & Jiang 2012). Also, because of the small scale of production, the biodiesel plants do not need to be licensed and approved by the government; therefore, the private sector is involved in the biodiesel industry more so than in the ethanol industry (GSI 2008).

The vegetable oil-based biodiesel production is constrained by its seasonal operation, and limited by the feedstock supply. The biodiesel industries in Yunnan Province, Sichuan Province and Guizhou Province turned their hopes to oil seeds from the energy trees, such as jatropha trees. At that same time, the three major oil companies in China (China National Petroleum Corporation, China Petrochemical and Chemical Corporation, and China National Offshore Oil Corporation) had planned large investments into jatropha biodiesel (Beckman & Jiang 2009; Qiu et al. 2012). However, because of the oil price had declined since 2008 and also because it takes three to five years before there can be a full-scale seed harvest to provide a sustainable supply of feedstocks, these plans have stagnated since 2008 (Beckman & Jiang 2009; Qiu et al.

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2012; Wu 2008). From 2010 on, biodiesel feedstocks have been mainly waste cooking oil and residues from vegetable-oil crushers (Scott & Jiang 2013). Since 2010, the Chinese government has exempted the 5 per cent consumption tax on biodiesel production from waste cooking oil, which might encourage mainstream biodiesel production (Scott & Jiang 2011). In 2012, the government strengthened the force to strike the illegal flow of waste cooking oil back to the catering industry and this has increased the supply of the waste cooking oil for biodiesel production. Up until 2015, biodiesel production reached 1141 million litres.

2.4 Biofuel policies in Australia

Biofuel policies in practice are usually in the form of financial incentives (grants and subsidies), institutional creation, strategic planning, infrastructure investment programs, and research and development investment programs. National biofuel policies have a close connection to climate change policies and to energy policies. In reviewing biofuel policies, climate change policies can provide a main timetable for biofuel policies’ narratives. A better understanding of biofuel policy changes can be achieved through a synthesis that links these two dimensions of policy contexts.

2.4.1 Biofuel policies before the ratification of the Kyoto Protocol (1990-2008)

The Australian Government signed and accepted the principles of the first United Nations Framework Convention of Climate Change (UNFCCC) in 1992 and the Kyoto Protocol is an extension of UNFCCC. Before Australia ratified the Kyoto Protocol it had made stepwise commitments to reduce greenhouse gas (GHG) emissions in accord with the Kyoto Protocol, it released policy statements and invested in programs to achieve the promised goals. In 1997, Australia committed to limit its GHG emissions growth to 108 per cent of its 1990 baseline, which meant a 30 per cent reduction in its ‘business as usual’ projection. To achieve the promised goals, the Australian Government from the late 1990s to the early 2000s invested in programs and measures worth around AUD1 billion (Roarty 2002). These measures included Safeguarding the Future: Australia’s response to Climate Change, released in 1997;

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National Greenhouse Response Strategy, announced in 1998; and Measures for a Better Environment in 1999 (IEA 2013).

In 2002, the Prime Minister John Howard announced that “it is not in Australia's interests to ratify the Kyoto Protocol … for us, to ratify the protocol would cost us jobs and damage our industry” (Howard 2002) and the government refused to ratify the Kyoto Protocol. There were other reasons for Australia not ratifying the Kyoto Protocol then, such as:

Australia contributes 1.6 per cent of world greenhouse emissions from energy. Changes in our emissions profile are not, of themselves, going to make a significant difference to global emissions (Australian Government 2004b).

Even so, by the time, its Clean Energy Security Future White Paper 2004 was published, the Australian Government retained the programs and measures for reducing GHG emissions, and set accordant energy policies to fulfil the Australia’s climate change mitigation obligations. The Prime Minister’s foreword in the Energy White Paper made the policy intention clear:

Energy is a major contributor to global , and although Australia is a small contributor to global emissions, we will play an active role in developing an effective global response to climate change (Australian Government 2004b).

However, “a global response encompassing the world’s largest emitters” and the “issue of economic activity and emissions potentially moving from one nation to another with no overall global greenhouse benefit” were emphasised as two additional issues to be addressed in conjunction with the Clean Energy Security Future White Paper 2004 (Australian Government 2004b), presenting the consistency with the defence of refusing ratification of Kyoto Protocol. According to the White Paper, Australia’s energy policy was to guarantee the fossil-fuel industry’s efficient development. ‘Low emission economy transition’ and ‘fulfilling its environmental target’ are still the ancillary policy guidelines for biofuel research and development.

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After the Buenos Aires Plan of Action was adopted at the tenth UNFCCC held in 2004, the International Energy Agency (IEA) urged Australia to build an Emission Trading System (ETS) because of Australia’s leading national rankings for emissions intensity among all the developed countries, its reliance on a fossil-fuel intensive economy and its capability to respond to the challenges. In 2006, Prime Minister John Howard announced the establishment of a Prime Ministerial Task Group on Emission Trading and asked it to design an ETS. These efforts had Australia heading towards an effective ETS and supported by the ‘Shergold Report’ that was released in May 2007 and the Royal Assent to the National Greenhouse and Energy Reporting Bill 2007 (Talberg et al. 2013). Even with Prime Minister John Howard’s re-election promise of a new ETS and the Environment and Water Resources minister’s urging, the Cabinet again refused to ratify the Kyoto Protocol. It was not until a new progressive Labor Cabinet of the Rudd Government came to office that the Kyoto Protocol was ratified in December 2007.

Because of the increasing world price of petroleum, and the need to increase the uptake of more sources of renewable energy to reduce GHG emission under the pressure from Kyoto Protocol, Prime Minister John Howard announced an allocation of AUD400 million for the Measures for a Better Environment package in the 2000–01 Budget, which was intended to fulfil commitments to the GHG reduction objective (Roarty 2002). Measures for a Better Environment includes the measures promised before Australia’s ratification of the Kyoto Protocol and emphasised renewable energy investments. There were several important biofuel policies and programs under the Measures, including the Renewable Energy Commercialisation Program (RECP), a 350 Million Litre Target, Biofuels Capital Grants Programs (BCGP) and the Energy Grants Credits Scheme (EGCS) (IEA 2014).

During this period, in the light of these climate change mitigation measures and GHG abatement plans, there were some government policy supports delivered through capital grants, production grants, and exemptions from excise duty. Specifically, the biofuel policies before Australia’s ratification of Kyoto Protocol include:

x Ethanol Production Bounty Scheme (EPBS)

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x Renewable Energy Commercialisation Program (RECP) x Renewable Energy Development Initiative (REDI) x Greenhouse Gas Abatement Program (GGAP) x 350 Million Litre Target 2001 x Biofuels Capital Grants Programs (BCGP) x Ethanol Production Grant Program (EPGP) x The Energy Grants Credits Scheme (EGCS) x Energy Grants (Cleaner Fuels) Scheme x Ethanol Distribution Program

The most important are the 350 Million Litre Target, the Ethanol Production Grant Program (EPGP) and Energy Grants (Cleaner Fuels) Scheme, which are introduced in detail in the following sections. Other biofuel policies are introduced in chronological order in Appendix 1.

350 Million Litre Target 2001

As one part of the package of Measures for a Better Environment, the Australian Government established the Fuel Taxation Inquiry in 2001 to examine the structure of subsidies, grants, and taxation of petroleum products and their substitutes. During the halfway review of the Fuel Taxation Inquiry under Measures for a Better Environment program, the Howard Government decided to provide a subsidy for biofuel production and set 350 million litres per year as a goal. This policy was informed by the projection made by Australian Bureau of Agricultural and Resource Economics (ABARE) that 350 million litres of low-cost biofuel per year (equivalent to approximately 1 per cent of national transport fuel consumption) could be achieved and would contribute to national transport fuel needs by 2010 (Quirke et al. 2008).

State-level biofuel mandate in New South Wales

The 350 Million Litre Target has not been made into federal-level mandate until 2008. However, in 2006, New South Wales required all unleaded petrol produced and wholesaled within the state to contain at least 10 per cent ethanol by 2011 (Quirke et

37 al. 2008). At the initial stage of the mandate, the New South Wales Parliament enacted legislation requesting wholesales to make up a minimum of 2 per cent mandatory blend of total volume in 2007 (Biofuel (Ethanol Content) Act 2007). The reasonable procedures of compliance the mandate target included taking all reasonable actions to secure sufficient supplies of ethanol, to upgrade the primary wholesaler’s infrastructure to enable it to distribute sufficient petrol-ethanol blend and to ensure the availability of facilities for the sale of petrol-ethanol blend at petrol stations (Biofuel (Ethanol Content) Regulation 2007). In addition, the percentage of blend in total volume can be lifted, depending on the changing factors, including relative price of producing ethanol compared to average petrol price, availability of water or ethanol feedstock, consumers’ acceptance and public health and safety impacts (Quirke et al. 2008).

Ethanol Production Grant Program (EPGP) 2002-2008 (AUD 145 million)

After the Fuel Tax Inquiry of 2002, the Howard Government announced it would impose on all previously untaxed fuels (ethanol, biodiesel, LPG, CNG and LNG) an excise at the same rate as for petrol (AUD0.38143 per litre), to ‘promote long-term sustainability and move to a neutral tax treatment between competing fuels’ (ANAO 2015a). At the same time, in September 2002, to encourage biofuel adoption in the transport sector, the Howard Government provided, for domestic fuel-ethanol producers, the Ethanol Production Grants Program (EPGP) for a ‘one year period’ trial (Australian Government 2000). The benefits given by the EPGP were as a form of an excise reimbursement in full (AUD0.38143 per litre) to domestic ethanol producers (ANAO 2015b). This excise reimbursement for domestic ethanol production was a kind of subsidy for the ethanol industry that passed along its supply chain. It was intended to continue support for the deployment of ethanol use as one kind of alternative fuel or additive to petrol in Australia’s transport system (Australian Government 2012c). The EPGP did not give imported ethanol the benefit of an excise rebate to protect domestic production at that period.

After the 12-month trial, the Howard Government announced in the 2003–04 Budget that EPGP would cease on 30 June 2008 and the Energy Grants (Cleaner Fuels) Scheme 38

(EG(CF)S) would then allow the full excise rebate for imported and for domestic ethanol production through the Australian Taxation Office (Australian Government 2012d).

The EPGP was described as the largest element of assistance for biofuel production in Australia (Quirke et al. 2008). The drivers of this policy, identified in commentary in the media was that the Manildra Group, the largest ethanol producer, was one of the biggest EPGP recipients and “had made significant donations to the major political parties” (ANAO 2015b).

As Table 2.9 shows, the total amount that EPGP grants provided from 2002–03 to 2007–08 was over AUD145 million.

Table 2.9 EPGP grant recipients and amounts (AUD), 2002-03 to 2007-08

Year (and Honan Wilmar Schumer Pty Tarac Pty Ltd number of Holdings Pty Bioethanol Pty Total Ltd (Qld) (SA) recipients) Ltd (NSW) Ltd (Vic) 2002-03 (2) 20,857,998 0 824,942 0 21,682,940 2003-04 (3) 10,486,262 97,138 299,656 0 10,883,056 2004-05 (3) 7,671,436 414,773 559,818 0 8,645,987 2005-06 (3) 11,387,565 71,163 3,922,281 0 15,381,009 2006-07 (4) 31,637,968 718 10,044,841 193,856 31,877,383 2007-08 (4) 43,937,217 2,513 12,635,228 111,110 56,686,068 Total 125,978,446 586,305 28,286,766 304,966 145,156,443 Source: ANAO (2015b)

Energy Grants (Cleaner Fuels) Scheme 2003-2011

The Howard Government enacted the Energy Grants (Cleaner Fuels) Scheme Act 2004 (the EG(CF)S Act) to provide long-term security for cleaner fuels including biodiesel, compressed natural gas, liquefied natural gas, liquefied petroleum gas and (Lyster & Bradbrook 2006). Unlike the Ethanol Production Grant Program (EPGP) that only gave benefits for domestically produced ethanol, the EG(CF)S supported domestically produced and imported biodiesel by giving the manufacturers and the

39 importers a full excise offset at the rate of AUD0.38143 per litre from 18 September 2003 to 30 June 2011 (Australian Government 2004a).

2.4.2 Ratifying Kyoto protocol – more positive actions (2008-2013)

Ratification of the Kyoto Protocol came into effect in Australia in March 2008. The Australian Government’s climate change policies were adjusted and by May 2009 the climate change mitigation objectives were set as a 5 per cent reduction of year 2000 levels by 2020 unconditionally; 15 per cent and 25 per cent reduction compared by year 2000 levels by 2020 conditionally on other nations’ policies in regard to climate change (Kevin Rudd 2009). In 2011, the emission reduction goal was changed to 80 per cent below year 2000 levels by 2050 and recorded in the Clean Energy Act (Australian Government 2014a). Australia joined the second commitment period of the Kyoto Protocol, which was launched by the 18th UNFCCC in December 2012 (Australian Government 2012b).

The Garnaut Review Report, a high quality independent report commissioned by the Labor Government when it was in government, analysed the effects of climate change on Australia’s economy and recommended that an Emissions Trading Scheme (ETS) would be one of the most efficient policy measures to achieve these Kyoto targets (Talberg et al. 2013). As the ratification of the Kyoto Protocol came into effect in March 2008, the efforts of the Australian Government to meet its emission reduction commitment started to take off with the release of the Carbon Pollution Reduction Scheme (CPRS), which included the plan to implement the ETS. The establishment of the CPRS was bumpy: it was rejected by Parliament three times from 2009 to 2010 and lapsed in September 2010, before being passed by Parliament in November 2011 within the (Australian Government 2012c).

The Government released the policy framework and its target of cutting 159 million tonnes in greenhouse emissions in 2011. The key mechanism to achieve this objective was the Clean Energy Future Plan that was to put a price on carbon, to invest in renewable energy, to increase energy efficiency (Julia Gillard (Prime Minister) 2011)

40 and to take action on the land management practices that release GHG emissions(Julia Gillard (Prime Minister) 2011) (Australian Government 2011a).

Ethanol Production Grants Program (EPGP) extended 2008-2021

On 30 March 2004, a minor political party, the Australian Democratic Party, was instrumental in deferring the commencement date for Energy Grants (Cleaner Fuels) Act from 1 July 2008 to 1 July 2011, which effectively extended the Ethanol Production Grants Program (EPGP) for ethanol for another three years from 30 June 2008 until 30 June 2011 (ANAO 2015b). Shown in Table 2.10, EPGP expenditure increased from over AUD77 million in 2008–09 to over AUD104 million in 2009–10. In the 2010–11 Budget context, amid concerns about the ballooning expenditure, the government decided to change and phase out the excise on ethanol and the EPGP extension arrangement by 2015 (ANAO 2015b; Quirke et al. 2008).

However, following the negotiation with Mr Tony Windsor MP, one of several independent MPs who supported the Gillard minority government from 2010 to 2013, the Gillard Government approved a third extension of the EPGP to 2021 (ANAO 2015b; Australian Government 2012d). The driver of this extension (ANAO 2015b) was “discussions with our crossbench colleagues and industry on these long-standing reforms” (ANAO 2015b), which reflected a policitical perspective of biofuel policy changes.

According to the statistics provided by the ANAO (Table 2.10), the EPGP invested over AUD627 million in the period from 2007–08 to 2013–14. Between 2002–03 and 2013– 14, Honan Holdings Pty Ltd, a company belonging to the Manildra Group, which was then the largest Australian producer of ethanol, received over 70 per cent of the total grants offered by the EPGP (ANAO 2015b). The expenditures during the period from 2008 to 2013 are summarised in Table 2.10 and the phases of the EPGP changes are summarised in Table 2.11.

.

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Table 2.10 EPGP grant recipients and amounts (AUD), 2008-09 to 2013-14

Dalby Year (and Honan Schumer Wilmar Tarac number of Holdings Pty Pty Ltd Bioethanol Pty Ltd Total Pty Ltd recipients) Ltd (NSW) (Qld) Pty Ltd (Vic) (SA) (Qld) 2008-09 6,478,916 57,012,826 1,146 14,028,932 94,006 77,615,826 (5) 2009-10 23,382,360 62,190,636 0 19,369,757 0 10,4942,753 (3) 2010-11 25,093,998 83,417,832 0 13,087,898 0 121,599,728 (3) 2011-12 23,043,155 78,285,150 0 15,511,559 0 116,839,864 (3) 2012-13 23,468,482 74,613,764 0 10,221,481 0 108,303,727 (3) 2013-14 15,932,612 71,880,659 0 10,789,007 0 98,602,278 (3) Total 117,399,523 427,400,867 1,146 83,008,634 94,006 627,904,176 Source: ANAO (2015b)

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Table 2.11 Effective fuel-tax rates for ethanol decided in Ethanol Production Grants Program (EPGP), 2002–2015

Effective Decision made Effective Rate of Rate of Phases of EPGP excise time/event period excise subsidy rate Establishment 12 Sept. 2002 2002-2003 0.38143 0.38143 0 2003-04 First extension 2003-2008 0.38143 0.38143 0 Budget Second extension 2003-4 Budget 2008-2011 0.38143 0.38143 0 phasing Changing Reducing down from 2011-2015 from 0.225 from 0.25 0.025 to Adjustment during 2010-11 to 0 second extension Budget to 0.125 0.125 From 1 July 0.125 0 0.125 2015 phasing Changing Reducing down from 2011-2021 from 0.225 2010 federal from 0.25 0.025 to Third extension to 0 election to 0.125 0.125 From 1 July 0.125 0 0.125 2021 EPGP cease by 30 June 0 0 0 2015 2014-15 Increasing Closure Increasing Budget from 0 at From 1 July from 0 at 0 the rate 2015 the rate of of 0.25 0.25 yearly yearly Source: Quirke et al. (2008); ANAO (2015b)

Energy Grants (Cleaner Fuels) Scheme (2011 onwards)

The Energy Grants (Cleaner Fuels) Scheme Act 2004 brought into being the EG(CF)S to provide companies trading in domestic and imported biodiesel and ethanol with grants to offset in part their excise duty from 1 July 2011 to 30 June 2015. The grant that covers the excise duty would be phased out gradually, declining at a rate of 20 per cent yearly, so that there would be no subsidy for either biodiesel or ethanol from 1 July 2015 (Australian Government 2004a).

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However, in 2011, the Energy Grants (Cleaner Fuels) Scheme Act 2004 was amended as the Energy Grants (Cleaner Fuels) Scheme Amendment Act 2011. In this second Act, the time limit of the excise exemption for domestic and for imported biodiesel was cancelled and the part offset for excise duty on ethanol from 2011 to 2015 was repealed (Australian Government 2004a).

Australian Renewable Energy Agency (ARENA) (2012 -- 2013)

Established under the Australian Renewable Energy Agency Act 2011, the Australian Renewable Energy Agency (ARENA) was one of the leading organisations for transforming Australia’s energy requirements to the use of clean energy by increasing the competitiveness of renewable energy technologies and improving the supply of renewable energy (ANAO 2015a). The Gillard Government invested AUD3.2 billion dollars to improve the information available for public and private sector investors and policymakers. ARENA’s responsibilities include supplying financial support along the value chain from research and development, to demonstration and to pre- commercialisation of renewable energy technologies; and to sharing knowledge and information of clean energy technologies to markets and to enable investment (ANAO 2015a).

In 2009, the Australian Centre for Renewable Energy (ACRE) was established to promote renewable energy technologies from development to deployment with over AUD690 million funding committed. After ARENA’s establishment on 1 July 2012, ACRE was incorporated with ARENA and its programs; programs such as the Emerging Renewables Program and the Support for Advanced Biofuels became ARENA’s responsibility (ARENA 2015b). From July 2012 to September 2013, ARENA’s total investment in biofuels was AUD19.19 million (Table 2.12).

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Table 2.12 ARENA’s investment in biofuel projects before September 2013

ARENA Project funding Start date Finish date provided Sustainable production of transport biofuels from AUD 2.50 Sep. 2009 May 2012 mallee crops by and biorefinery million Production of second-generation ethanol from AUD 2.37 Nov. 2009 Apr. 2012 waste million Cane2Fuel: Feasibility of producing biofuel from AUD 1.27 Dec. 2009 May 2012 sugarcane waste million Demonstrate commercial production of bio-crude oil AUD 2.29 Dec. 2009 Jun. 2012 from biomass million AUD 0.92 Production of biofuel from microalgae Feb. 2010 Jun. 2012 million Advancing marine microalgae biofuel to AUD 4.40 Feb. 2012 Jun. 2015 commercialisation million Australian feedstock and refining capacity to produce AUD 0.58 Jun. 2012 Jun. 2013 Sustainable Aviation Fuel (SAF) million Biomass to bio-crude: Producing advanced drop-in AUD 4.86 Jan. 2013 Apr. 2015 fuels for Australia million AUD 19.19 ARENA's funding in total million Sources: ARENA (2015c)

2.4.3 New approaches for the new commitment (2013 -- 2015)

In February 2014, the Australian Government released the Emission Reduction Fund White Paper, in which two important policy decisions were described (Australian Government 2014a). One was to adjust the commitment to the Kyoto Protocol back to the lowest level, that is, 5 per cent below year 2000 levels by 2020, and the other was to replace the planned Emissions Trading Scheme (ETS) with the Direct Action Plan. The Abbott Government decided to replace the previous ‘Clean Energy Future’ and ‘Measures for a better environment future’ with the ‘Direct Action Plan to Tackle Climate Change’. This meant that instead of levying a carbon tax on large carbon- emitting businesses, there would be grants made competitively to pay large emitters to take action to reduce emissions. Controversially, that fund is paid by the taxpayers and has received little support from the academic community and, tellingly, the

45 economic community has been particularly sceptical doubting the method’s efficiency. Only 2 out of 35 university and business economists in Fairfax Media survey believed that direct action was a better way to limit Australia's GHG emissions. In contrast, significant majority of the economists (86%) stated that the existing carbon price scheme is a more fair and efficient way to tackle the GHG emission (Wade & Hutchens 2013).

In the 2014–15 Budget, the Government abolished many climate and energy programs to make budget savings, including the two major policy tools for combating climate change, the enabling legislation for the Clean Energy Finance Corporation (CEFC) and for the Australian Renewable Energy Agency (ARENA) (John 2014). The abolition of ARENA and CEFC left the Renewable Energy Target (RET) as the only substantial Commonwealth renewable energy program (John 2014). Influenced by the Abbott Government’s new ways to tackle climate change, there were also changes in biofuel policies.

Ethanol Production Grants Program (EPGP) cessation (2014-- 2015)

In its 2014–15 Budget, the Abbott Government announced that the Ethanol Production Grants Program (EPGP) would cease on 30 June 2015 (ANAO 2015b; Australian Taxation Office 2014b) reversing the Gillard Government’s plan to extend the program to 2021. From 1 July 2015, the excise for domestically produced fuel ethanol was to increase by AUD0.025 per litre annually until it reached AUD0.125 per litre (Australian Taxation Office 2014b). Throughout that time, the customs duty on ethanol stayed the same as the fuel excise for fossil fuel at the rate of AUD0.38143 per litre (shown in Table 2.11).

The funding through the EPGP started from 2002–03 and peaked in 2010–11 (Figure 2.4). The EPGP is a demand-driven grants program (ANAO 2015b). Responding to the fall in ethanol production from 2011–12, grants under the EPGP have decreased gradually since then. With estimated costs in 2014–15 of AUD122.1 million, the total payment from EPGP would be AUD895 million (ANAO 2015b).

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Figure 2.4 Grant payments of Ethanol Production Grants Program (EPGP), 2002-03 to 2013-14

140 121.60116.84 108.30 120 104.94 98.60 100 77.62 80 56.69 60 31.88 40 21.68 15.38 Millions 20 10.88 8.65 0

Source: ANAO (2015b)

Energy Grants (Cleaner Fuels) Scheme - cessation (2015)

In the Commonwealth Budget for 2014–15, the cessation of the Energy Grants (Cleaner Fuels) Scheme was announced. The full excise offset for domestically produced and for imported transport-use biodiesel were to be cancelled from 1 July 2015 and the excise rate for biodiesel would fall from AUD0.38 to zero over the period from 1 July 2015 to 30 June 2016 (Webb 2014). For five years, from 1 July 2016, the excise rate for biodiesel would increase gradually at a rate of AUD0.025 per litre per annum until it reached 50 per cent of the energy content-equivalent tax rate (Webb 2014). From 1 July 2015, the customs duty for biodiesel would stay at AUD0.38143 per litre (Australian Taxation Office 2014c).

Australian Renewable Energy Agency (ARENA) (2013 to 2015)

In the Commonwealth Budget for 2014–15, the Australian Government announced it would abolish ARENA’s AUD2.3 billion funding. Until the repeal of the Australian Renewable Energy Agency Act 2011, ARENA was to continue as usual: cooperating with stakeholders on the projects, monitoring progress and seeking improvement in the uptake of renewable technologies in the market. The projects that have ARENA’s investment would not be influenced and the continuing programs, such as the Emerging Renewable Program, would still be open for applications before the repeal of the ARENA legislation (ARENA 2014). The biofuel projects funded by ARENA from

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September 2013 to September 2015 are shown in Table 2.13. The legislation had not been passed by the Parliament at the date of the signing of the 2014–15 financial statements (ANAO 2015a).

Table 2.13 ARENA’s investment in biofuel projects from September 2013 to September 2015

ARENA funding Finish Project Start date provided date High-energy algal fuels A$ 5.00 million Nov-13 Jun-15 Participation in the International Energy Agency’s A$ 0.36 million Jul-14 Bioenergy program Woody biomass harvester A$ 1.94 million Jul-14 A low emission biofuel technology A$ 5.17 million Sep-14 ARENA's funding in total A$ 12.47 million Sources: ARENA (2015c)

ARENA’s investment projects cover all kinds of renewable energy; solar, ocean, geothermal, biofuel and hydropower energy projects. In addition, ARENA also invests in those projects that are relevant to the development of renewable energy technologies, including energy storage projects, hybrid technologies projects, and renewable-energy, industry-capacity building projects (Figure 2.5). Until December 2015, the total renewable energy investment from ARENA was AUD919.39 million, of which investment in biofuel projects accounted for 4.36 per cent with a value of AUD40.08 million (Figure 2.5)

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Figure 2.5 ARENA’s funding, by energy type, shown as percentages

Biofuel projects 4.36% Solar energy projects 63.74% Energy storage 14.72% Hybrid/enabling technologies projects 6.87% Ocean energy projects 4.82% Geothermal energy projects 4.41% Bioenergy projects (exclude biofuels) 0.66% Renewable energy industry capacity building projects 0.36% Hydropower projects 0.07% 0% 20% 40% 60% 80%

Source: ARENA (2015c)

2.4.4 Summary of Australian biofuel policies

The number and the value of the government’s investment or expenditure for biofuel policies and programs correspond directly to the degree of government support. This section shows all the major biofuel policies and the available audit data of the expenditures on these policies, to show an informative time-series summary of all the biofuel policies from 1990 to November 2014, when the fieldwork for this research stopped.

The biofuel programs and financial commitments are summarised in Figure 2.6. In Figure 2.6, the horizontal axis of the bar chart is the timeline and all the programs’ time periods are given there. The vertical axis shows the expenditure on the biofuel programs in millions of Australian dollars, and the exact value of the expenditure on the particular program during the specific time periods are marked at the top of the blue bars. The author could not see all audit reports of all the biofuel programs; therefore, the unavailable data of expenditures are shown as N/A. For convenience, the abbreviated names of the policies are shown in the blue square and the full names of biofuel programs are given at the bottom of Figure 2.6.

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Figure 2.6 Summary of biofuel policies from 1990 to 2015

700 627.9 600 EPGP 500

400 BCGP EG(CF)S extension EDP A$ 300 GGAP ARENA million EG(CF)S 200 EPBS 145 EPGP cessation

100 37.6 7 16 7.48 17.2 19.19 12.47 1 N/A N/A N/A N/A N/A 0 N/A

RECP 350 Million Litre Target EGCS REDI EPGP ARENA EG(CF)S cessation

Ratifying New approaches Before ratifying the Kyoto Protocol (1990-2007) (2008-2013) (2013-2015) over A$ 231.28 million over A$ 647.09 over A$ 12.47

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From 1990 to 2007, before the Australian Government ratified the Kyoto Protocol, Australia had made GHG emission reduction commitments to the Kyoto Protocol and started to invest in programs to achieve those goals (Figure 2.6). The energy policy at that time was not fully synchronised with ratifying the Kyoto Protocol, but there were still positive policies supporting the development of renewable energy, shown in the Energy White Paper 2004. During this period, there were ten biofuel policies being applied (programs) with a total investment of around AUD231.28 million.

After the Australian Government ratified the Kyoto Protocol, in the period from 2007 to 2013 (Figure 2.6), the commitment to climate change mitigation became more ambitious and also the policy decisions were more financially supportive. During this period, there were three major biofuel policies and expenditure also increased sharply, to the total value of AUD647.09 million.

After the 2013–14 Budget (see Figure 2.6), the approaches to climate change mitigation taken by the Abbott Government and substantial funding in climate change mitigation were abolished. This directly influenced biofuel policies because the major biofuel programs ceased with the 2013–14 Budget and the expenditure for implementing biofuel policies fell to AUD12.47 million.

The attitudes to and policy changes to do with climate change and, subsequently, with renewable energy were mainly a consequence of major national development goals at the time. According to the data organised in this section, through the different stages of Australia’s approaches to climate change, there have been remarkable corresponding shifts in investments in biofuel programs.

2.5 Biofuel policies in China

China’s energy policies are mainly developed by the National Development and Reform Commission (NDRC), the National Energy Administration (NEA), the Ministry of Science and Technology (MoST) and the Ministry of Finance (MoF). The NDRC is the major regulator of biofuel development and is the planning body for future production and consumption. The NEA, MoST, and the MoF are government departments regulating

51 biofuel development in its energy, technology and finance aspects, following NDRC’s policy guide.

China’s biofuel regulations and policies have been through three major phases. A tabulated summary is provided in Table 2.14. The first phase is from late in 2001. It was the beginning stage of the whole country’s biofuel development, marked by the release of the Special Development Plan for Denatured Fuel Ethanol and Bioethanol Gasoline for Automobiles (the Plan) in the 10th Five-Year Plan (2001–2005). The Plan’s intention was to promote initial ethanol development in the market (Yang et al. 2009). Along with the Plan, the Government released national standards for Denatured Fuel Ethanol (policy code: GB18350-2001) and Biofuel Gasoline for Automobiles (policy code: GB18351-2001) to establish the regulations and standards for the E10 production (Tao et al. 2011).

The development of biofuels, especially ethanol, boomed in the second phase (2002– 2005) with supportive policies. Two pilot programs of ethanol-petrol blends for automobiles, namely the Pilot Testing Program and the Expanded Pilot Testing Program, were announced in 2002 and 2004, respectively. In 2005, the Renewable Energy Law of China was promulgated. The law set the definitions of biofuels and promoted the development and utilisation of renewable energies including liquid biofuel (Ren et al. 2015). Guided by this law, the Ministry of Finance (MoF) in 2005 formulated new supportive policy provisions. The incentives for the pilot ethanol plants included sales tax exemption (5 per cent) and refunds of value added tax (17 per cent). Extra subsidies were promised by the government to guarantee a minimum profit for the plants during this period (Qiu et al. 2012). Initially, there were four pilot plants producing fuel ethanol (see Section 2.1.3). As a result, the use of E10 expanded to five provinces (Heilongjiang, Jilin, Liaoning, Henan and Anhui provinces) and to 27 cities in four other provinces (Hubei, Shandong, Hebei and Jiangsu provinces). In this phase, the four main plants reached a production capacity of 1.02 million tonnes annually by 2006. The main feedstock was maize, which was in line with the government’s intention to release stale grain from the national storage after several years of bumper harvests.

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Strong incentives along with oil price rises after 2006 caused ethanol production to soar. Because maize was the main feedstock at that time, first-generation ethanol’s development led to competitions between different users of maize. Domestic maize prices had increased 30 per cent by 2007 compared with 2006 (Yang et al. 2009). concerns led to adjustments in biofuel policies after 2006.

Specifically, the policies were to transform ethanol production from maize to non- maize-based technologies in the third phase (from 2006). Two important announcements (Announcement Regarding Promoting Healthy Development of Ethanol Industry, and Urgent Announcement Regarding Development and Management of Maize Processing Projects) were made by the NDRC to control the expansion of the first-generation ethanol industry and to support the use of non-grain- based feedstock, such as cassava, sweet sorghum and cellulosic materials (Tao et al. 2011).

In addition, three macro policies were developed from 2006 forward to provide a supportive environment for second-generation biofuel production. In 2006, the Ministry of Finance (MoF) issued the Interim Measures for the Administration of Special Funds for the Development of Renewable Energy Sources (the Measures). The Measures gradually adjusted the financial incentives from ‘fixed cost supplementation and guaranteed profits’ to ‘flexible subsidies according to the cost–price gap linked to gasoline market price’ (Zhao & Liu 2014). The principle of these three policies was to promote biofuel technologies that do not compete for grain-growing land but keep costs low and efficiency high. Feedstocks, such as cassava, sweet potato, sugar cane, and sweet sorghum, are supported.

In 2007, the NDRC issued the Medium to Long Term Development Plan for China’s Renewable Energy, setting production goals of 2.2 million tonnes for ethanol by 2010 and 12 million tonnes by 2020; 0.2 million tonnes for biodiesel by 2010 and 2 million tonnes by 2020 (Zhao & Liu 2014). This plan forbade cropland occupation and ecological destruction for ethanol production.

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In 2011, the Ministry of Science and Technology released its 12th Five-Year Development Plan for Biology Technology. It promoted research and the development of key processing technology and facilities for the production of non-grain-derived bioenergy, including the aforementioned second-generation ethanol and biodiesel (Chen et al. 2015). In the following year, the National Energy Administration announced the 12th Five-Year Development Plan for Biomass Energy. It recommended feasible feedstock for second-generation ethanol and biodiesel, including sweet sorghum, cassava, straw from crops and organic waste products. The biofuel production targets it set were 4 million tonnes for ethanol and 1 million tonnes for biodiesel in 2015 (Chen et al. 2015)

Table 2.14 China’s biofuel policies (in chronological sequence)

Policy documents Major content

Since the 1980s, China has been supporting Before No specific government policy liquid biofuel development through 2000 investment in R&D and biofuel technologies. Special Development Plan for Denatured Fuel Ethanol and The Plan was intended to promote the initial 2001 Bioethanol Gasoline for Automobiles ethanol development in the market in the 10th Five-Year Period (2001– 2005) (the Plan). national standards for Denatured Fuel Ethanol (policy code: GB18350- Established national compulsory standards 2001 2001) and Biofuel Gasoline for for the production of E10 Automobiles (policy code: GB18351- 2001) Pilot Testing Program of Bioethanol Five cities in Henan and Heilongjiang 2002 Gasoline for Automobiles selected to use E10. Expanded Pilot Testing Program of Five provinces and 27 cities in another four 2004 Bioethanol Gasoline for provinces were selected to participate in the Automobiles; second phase of expanded testing. Promote the development and utilisation of 2005 Renewable Energy Law of China renewable energies, including liquid biofuels The incentives for these pilot plants included Supportive policies of Ministry of 2005 exemption from Sales Tax (5%) and a refund Finance on bioethanol production of Value Added Tax (17%). Announcement regarding promoting Restricted market access of bioethanol 2006 healthy development of ethanol production; encouraged the development of industry non-cereal based bioethanol. (continue on next page)

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Policy documents Major content Restrained the development of grain-based Urgent announcement regarding ethanol and supported the use of non- grain 2006 development and management of based feedstock such as cassava, sweet maize processing projects sorghum and cellulosice materials. Gradually adjusted the financial incentives Interim Measures for the from ‘fixed cost supplementation and Administration of Special Fund for 2006 guaranteed profits’ to ‘flexible subsidies the Development of Renewable according to the cost--price gap linked to Energy Sources (the Measures). gasoline market price’. Medium to Long-term Development Set the objectives for biofuel production for 2007 Plan for Renewable Energy 2010 and 2020 It promoted research and development of the 12th Five-Year Development Plan 2011 key processing technology and facilities for for Biology Technology producing non-grain bioenergy. It set biofuel targets: 4 million tons of the 12th Five-Year Development Plan 2012 ethanol and 1 million tons of biodiesel in for Biomass Energy 2015. Sources: Chen et al. (2015); Zhao and Liu (2014); Tao et al. (2011); Yang et al. (2009); Qiu et al. (2012)

2.6 Classification of Research Agencies on biofuel in Australia

‘Research’ is one of the major elements in ‘evidence-based’ policy-making. In addition to understanding all the major biofuel policies in Australia, it is also necessary to have a comprehensive understanding of the biofuel-related research agencies and their research. The author explored all the major research agencies that take part in biofuel research and, from these, potential interviewees were found. In this section, a typology of biofuel research agencies is developed using three dimensions: government affiliation; funding resources; and target audiences.

The Australian Government gives support and funding for scientific research and underpins Australian science through its departments and funding agencies (Australian Government 2012a). This system includes publicly funded research agencies (PFRA), research funding agencies, cooperative research centres (CRC), universities and medical research institutes (MRI) (Australian Government 2012a).

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2.6.1 Publicly Funded Research Agencies (PFRAs)

Publicly funded research agencies (PFRA) are those public research institutes that are either statutorily authorised by the Financial Management and Accountability Act 1997 (for instance, the Defence Science and Technology Organisation (DSTO) and Geoscience Australia) or those authorised by the Commonwealth Authorities and Companies Act 1997 (such as the Commonwealth Scientific and Industrial Research Organisation [CSIRO] and Australian National Nuclear Research and Development Organisation [ANSTO]) (Australian Research Council 2014).

Within the Australian Government, major PFRAs for biofuel research include the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), the Bureau of Resources and Energy Economics (BREE) and the CSIRO. Some of these PFRAs are in government departments as research agencies to provide their research outputs to the policymakers, for instance ABARES is within the Department of Agriculture and BREE within the Department of Industry. They are administratively embedded in government departments, albeit with professional independence to do research without operational control by the government of the day, and to provide scientific evidence and policy advice (Australian Government 2012a). Some research agencies have an independent board and administration to make decisions about the research plans, strategies and investment. The detailed introduction of ABARES, BREE and the CSIRO is in the Appendix 1.

2.6.2 Research funding agencies

In addition to those publicly funded research agencies (PFRA), there are other agencies that are categorised in the Australian science system as ‘research funding agencies’. Administratively, the Australian Research Council (ARC) is the body responsible and it reports to the Minister for Education. The ARC is one of the more independent research funding agencies in Australia: it supports research agencies or individuals on merit and the research fields it caters to include any discipline but medical research, which is supported exclusively by the National Health and Medical Research Council (NHMRC). The ARC provides joint investment in researchers and research organisations in the form of grants, scholarships and funding programs. The joint investment 56 includes business and other collaborators or matched investment by the government to improve the effectiveness and efficiency of research and to facilitate collaboration between researchers and the government, business and the community in Australia. The target audiences for these research projects are rarely the Australian Government, but are academics, and other stakeholders in industries and the community.

2.6.3 Government-business joint research funding agencies

Government–business joint research funding is an increasingly popular model for research funding, in which funding is from industries and the government. The major biofuel-related government–joint investment agencies include cooperative research centres (CRC), research and development corporations (RDC) and the Australian Renewable Energy Agency (ARENA).

Cooperative Research Centres (CRCs)

The Australian Government establishes cooperative research centres (CRC) through the Department of Industry. The mission of the CRCs is to develop cooperative public– private research centres and to improve as soon as possible collaboration between universities and industries by the transfer of knowledge and technology (Australian Government 2011b). The major effect of CRCs is improving national industrial and economic growth by supporting education and research activities.

Research and Development Corporations (RDCs)

Because the scale of the rural business investment is usually small and the producers don’t have the capacity to develop rural technology and innovation by themselves, it is necessary for the Australian Government to support rural research investment and extension (RD&E) (Australian Government 2012a). Rural research and development corporations (RDC) are one of the major research funding agencies for the rural RD&E system, investing in research in agriculture, fisheries and forestry.

The key function of RDCs is to invest in new knowledge and to build efficient links for its communication with researchers, industries and the government (Australian Government 2011b). The RDCs funding consists of levies from industry and matching

57 investments from the Australian Government; therefore, RDCs invest in research projects on behalf of industry and the Australian Government. RDCs are a unique research investment structure domestically and internationally (Australian Government 2012a). By combining industry levies with government support they facilitate the use of public money with a maximum value-added rate in the rural industry R&D. In addition, the RDC model can also improve the uptake of the research outputs efficiently and effectively (Australian Government 2011b). The productivity of Australian agriculture has doubled over the past 25 years thanks to the efforts of RDCs (Rural R&D Corporation 2014). Biofuel-related RDCs include the Rural Industries Research and Development Corporation (RIRDC) and the Australian Renewable Energy Agency (ARENA), which are described in Appendix 1.

2.6.4 Universities

Universities play an important role in Australia’s research system. In almost all research investment activities, universities are involved and can be the applicants for research funding from the government or from the research funding agencies. The universities’ share is usually more than 50 per cent of the Australian Government’s investment, and contributes a significant part of the total expenditure (Australian Government 2008). For biofuel research, many universities have been given support from federal, state and territory governments and also from industrial investment. For example, government-business joint research funding agency, ARENA, provided an AU$ 5 million foundation grant to James Cook University for its high-energy algal fuels project in 2011; and provide AU$ 920,000 for The University of Melbourne for its ‘Production of biofuel from microalgae’ project in 2012 (ARENA 2012).

2.6.5 Summary of Australian research agencies

Shown in Figure 2.7, there are four questions that need to be asked about research activities when classifying research agencies: Who requests the research? Who funds the research? Who conducts the research? Who is the target audience?

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Figure 2.7 Categorising principles of different types of research

•commissioned by the •mixed types from: government •the government (publicly •contracted by the industry funded) •spontaneously started from •the industry (privately researchers based on their funded own interests Who Who funds requests the the research? research?

Who Who is conducts target the research? audience? •research agencies within •policymakers government departments •industries •publicly funded research •basic research for the long- agencies term scientific development •government-business joint research funding agencies

Biofuel research could be commissioned by the government or contracted by the industry or sometimes may be driven the curiosity of scientists. Usually whoever commissions the research pays for it. The funding could be from mixed sources, including governments and industry. The publicly funded research agencies (PFRA) conduct research commissioned by the government and industries, and their research funding is usually from both sides as well. Some agencies only fund research, some agencies only conduct research, and some do both. The archetypal research funding agency in Australia is the ARC, although some government–business joint research funding agencies and some of the PFRAs invest in and conduct research as well, such as the CSIRO, the RIRDC and ARENA.

The audience for research into biofuel could be policymakers or industries or in some circumstances both. Who are to be the beneficiaries of research programs is a key question. In evidence-based policy-making, policy-oriented research is for the benefit of the research subject. In addition, some of the business-targeted research could also have effects on policy through subtle ways, by either proving the feasibility of 59 particular technologies via the bio-physical research or making market predictions via economic studies.

2.7 Summary

This chapter provided necessary biofuel related information to facilitate empirical analysis and discussion in the biofuel policy area. It introduced biofuels’ contribution to transport, to fuel consumption and reviewed the development of biofuel industries in Australia and China. Even though biofuel in neither country contributes to a major proportion of fuel consumption in the transport sectors, the development of biofuel industries and the expansion of the markets have been rapid. However, as the supporting policies have been declining recently, the production also started to drop. This reflected the important role policy incentives/subsidies play in the biofuel business.

A record of Australia’s biofuel policy changes was compiled, and it demonstrated that there was a positive correlation between the Australian Government’s support for biofuels and its commitments to climate change mitigation. This reflected that climate change mitigation could be one of the biofuel policy drivers. This section also summarised the biofuel policy changes in China. Besides, the policy trigger and the key reasons for policy changes were identified. Finally, this chapter introduced a detailed classification of biofuel related research agencies in Australia, which were used to gather, through a purposive sampling ( introduced in Chapter 4), the most informed views on research and policy ever reported.

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Chapter 3 Literature Review

3.1 Introduction

This chapter reviews an extensive volume of theoretical and empirical literature around the research topics in the public policy discipline. The overall intent of the review is to serve the investigation of the research questions. This is achieved in the following steps. First, it identifies the rationality of government intervention, along with the concepts of ideology and its fundamental influences in policy-making. Second, it examines the literature and identifies the different conclusions going for and against government intervention. These are mainly from market failure, public goods theory and government failure perspectives. Third, locating in the biofuel policy area, this review goes through the specific biofuel policy drivers and the impacts of biofuels in Australia and China. It is necessary to know the specific knowledge related to the research object in this empirical study. Fourth, this review identifies different models of research use, as well as policy-making, to have a comprehensive view on the research-policy interaction, following which the obstacles in evidence-based policy- making from both supply and demand sides are summarised.

The rationality and ideology’s influence in economic and environmental policies deepen the understanding of the research topics in the public policy field. The research utilisation models and policy-making models in the theoretical literature seem to cover all the possible situations of research-policy interaction. However, evidence and empirical studies, wherein which model best describes the situation in practice is identified, are rare. The disconnect between theory and practical evidence in the literature of evidence-based policy-making establishes this study, by exploring policy drivers and evidence-based policy-making in a specific policy area of biofuels and accessing the views of both researchers and policymakers, will contribute to the literature.

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3.2 The rationality embedded in government policies

Rationality is a fundamental principle of concepts, judgements, and deduction (Xie & Zhang 2015). Under most circumstances, being rational is a requirement for policy- making and this makes ‘rationality’ the central concept in policy analysis (Thacher 2004). Rationality in policy-making comprises many dimensions. For example, Anderson (2009) interpreted rationality to comprise of legal rationality, social rationality, technical rationality, economic rationality and substantive rationality (Anderson 2009).

Legal rationality is the most basic condition when making policies. It shows the typical principles of ‘rule by law’ in contemporary countries. In policy analysis, legal rationality helps to judge whether the policy is consistent with former or current regulations and acts.

Social rationality is in the paradigm of ‘we’, which subscribes to a value system based on communalism. Within the value system of social rationality, personal benefits are in a subsidiary position (Gintis 2015). In this case, the criteria for judging policy rationality can avoid being interpreted inconsistently and avoid being influenced by individualism. In policy analysis, social rationality refers to ‘appropriateness’ which emphasises the equity and accessibility of policy programs and services.

At a more detailed and practical level of rationality, there is technical rationality and economic rationality. Technical rationality is also called instrumental rationality. It applies to technical regulation and it refers to ‘effectiveness’ and the ‘value of policy goals’ in terms of policy evaluation (Chen 2014a). Economic rationality has a bias relating closely to ‘efficiency’. In practice, cost-benefit analysis is a widely used method for policy analysis.

Comprehensively, substantive rationality covers many types of rationality. It could be a flexible combination of legal, social, technical and economic rationality, depending on the specific needs of a policy analysis. The purpose is to make the most suitable evaluation of policy performance.

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Tracking back further, Regan (1978) divided the concept of rationality in policy-making into two categories: quantitative and qualitative rationality. Qualitative rational policy- making is policy decision-making that allows an appropriate choice of alternatives; quantitative rationality refers to ‘effectiveness and efficiency’ in policy-making (Regan 1978). The effectiveness and efficiency rationalities of policy-making are, historically, referred to as instrumental rationality. The instrumental rationality of policy analysis emphasises assessment methods and techniques more than an identification of the rationality of policy goals themselves (Thacher 2004). The identification of what the policy goals should be is value rationality. Tacher (2004) defined value rationality as “reasoning not about the best means to given ends but about what the ends themselves should be”. Inspired by the definition of value rationality in policy analysis, the author tracked back along the policy-making path to explore the beginning of policy-making that refers to the ‘drivers’ of biofuel policies in this research.

In Australia, evaluations of government policies use the terms ‘effectiveness’ and ‘efficiency’ as criteria to help judge government rationality in action (ACT Government 2010; Productivity Commission 2013). Moreover, ‘appropriateness’ is another criterion used by the Australian Capital Territory Government in its guideline of evaluating government policies and programs (ACT Government 2010).

‘Appropriateness’ emphasises that the policies, programs and services should meet the government’s policy priorities and follow the principle of improving community wellbeing (ACT Government 2010; Australian Government 2014b). If one policy can provide outcomes that meet the government’s priorities and principles, it then meets the criterion of appropriateness.

The Productivity Commission, one independent research organisation of the Australian Government, defined and categorised different types of efficiency. One type of efficiency frequently mentioned is ‘economic efficiency’, which can be achieved by reducing costs and increasing output. Another type is ‘allocative efficiency’, that is, improving the market’s ability to supply resources where they are most needed. One more is ‘dynamic efficiency’, which refers to improving the whole society’s productivity by optimising the structure of the economy, usually by investing in research and 63 innovation (Dolamore 2014; Productivity Commission 2013). For policy decisions, the criterion of ‘efficiency’ is more integrated, instead of only concentrating on achieving of economic benefits by improving economic dynamics, or allocative efficiency, it’s goal is to achieve a balanced and improved net benefit for the whole community’s wellbeing (Australian Government 2014b).

‘Effectiveness’ is a criterion to measure the extent to which the policy reached its goal (Perrels 2001; Productivity Commission 2013). For a policy program or service, there are two types of ‘effectiveness’ that need to be evaluated. One is ‘cost effectiveness’, which indicates the ratio of outcomes per unit of government expenditure. The other one is ‘program effectiveness’, which is the indicator that shows how successful the policy was in achieving its objectives, based on an integrated evaluation of accessibility, equity and quality (Productivity Commission 2013; SCRGSP (Steering Committee for the Review of Government Service Provision) 2006).

In China, ‘Scientific Outlook on Development’ (、ᆖਁኅ㿲) is the highest standard for policy evaluation, and was set in the Third Session of the Sixteenth Central Committee of the Party in 2003 (Shen 2009). Since the Chinese economic reform in 1987, China has transferred from ‘Class Struggle as the Centre’ to ‘Humans as the Centre’. China is a socialist country. The people are the masters of the country, and therefore, public policies must reflect benefits for the people. The people-oriented essence of ‘Scientific Outlook on Development’ is the primary criterion for policy evaluation in contemporary China (Guo & Liu 2006). Under this principle, ‘effectiveness’, ‘efficiency’ and ‘appropriateness’ are also suitable for policy analysis in China (Gao 2015; Zhou & Zhang 2015).

3.3 Ideologies embodied in economy and environment in Australia and China

3.3.1 Ideology

Ideology is a collection of ideas that make up one’s beliefs, goals, and expectations. These ideas are shared by members of a group and national policies reflect some of the ideologies. National ideology acts as a comprehensive normative vision on the 64 correct way of behaving (Eagleton 1991; Jost et al. 2009). Jost et al. (2007) reviewed the relations between shared reality, system justification, and the relational basis of individual ideological beliefs. His research concluded, in contrast to the findings of previous research, that one’s ideology is not a stable, consistent and logically coherent belief structure of the world. To some extent, it can be influenced by the shared reality and the system justification embedded in the ongoing and temporary social relations formed by the surrounding people in the group (Jost et al. 2007).

There are political ideologies held by individuals, which are the individuals’ belief systems and ideas on policies or political theories and there are also political ideologies held by a particular social class or social group, such as those of the ruling parties in governments (Jost et al. 2009). In this research, political ideology could be one of the important concepts that need to be briefly considered. Identifying the different government ideologies relevant to the research topic of biofuel policy-making, relies on the philosophical foundations of individual ideologies that, broadly, are either conservative or progressive. Conservative (right wing) ideologies lean more to activities that lead to deregulating product markets, including biofuel, and to avoiding intervention: the progressive (left wing) ideologies favour government intervention (Anderson & Singer 2008; Potrafke 2010).

3.3.2 Political ideologies in contemporary Australia and China

In line with the brief classification of individual ideologies, a governments’ political ideology can be described as its position on a political spectrum, such as left or right (Jost et al. 2009). The political spectrum is usually thought of as a left-centre-right continuum. Right-wing governments tend to defend the status quo and are also called “market-oriented governments”; left-wing governments seek progressive changes more often and favour governments having more responsibilities and intervening more (Potrafke 2010).

Political ideology is a particularly complex and ongoing set of interactive belief systems (Carmines & D'Amico 2015), and there are complicated systems and various schools of thought that categorise political ideologies. This research does not seek to contribute

65 to this detailed theoretical and philosophical typology of ideology. It is appropriate to employ two indices of government ideology and explicitly refer to the left–right political spectrum of governments as Potratke (2010) did. It is a simplified model but typical, and widely adopted by many researchers, for instance, Anderson & Singer (2008), Gabel & Huber (2000), Hellwig (2008), Jost et al. (2009) and Potratke (2010).

In contemporary Australia, national political parties dominate the political landscape and play a determining role in national policy-making (Marsh 1999). There are two major parties in the Australian political system: the Australian Labor Party, the Liberal Party of Australia and the National Party of Australia. As a brief working description, the Australian Labor Party is considered to be a left-wing party. It has traditions of supporting workers’ rights and social justice. Its current supporters range from workers to middle-class. Over time, the Australian Labor Party’s interests have covered a wider range; from workers’ employment conditions to social justice and to protect women’s rights, environmentalism and international affairs. Its "socialist objective" is still stated in its constitution: “The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields” (Labor’s National Platform 2015).

The opposing political interests are represented by a coalition of two other parties: the Liberal Party of Australia and the National Party of Australia. The Liberal Party of Australia is a right-wing political party and it represents business, the suburban middle classes and many rural people (Liberal Party of Australia 2014). The Liberal Party’s right-wing ideology defines it as conservative in social policies and it cleaves to a liberal ideology in social and economic policies (Thomas et al. 2012). Its permanent coalition partner is the National Party of Australia, a conservative (right-wing) party that represents rural interests. These two parties together when in government are known as the Coalition (Bach 2003).

Australian political system is a two-party system. The competition for government has mainly been between the Australian Labor Party and the Coalition. There are some minor parties in Australia, such as the Australian Green Party, the Democratic Party 66 and the Family First party, which represent special interests for specific groups, and can play an important role in legislation and government policy-making because sometimes they hold the balance of power in a parliament (Althaus et al. 2007).

The two major parties in Australia subscribe to different ideologies on economic growth and environmental protection. The left-wing Labor Party’s origins as a democratic socialist party, means that it used to support the government’s economic interventions. From the 1980s, however, the Australian Labor Party embraced economic rationalism and initiated economic reforms to achieve prosperity. In contrast, the Coalition parties have retained a neo-liberal ideology in political, social, and economic policies. They support free markets and advocates further ‘liberalisation’ of finance and business within the rule of law (Hughes 2002).

In contemporary China, the Communist Party of China is the ruling party in government. There are also some democratic parties such, as the minority parties who work with the Communist Party of China in making policy decision in the government (Yang & Wang 2014). The Communist Party of China adopted socialism as its main ideology in economics and politics; it represents the people’s will. The adaptation of aspects of a market economy in China’s socialist economy has resulted in economic development that is widely agreed to be successful; this has been called “Socialism with Chinese characteristics” (Brown 2012). Balance and harmonious economic development is the foundation of the Chinese government’s policy goals (Pan 2014). Current policies are intended to increase innovation, optimise the industrial infrastructure, improve the quality of life in rural areas and address the immense need for energy and environmental problems (Wei 2008).

3.3.3 Different ideologies on economic growth and environmental protection

Consistent with their political ideologies, governments represent community hopes and ambitions and act in accordance with the people’s expectations. The current ruling party’s ideology significantly influences the policy-making and helps decide its policy priorities for the whole community (Black & Donald 2001). The core difference between right-wing and left-wing governments is about the government’s role in the

67 economy (Bjørnskov 2005; Potrafke 2010). However, environmental topics are an indispensable part of discussions of economic growth in the modern world. The exponential growth of populations and of economic production are pushing human society beyond the capacity of the Earth to sustain it and this is the basis of conflict between economic growth and environmental protection (Doyle & Kellow 1995; Guo & Ma 2008). Moreover, environmental policies are heavily influenced by a political party’s ideology (Barrilleaux 1997). Therefore, governments under the influence of their party’s ideological background will arrive at different policies in their treatment of the relations between economic growth and environmental protection.

Conventional wisdom states that the left-wing governments consider environmental protection to be more important than economic development; right-wing governments tend to favour the converse (Benton 1997). Environmental issues, such as climate change, are always considered as being associated with market failures (Helm 2010). Therefore, policies and regulations are usually needed to restrict the behaviours of markets to protect the environment from damage or destruction caused by economic development. Left-wing governments prefer to intervene in market operations and to make environmental protection policies (King & Borchardt 1994). This policy preference of a left-wing government derives from its ideological predilection to protect the interests of its electoral supporters, who are more vulnerable and more often affected by pollution or severe environmental issues than are the middle classes (Neumayer 2003). Chang et al. (2016) tested the conventional wisdom with rigorous empirical estimations. They concluded that the evidence drawn from their basic estimation results were in line with the conventional-wisdom hypothesis of the different attitudes of left and right-wing governments ’ policy preferences between economic growth and environmental protection. However, there was also clear evidence from their results to show that policy preferences based on different ideologies were uncertain when there was pressure from voters for a better economic performance.

Similar to conventional wisdom on right and left-wing governments’ policy preferences, Doyle & Kellow (1995) discussed in chapter 2 of their book that there are fundamental

68 divergences in political thought on the environment between the “two major competing ideologies of the modern era: liberalism and socialism” (on Page 44). They investigated the conflicts between economic growth and environmental issues. They examined in detail the differences between the liberal and socialist ideologies on environmental issues and, to paraphrase their discussion, they found that liberal democracy, with its belief in individual freedom and private property, can easily be considered the cause of environmental problems when economic growth is paramount and a liberal ideology is most likely to prefer economic intervention in the way of taxes to fix a market failure that has allowed pollution to be a problem. In line with socialist thought, they found the most likely socialist responses to environmental problems would be to make technical and cultural adjustments to natural events or to make changes to productivity and consumption to mitigate conflicts of economic growth and environmental protection (Doyle & Kellow 1995).

3.4 Justifications for and concerns about government intervention in biofuel development

To be able to justify government intervention is fundamental for policy analysis. Some degree of market failure is usually used as the rationale for a government to intervene (Fisher & Rothkopf 1989); however, there are concerns that government intervention could cause or worsen market failures and be seen as a government failure (Krueger 1990). The belief or scepticism surrounding government intervention in the working of the economy for fear of market or government failure is sometimes rooted in political ideology. Helm (2010) stated that the governments in favour of government intervention usually ignore or downplay the potential for failures. He asserted that the balance between the two sources of market failure and government failure was political: left-wing governments tend to be more concerned with market failure; right- wing governments were more concerned with government failure. Taking renewable energy policies as an example, Cadoret & Padovano (2016) concluded that left-wing governments tend to invest more effort than do right-wing governments in intervening in the energy markets by advocating and implementing renewable energy policies.

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3.4.1 Market failures justify government interventions

Economic theory provides the argument or basis for a justification of government intervention in the economy (Kotagama et al. 2013). Neoliberal economic theory has it that a perfectly competitive market allocates resources efficiently, that is, the supply meets the demand and that benefits and costs of market activities are in balance at the margin (Fisher & Rothkopf 1989). In this perfect market, maximum social welfare is attained (Kotagama et al. 2013). However, in the market, public–-private natural resource management can fail to allocate resources efficiently in the economy when particular goods and services have a part in the market: such as public goods, externalities, and incomplete information (Abbott 2001). Markets may fail in producing and delivering those commodities that have the characteristics of ‘non-excludability’ and ‘non-rivalry’ and that do not respond as expected to the market price mechanism. In natural resources (air, land and water), the economic concepts of ‘non- excludability’, ’non-rivalry’ or ‘externalities’ of a good or service are complex. ‘Information failure’ or ‘imperfect competition’ further distort reality from what the theory of efficient markets suggests is reality (Pannell & Roberts 2015; Rajagopal & Zilberman 2007). Under these circumstances, government intervention may improve the efficiency of resources allocation, but it is highly complex and uncertain and policy results are not guaranteed.

To ascertain whether there is a market failure, two factors should be present together. Pannell & Roberts (2015) simplistically describe these two factors as 1) at least one of the characteristics of a market failure is a reduction in the markets’ effectiveness; and 2) the benefits of government intervention that are intended to address a market failure can exceed its costs. However, in practice, both factors are rarely proven and subject to partiality. Values are heterogeneous; therefore, the identification of market failure itself is only one of the two necessary justifications for government intervention. The other, indispensable one is that government intervention be cost-effective in improving the situation caused by market failure (Garnaut 2011).

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3.4.2 Biofuels’ externalities cause market failures

When ‘public goods’ and ‘externalities’ strongly influence prices of commodities in trade, markets cannot function efficiently in resource allocation (Stiglitz 2008). Public goods have the property of ‘non-rivalry’ in consumption and ‘non-excludability’ (Kaul et al. 1999). Security of energy and food supplies are public goods (Labandeira & Manzano 2012; Rocha 2007). National sovereignty, energy security and food security are matters of government concern and investment because everyone benefits from them and all could be threatened by their failure (Rocha 2007). Investment in energy or food security obtain lower returns than required to sustain the desired service (Abbott 2001; Greater London Authority 2006). To develop a nation’s economy and improve welfare for its people, governments need to intervene to guarantee sufficient food supplies and energy generation as the basic social needs (Abbott 2001; Prentice 2015). Therefore, from these economic angles, the paradigm that ‘market failure in producing public goods justifies the governments’ intervention’ is widely accepted by scholars (Abbott 2001; Kotagama et al. 2013; Labandeira & Manzano 2012; Prentice 2015; Rocha 2007; Stiglitz 2008).

Biofuel production is intended to mitigate climate change consequences but it also has adverse effects on biodiversity and other side effects that affect third parties. The production of biofuel, encouraged by ethical pressure and by long-term energy and food security concerns are motivated by values external to biofuel markets (Clark 2012). Governments are justified in applying policy instruments to correct market failures when the value of long-term environmental externalities are not included in the market price of the commodities (Center for Climate and Energy Solutions 2013). As climate and energy externalities appear, the extra costs of loss, remediation or adaptation will be incurred by governments or passed on to future generations (Rajagopal & Zilberman 2007).

3.4.3 Research investments in biofuel field

New information and technology is necessary for economic growth and underinvestment by the private sector in research has been asserted as a justification for government intervention (Guo et al. 2016). In regard to research and development, 71 the Productivity Commission (2011) emphasises that the key rationale for government intervention in R&D is to redress the private sector’s underinvestment because of the negative ‘spillover’ effect on business. Another remedy is to improve protection for intellectual property rights (IPR) of the research and development investments by private entities (Alfranca & Huffman 2003).

For biofuel research investment, market uncertainties call for government intervention to establish particular institutions and to offer support grants to reduce investors’ risk, in order to counter the underinvestment and make biofuel and its R&D market more efficient (Schill 2009).

Through biofuel policies and research investment, governments’ justification for intervening in biofuel’s development has been the subject of considerable discussion. Three examples will illustrate the range of views. Steenblik (2007), in the report for the International Institute for Sustainable Development (IISD), evaluated the rationality of government support for ethanol and biodiesel in several OECD countries, including Australia, Canada, the European Union, Switzerland and the United States, and concluded that the production-linked subsidies for biofuels are costly and inefficient. The quest for renewable energy sources has been claimed by politicians and by researchers as a justification for developing biofuel (Moschini et al. 2012). However, Lapan & Moschini (2012) provided analytical assessment of policy tools for biofuels in the United States and concluded that biofuel subsidies are revenue neutral and the combination of fuel taxes with biofuel mandates would be welfare improving.

Moreover, on the justification of biofuels ‘being able to reduce CO2 emissions’, (Grafton et al. (2014) overturned this rationalisation, concluding that the US biofuels subsidies had perversely increased fossil fuel extraction and carbon emission between 1981 and 2011.

3.4.4 Controversial subsidises for infant industries

Biofuel industries are consistently defined as infant industries in the literature (Batten et al. 2007; Doku & Di Falco 2012; FAO 2008; Glithero et al. 2013; Ren et al. 2015; Sarris & Morrison 2010; Webb 2008) and some writers have said that there is a need for

72 governments to support biofuel industries to build the skills and capacity at an early stage, in order to accelerate their development.

Mainstream literature on the ‘infant industry argument’ has cited the Mill-Bastable criteria when discussing the justification for government intervention in infant industries (Harris et al. 2015; Kaneda 2003; Melitz 2005; Sauré 2007). The Mill-Bastable Criteria are a combination of these three prerequisites:

x “there is a presence of dynamic learning effects which are the external to the industry” x “the protection must be temporary before the industry becomes mature” x “the cumulative net benefits provided by the protected industry exceed the cumulative costs of protection” (Melitz 2005).

Drawing on these three prerequisites, the Productivity Commission (2011) expressed a dialectical attitude on ‘supporting infant industry’ as a rationale for government investment in R&D. It emphasises that, given limited resources, it is necessary to distinguish infant industries from small industries and from industries that will be indefinitely dependent.

Considering Australia’s biofuel industry, Webb (2008) considered that a biofuel mandate may be justified on the grounds of it being an infant industry; however, it is uncertain whether the protection of the industry is to be temporary or long-term. Webb (2008) was concerned that a permanent mandate of biofuel could ultimately lead to the Australian biofuel industry being uncompetitive and dependent on government funding. This concern has practical significance and is reflected by the situation of biofuel industries in China. The Chinese Government strictly controlled biofuel production from feedstock collection to marketing, and provided the biofuel industries with subsidies to guarantee their incomes. China’s biofuel industries are far from operating in a mature market with steady profits and consistent revenue streams (Ren et al. 2015). As Liang et al. (2016) commented, “the biofuel industry in China does not represent a free, continuous and steady market, and is still at the infant stage of ‘planning sales according to yield, planned supply’”.

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3.4.5 Government failures contradict government intervention

Government failure, according to Winston (2006) is a situation where government intervention leads to an undesirable allocation of scarce resources. Blamed on imperfect information, uncertainties and erroneous assumptions about ‘rational people’ in economics that render the market mechanism complex, there are also potential risks of government failures when they try to deal with market failures by intervening. Policy interventions are highly visible and cause conflicts between groups with different values and interests. Imperfect information, as Stiglitz (2008) described, adds to concerns about risk and peoples values that confuses decision makers. Party leaders and government ministers are empowered to decide these complex policy matters, but it becomes difficult for them to tell who should get subsidies, or to decide what policies are appropriate. Moreover, the private sectors’ dishonesty and asymmetrical views of costs and benefits contribute to government intervention diverging from the government’s intentions (Maio & Valente 2013).

The officially stated objectives for governments, in justifying their support for biofuel, are greenhouse gas emission reduction, regional economic development and improving national energy security (Ackrill & Kay 2014). In addition to these official objectives, Charles & Wooders (2011) added the political and unofficial objectives, such as to sway rural voters. Biofuel subsidies in America, for example, are considered an important currency of politics that can channel benefits to rural constituencies. Farmers and landowners benefit from the subsidies immediately on production and in the longer term from the rising value of land (Gerasimchuk et al. 2012). Decisions about subsidies in these situations are affected by an electoral considerations and influencing rural voters is one of the paramount drivers of biofuel policy in agricultural areas around the world. Gerasimchuk et al. (2012) quoted the former American Vice- President Al Gore’s reflection on his support for biofuel subsidies:

First-generation ethanol I think was a mistake … One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president. ((Gerasimchuk et al. 2012), Page 4)

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Based on such very obvious electoral drivers, policy interventions directed by leaders in government can then lack the comprehensive investigation of other drivers, and can ignore biofuel-market signals that appear to be more rational to economists and scientists.

Subsidies help to cultivate a pool of economic rents (Helm 2010). Rent-seeking behaviour is frequent in a weak institutional environment. Asymmetric information about the costs and benefits of granting subsidies makes room for lobbying (Victor 2009). Decisions by governments to support biofuel are subject to feedback loops that increase lobbying and cause uncertainty in decision-makers’ minds, thus adding to the complexity and uncertainties of policy-making. Gerasimchuk et al. (2012) expressed biofuel policymakers’ frustration when facing these uncertainties and conflicting values by quoting one interviewee’s words:

Ethanol is like cholesterol. There is good ethanol and bad ethanol. Good ethanol helps clean up the planet and is competitive. Bad ethanol comes with the fat of subsidies. ((Gerasimchuk et al. 2012), Page 9)

Governments are often influenced by lobbying and sometimes political objectives hiding behind the stated aims of pro-biofuel policies are quite clear (Doornbosch & Steenblik 2007). One instance of government failure was when the Howard Government in Australia in 2001 set a target of 350 million litres of ethanol production by 2010 and subsidised the domestic ethanol production with an excise exemption of 38.143 cents per litre. Webb’s Parliamentary Library paper (2008) revealed that these two policy arrangements cost about AUD50 million paid through the Budget in 2006– 07 and 90 per cent of the production subsidy went to the Manildra Group. The Biofuels Taskforce (2005) conducted the most comprehensive independent analysis of the ethanol industry in Australia. Its results showed that there were not obvious and irreplaceable benefits from the policy for the environment, for health or for the economy the policy. It is inevitable that people will assume that lobbying by the Manildra Group led it be the major beneficiary of the subsidy.

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3.5 Drivers of biofuel policies

There is a plethora of journal papers and books about biofuel policies that mention ‘carbon emission reduction’, ‘national energy security’ and ‘regional development’ as the three major drivers of biofuel policies in Australia (Azad et al. 2015; Hazrat et al. 2015) and in China (Chen et al. 2015; Hua et al. 2016; Ren et al. 2015). Moreover, these three drivers are also usually cited as the policy context of biofuel development in technological or biophysical research papers on biofuels (Hallenbeck et al. 2016; Kim et al. 2016; Milano et al. 2016; Puri et al. 2012; Rodriguez et al. 2011). Ackrill and Kay (2014) interviewed biofuel policymakers in the USA, the EU and Brazil, three dominant biofuel producers, and obtained first-hand confirmation that these three drivers were the officially accepted drivers of biofuel policies. However, there is a gap in research that explores whether these drivers are the commonly confirmed by policymakers in Australia and China.

3.5.1 Climate change mitigation

Combustion of fossil fuels is the main source of emissions (such as carbon dioxide and ), which causes undesirable global warming and climate change (IPCC 2013; Suranovic 2013). The international political pressure, based on the Kyoto Protocol agreements, to reduce emissions is increasing (EBRD 2011). The science of climate change has connected the problems caused by fossil fuel consumption to solutions such as biofuels (Khanna et al. 2011).

Some literature shows that biofuel is renewable and causes far lower GHG emissions than fuels currently used and its development can reduce the risk of catastrophic climate change; therefore, biofuel science and policy advice was advocated to be developed rapidly by government policymakers (UNCTD 2009) (The Brazil Institute of the Woodrow Wilson Centre 2007). Research that is to provide policy advice often uses the general results of biofuel emissions as the justification of their advocacy. For instance, (Hazrat et al. 2015) asserted that “biofuels can reduce over 60 per cent of GHG emissions caused by the same amount of fossil fuel” (EIA 2013) as one of the policy drivers for the Australian Government to support more biofuels production.

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However, there is other research that challenges the general impression that biofuel produces low GHG emissions by calculating the net GHG emissions of biofuel production. As Ackrill and Kay (2014) summarised, the production of biofuel also generates GHG emissions that have a profound effect on net emissions. For biofuels; moreover, the calculation of the net emissions is challenging, because different combinations of feedstock and technology generate different figures for net emissions. Research provides different advice when it considers different elements in calculations. The lack of unanimity of advice from research undoubtedly challenges policymakers’ judgements about the ‘right’ information to inform biofuel policy-making.

Early analysis of Australia’s biofuel situation was conducted by O'Connell and RIRDC (2007), which comprehensively explored different life-cycle GHG emissions for transport on a per kilometre basis from the use of ethanol blends from various feedstocks, including molasses, sorghum, wheat and wheat starch waste. As shown in Figure 3.1a, different production processes with different feedstock generates different reductions of GHG emission measured at the tailpipe and upstream. The life cycle analysis of biodiesel’s GHG emissions is more complicated, because not just feedstocks need to be considered but also the different proportions used in the diesel fuel blends should be considered. As shown in Figure 3.1b, O'Connell and RIRDC (2007) also explored the emissions of biodiesel from different feedstocks and different percentage of blends.

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Figure 3.1 a. Life-cycle GHG emissions per kilometre from the use of ethanol blends from various feedstocks and unleaded petrol (ULP) in a light passenger car. Upstream begins with biomass production; Tailpipe begins at the bowser. b. Full life-cycle GHG emissions per km for biodiesel and biodiesel blends in a rigid truck compared to Ultra Low Sulphur (ULS) diesel (sulphur content < 50 ppm). Numbers at the top of the bars represent the percentage change, compared to diesel.

a. b.

Sources from O'Connell and RIRDC (2007) P21, P23

As well as the production process, different blending proportions when retailing biofuels can cause different levels of emissions. For instance, Hashim et al. (2016) showed that different percentages of CO2 emission reduction and sulphur content in the emission were caused by different blend proportions. They concluded that one of the best blends methods is 5 per cent biodiesel blended in fossil diesel fuel (B5), which can yield about 26 per cent reduction in CO2 emission and about 22 per cent less sulphur content.

When putting the effects of the land use changes into the calculations, the net GHG emissions from biofuels are even more uncertain. The effects of land use changes refer to the unintended consequence of releasing more carbon emissions. A direct land use change (DLUC) effect happens when feedstock growing displaces the previous use of the land. An indirect land use change (ILUC) effect refers to the circumstances when land that was formerly used for growing food, feed or fibre is now used for feedstock

78 production displacing the original land use to another area that might have a high carbon stock (Gawel & Ludwig 2011).

Quiroz Arita et al. (2016) used life cycle assessments (LCA) to examine net GHG emissions from microalgal-based biofuels and their examination considered of the

DLUC effects in their model by quantifying the CO2 equivalence of carbon released to the atmosphere through the construction of microalgal facilities. Their results demonstrated that previous LCA of biofuel production from microalgae had overestimated the GHG benefits because it neglected the contribution of the −1 statistically average scale of 17 gCO2eq MJ from the DLUC effect.

Taking ILUC effects into consideration makes the estimation of carbon emission from biofuels even more complicated. Because of international trade and global markets, the land use change can affect to several different countries (Maria & van der Werf 2008). As Gawel and Ludwig (2011) stated, because of the ILUC effects, not even an outcome that biofuels emit less GHG than fossil fuels can be taken for granted. National and international biofuel policies should be precisely informed by full information about the adverse ILUC effects, to avoid the wrong policy decisions, economically and politically. There is still a lack of common methods for calculating the ILUC effects and the results from related research vary (Oladosu & Kline 2013), which makes controversial any contention that ‘reducing carbon emission’ is a major driver of biofuel policies.

From research only can policymakers obtain accurate information about biofuels’ performances in reducing net GHG emission. The results vary because many disparate factors need to be considered in the calculations. This directly leads to complexity for policy-making.

3.5.2 National energy security

The commonly accepted definition of energy security is ‘a reliable and adequate supply of energy at reasonable prices’ (Andrew B. Kennedy 2010; Chester 2010; Daniel Yergin 1988; Yao & Chang 2014). One direct indicator of energy security that is used is the degree of dependence on imported oil (Zhao et al. 2015). In addition to the supply

79 aspect of energy security, researchers raised concerns about energy security’s downstream effects of inadvertently making climate change mitigation goals more difficult to meet (Vivoda 2010; Yao & Chang 2015). However, the concept of energy security is highly dependent on the national context because each country has its own circumstances: economic development, the government’s perception of risk, as well as on how robust the energy system is and any geopolitical issues (Ang et al. 2015).

Though Australia is endowed with abundant fossil fuel resources, its oil supply is unable to meet domestic consumption demand. Oil consumption was 34 per cent of all energy consumption in 2000, it increased to 38 per cent in 2015 and is ranked the highest of all kinds of energy demand in Australia (Hua et al. 2016). However, this essential energy supply is 91 per cent imported. The high dependence on imported oil is the most serious risk for Australian energy security (Blackburn 2014).

The importation of refined petroleum products increased about threefold over the past decade in the Australian petroleum market (Hazrat et al. 2015). In 2014, domestic Australian refining capacity can cover 17 per cent only of the domestically produced crude oil—it was 37 per cent a decade ago (BREE 2014b). The reason for the reduced refining capacity is that a number of refineries were shut down because they could not compete with the more efficient and larger Asian refineries (Hazrat et al. 2015). The decline in the number of crude oil refineries in Australia has contributed to the increase in the vulnerability of the fossil-fuel supply chain.

Along with the reduced capacity to refine crude oil, Australia’s reserves of liquid fuel stock are as low as 20 days equivalent net average fuel import of the year before. This does not meet the obligation under the International Energy Program Agreement that requires International Energy Agency (IEA) member countries, such as Australia, to hold oil stocks equivalent to at least 90 days of net oil imports (Hazrat et al. 2015; IEA 2008). The only cause for optimism from Australia’s energy security situation, as Hazrat et al. (2015) stated, is that a diversified international supply might buffer vulnerability and strengthen confidence in supply. However, any critical disruption in the foreign supply market, for example, political turbulence in other countries, could cause Australia to run out of public-use fuel within three days (AIP 2013). 80

For China, the pressure caused by energy security issues is often attributed to the fast economic development of the recent decades, which has been described widely (Chen et al. 2015; Qiu et al. 2012; Ren et al. 2015; Zha 2006; Zhang & Chen 2015; Zhao et al. 2015). The degree of dependence on imported oil is one of the important indicators used when describing China’s energy security situation. In 2013, China’s dependence on imported oil was of the order of 60 per cent (Zhao et al. 2015). The inference that can be drawn from this high dependence on imported oil is that for the next 20 years China’s dependence on such imported energy will not decrease until and unless China replaces fossil fuel’s dominance with renewable energy (Chang et al. 2012).

In addition to the supply and self-sufficiency aspects of energy security in China, researchers Odgaard and Delman (2014), Zweig and Bi (2005) and Zhang (2003) have also discussed energy security from the perspective of international relations and geopolitical advantages. For instance, Odgaard and Delman (2014) found that conflicts between some of the supplier countries and neighbouring countries for resources can cause instability in energy supplies for China. The USA, as the only superpower in the global energy arena, is a potential threat in that it might cause temporary disturbances in energy supply routes from the international market. Yao and Chang (2015) concluded that China’s energy policies have not improved energy security but China has been passive in macroeconomic reform over China’s 30 years of economic reform (from 1978 to 2008).

There are links between ‘economic reform’, ‘energy security’ and ‘climate change mitigation’ in China. Yao and Chang (2015) describe China’s economic development as being focused on the growth of heavy industries for the first two decades of China’s economic reform. Known as ‘destroy now, clear-up later’, the environmental damage was at the expense of ensuring China’s economic growth at that time. Abating GHG emission started to become one of China’s energy policy concerns from then on. In 2007, the NDRC issued ‘China’s National Climate Change Program’ and made the energy sector the major target for CO2 emission reduction (Lin et al. 2008).

The common energy security issue for Australia and for China is that the increasing dependence on imported fossil fuel indicates a vulnerability to national energy security 81

(IEA 2007). Globally, national energy security also fosters work to mitigate climate change, because fossil fuels contribute most to CO2 emission, but it is still the safest and most easily obtained energy source. To mitigate the effects of climate change and to assure energy security, renewable energy, such as biofuels, can supplement the demands for and in China (Chang et al. 2012; Hazrat et al. 2015).

3.5.3 Regional development

Regional development was identified as one of the three major drivers for biofuel in the major biofuel producing countries, such as Brazil, the USA, and the EU (Ackrill & Kay 2014). Regional development implies developing rural economies, increasing employment and improving the quality of life in rural areas.

In regional areas, farmers who are willing to grow bioenergy crops or to produce alternative cellulosic feedstocks welcome biofuel development (Caldas et al. 2014). In addition, there are more biofuel producers see an additional or more profitable market for their products. Currently, first-generation biofuel, which is made from food crops and can be produced on a commercial scale in feedstock-rich developing countries. For example, China has focused heavily on ethanol production because of its previously large surplus of inferior maize (Zhou & Thomson 2009). Thailand has so much cassava that even after consumption and export it still has an annual production excess of four million tonnes that could be used to produce 1.8 million litres of ethanol per day (Gonsalves 2006). In addition, as Puri et al. (2012) stated, biofuels also provide a new market for Australia’s agriculture sector because it gives opportunities for rural and regional community development, as well as improving air quality and health for urban communities.

For developing countries, governments and agricultural interest groups have increasingly viewed biofuel as a means to increase employment. For example, the Malaysia Palm Oil Council states that the palm oil industry provides direct employment for over 800,000 people (Charles et al. 2007); in India, the sugar industry is the biggest agro-industry in the country, employing 45.5 million people (Gonsalves 2006). And it has also been observed in Brazil that biofuel production has stimulated rural

82 economies and helped improve conditions for the production of other crops (UNCTD 2006).

3.6 Impacts of Biofuel Policies

Future energy security could be threatened by relying on fossil fuel, especially on imported fossil fuels, because fossil fuels are being depleted and the import sources might not be stable forever and those sources might deny or reduce supply or their prices fluctuate (Fisher & Rothkopf 1989). Biofuel production can reduce dependence on imported oil and also enable reliable distribution of fuels domestically (Trumbo & Tonn 2016). Therefore, biofuel has been identified as one of the potential means to increase energy security, especially in the heavily oil-dependent transport sector (Månsson et al. 2014).

Biofuels can have a positive effect on energy security but negative effect on food security and food security is urgent and important. Statistics show that around 12.5 per cent of the world’s population does not have enough food for an active life (Koizumi 2015). First-generation biofuels use food material as their feedstock, such as maize, wheat or sugar for ethanol production and oil seeds for biodiesel production. This causes direct competition in resources for food and can cause price increase for food. Zilberman et al. (2012) concluded that using maize to produce ethanol has had a significant effect on food commodity prices; moreover, biofuel effects on food prices might be lower if biofuel production is not competing for resources with food crops, such resources as land and water. Many researchers have asserted that biofuels’ effect on food prices varies with factors that are taken into account in different models, such as the crops and locations for biofuel production (Tomei & Helliwell 2016; Zhang et al. 2013; Zilberman et al. 2012). Because biofuel feedstock production competes for resources (high-quality agricultural land and water) for food production and for food material itself, it can influence the supply of food: therefore, the production of biofuel from food-based stocks have the potential to threaten food security (Monbiot 2004).

Biofuel production also has effects on the environmental, such as climate change and biodiversity loss (Fargione et al. 2010). Studies to find whether biofuel adoption in

83 fossil-fuel consumption systems could reduce carbon emission come to different conclusions. Without taking the production of biofuels into consideration, carbon emitted from biomass-based biofuel is lower than from fossil fuels (Demirbas 2009). However, when considering the land use change (LUC) caused by biofuel feedstock production, the carbon captured by biofuels may offset the emissions of carbon from LUC because land used for pasture or forestry is used for biofuel (Righelato & Spracklen 2007). As biofuel feedstock production expanded, much research centred on these net carbon-emission savings in relation to LUC (Edwards et al. 2010; Gohin 2016; Kim et al. 2014; Palmer & Owens 2015; Panichelli & Gnansounou 2015; Righelato & Spracklen 2007).

Edwards et al. (2010) stated that the calculations of land use change related to carbon emissions induced by biofuel production vary significantly when biofuel production pathways vary. The estimation systems for biofuels’ carbon emissions adopt different models that include different dimensions of indicators in the life cycle analysis, which makes the calculations complicated. Witcover et al. (2013) also found that there is a lack of reliable and widely accepted model with consistent data to estimate the net land use change related carbon emissions of biofuel production. The literature includes evidence that could be used by policymakers to support a view that biofuels contribute to climate change mitigation; however, there is evidence to support the contrary.

In addition to the impacts on climate change mitigation, there is evidence that biofuel produced from agricultural crop biomass has undesirable impacts on biodiversity. The impacts are also mainly related to the land use changes when cultivating biofuel feedstocks (Verdade et al. 2015). The main crops used for liquid biofuels are oil palm, soybean, sweet sorghum, maize, wheat, sugar beet, oil-seed rape, or jatropha (de Vries et al. 2010). These crops are exclusively cultivated on an industrial scale for liquid biofuel production, using less profitable crop land and degraded land and land that might be biodiversity hotspots (Verdade et al. 2015). Verdade et al. (2015) reviewed more than 20 scientific papers from 2008 to 2013 and concluded that the massive land use changes caused by biofuel production resulted in biodiversity loss because of the

84 loss of wildlife habitat. Besides land use changes, invasive species are a significant risk, especially in Africa and Europe (Hellmann & Verburg 2010; Witt 2010).

Biofuel production is problematic since the evidence is conflicting and the impacts evaluation models are immature. The effects on climate change mitigation and biodiversity may be uncertain. The massive volume of bio-physical biofuel-related studies provides evidence on both supporting biofuel development and the contrary. Therefore, besides the fact that biofuel does have effects on climate change, policymakers’ perceptions of the effects of biofuel production are important to the biofuel policy decisions, which makes the policy-making situation uncertain and complex.

The common context for the large field of examples of biofuel research was that biofuel development relying on governments’ policies through its history is clear (Grafton et al. 2014; Lapan & Moschini 2012; Steenblik 2007). However, it is quite unclear in the evaluation of how research had influenced the development of policy and whether policymakers had invested in the right research, or used it.

3.7 Evidence-based policy-making in the field of biofuel

Evidence-based policy-making is widely supported as an approach to make better policies (Head 2015). Considerable attention is shown in the literature to improve the use of research evidence in government policy-making (Porter 2010). Matters related to evidence-based policy-making are the utility of various models of research used in policy-making, approaches to assessing the impact of research on policy-making, and frameworks for analysing factors facilitating research uptake and improving communication in the research–policy interface (Armstrong et al. 2013; Davies et al. 2005; Janse 2008; Meagher et al. 2008; Newman et al. 2012; Weiss 1979).

This section will tease out the following themes in the literature:

x the concept of evidence-based policy-making;

x different meanings applied to ‘using research evidence’ in different models of research use and different models of policy-making; and

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x barriers to using research evidence in policy-making.

3.7.1 The concept of research evidence-based policy-making

Using evidence from research in policy-making has been seen as a rational activity that can contribute to improved quality of policy-making (Newman et al. 2012). It is widely accepted that policy-making based on evidence derived through systematic evaluation of credible research or information is best practice (Nutley 2003). In addition, the Chairman of Productivity Commission in Australia, Gary Banks, pointed out that the value of an evidence-based approach to public policy was well known (Banks 2009). van den Hove (2007) interpreted the rationale of the science–policy interface based on the elements in common of science and policy activities. He observed that science and policy were both social processes that encompass relations between scientists and other actors in the policy process and that this “allows for exchanges, co-evolution, and joint construction of knowledge with the aim of enriching decision-making” (van den Hove 2007). Statements such as “the availability of good-quality research that provides solid evidence to policymakers may better improve the efficiency and effectiveness of policy settings” (Head 2015) are widely expressed in the literature. Similar ideas in the context of research assessments or advice for improving the adoption of research in policies repeatedly invoke research use (Clare & Creed 2014; Davies et al. 2005; Holzer et al. 2007).

However, some critics also state that there are two important assumptions embedded in the concept of evidence-based policy-making (Porter 2010). One is that ‘research evidence adoption can improve policy outcomes’, and the other assumption is that ‘policymakers would seek research evidence to tackle the uncertainties in policy decisions’; however, despite these assumptions, policymakers may choose to ignore the evidence when it gets in the way of politicians seeking election (Porter 2010). Porter (2010) two assumptions challenge the concept of evidence-based policy-making, which draws on the “dual follies” stated by Nutley (2003) that underpin the very idea of evidence-based policy-making. Nutley (2003) interpreted that one of these “follies” is the assumption that “research evidence can provide objective answers to inherently

86 political policy questions”; the other “folly” is the assumption that “policy-making can become a more rational process”.

One of the most recent and comprehensive research papers on evidence-based policy- making pointed out that the concept of evidence-based policy-making is generally vague, without a clear description of the process (Cairney 2016). Nutley et al. (2007) commented that it is easy to be cynical and deny the possibilities of research evidence improving policy outcomes; and it is also too simplistic to overreact and see evidence- based policy as an exact ‘movement’. There is unlikely to be a perfect, specific form for evidence being translated into guidelines in practice and contributing to policy-making. Furthermore, (Cairney 2016) pointed out that neither view is helpful for understanding the role of evidence in the policy-making. Evidence-based policy-making lies between these extremes, is more rational and closer to the reality of policy-making (Nutley et al. 2007). Admittedly, the role of research evidence is limited in the inherently conservative nature of policy-making and accepting that the role of research evidence is ‘to inform’ policy rather than ‘to drive’ policy is more realistic and helpful (De Marchi et al. 2016).

3.7.2 Different models of research use in policy-making

Between the two extreme views (discussed in the previous section) of evidence-based policy-making, Weiss (1979) pioneered a synthesis of six models, each with different extents of research use in policy-making. By defining ‘supply push’ and ‘demand pull’ as two ends of the evidence utilisation spectrum (the double-headed arrow in Figure 3.2), the six models can be positioned along the spectrum. Each model, which will be described in a moment, describes ‘how the research was supplied’, ‘how the research was used (demanded)’ and the ‘relation between research supply and research demand’ in policy-making. These three aspects of research use in policy-making are generally used to organise the framework of discussion in the literature and is appropriate here. For instance, Rogers et al. (2015) organised her discussion around these three aspects of research use in her paper that advocated bridging the policy research divide.

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Figure 3.2 Models of research utilisation

Knowledge- Interactive Political model driven model model

Supply push Demand pull

Problem solving Enlightenment Tactical model model model

Knowledge-driven model

The knowledge-driven model is a typical a ‘supply push’ model that assumes research outputs can naturally be transferred to application and can contribute to public policy. The sequence of events would be: basic research Æapplied research Ædevelopment Æapplication. The successful examples of this model are usually from the physical sciences, for example, electronic research has enabled a multiplicity of television broadcast channels. More social resources and longer time spans are needed to enable social science research to affect governance and implementation, and social science could have a long-term enlightenment function by broadening perceptions about policy problems (Levidow & Papaioannou 2016).Therefore, the knowledge-driven model is less applicable in explaining the social science research utilisation (Weiss 1979).

Problem-solving model

Unlike the knowledge-driven model, the problem-solving model starts from the policy end and assumes that the pending problems demand that research be done to provide information and to facilitate understanding. The assumption in this model is that policymakers and researchers explicitly agree on the problems to be solved and that the main contribution of research is to provide information and to suggest means to reduce uncertainties or to solve the policy problems (Weiss 1979). The communication

88 between researchers and policymakers is linear and the rewards for effort are congruent. This is the typical assumption of the ‘demand pull’ model.

In this ‘demand pull’ model, there are two ways research enters the policy-making arena. The first is when the research pre-dates the policy problems and has been already published in journals, newspapers or conferences and those outputs are accessed by the policymakers. This can be described linearly: problem Æ research Æ decision. How well the research is used in policy-making in this model depends on a pool of research outputs, the efficiency of communication and the ability to match old knowledge with new contexts. There is no guarantee that the inside experts and outside consultants always have the relevant or best research available in time for policy decisions. Therefore, there are plenty of research papers that bemoan communication between policymakers and researchers, and addressing ways how to improve the use of research (Cvitanovic et al. 2015; Janse 2008; López-Rodríguez et al. 2015; Ugolini et al. 2015).

The second route of research adoption in the problem-solving model is the purposive commissioning of research by policymakers as an active way for policymakers to be consumers of knowledge. The assumption here is that policymakers clearly have the policy goals and knowledge gaps in mind. The process was described by (Weiss 1979) as ‘definition of pending decision Æidentification of missing knowledge Æacquisition of research outputs Æ interpretation of the research for the decision context Æ policy choice’ (Weiss 1979). To highlight policymakers’ active pursuit of information to inform policy-making, this route appears to show that policymakers are well-informed and are the only agents in the system.

Interactive model

Instead of only considering a one-to-one relation between researchers and policymakers, the interactive model covers various information providers who have the potential to influence policy-making, such as administrators, practitioners, politicians, planners, journalists, clients, interest groups, aides, friends, and social scientists (Weiss 1979). The acknowledged interaction between policy-making and

89 these other sources of information is more like a multidirectional web with disorder, emergent issues, and back-and-forth information exchanges. Because there is no guarantee that specific research evidence can win or stand out from all the other sources of information, such as experience, social judgement, political insight and pressure. Policymakers are unlikely to be able to pick the ‘right’ research. In addition, policy decisions sometimes cannot wait for the completion of research, and they have to meet the political circumstances (Weiss 1979).

Enlightenment model

The enlightenment model (Weiss 1979) is the only model that does not assume that policymakers would seek research outputs as evidence and contends that research outputs must first match policymakers’ values and policy goals to be ‘useful’ in the policy-making. It admits that there are manifold channels for research to diffuse through to the policy arena. Instead of influencing policy-making directly, research in the enlightenment model can alert communities and policymakers with new insights into the potential policy problems and shape their ways of thinking and defining the policy agenda. This is an indirect way research affects policy-making and appears to be a more realistic if humbling way of estimating the role of research in policy changes (Janse 2008).

Agreeing with this view of the often imperceptible and indirect influences from research, Uyarra et al. (2016) pointed out that the boundary between research and policy often is not a sharp line but rather as a dynamically shifting boundary between maintaining scientific credibility, assuring practical saliency and legitimising the process to the many participants in changing circumstances (Janse 2008). In the spirit of this enlightenment model, Posner et al. (2016) stated that detecting direct links between research and policy changes are rare and believing that policy will change based on the relevant research findings is unrealistic.

Political model

Political models emphasise the potential influences from different interests and ideologies around one policy decision. Usually these interests and ideologies are seen 90 to make research less influential and to stops policymakers absorbing the research outputs objectively (Weiss 1979). This model adheres to the belief that politics and power dominate the policy decisions. Therefore, the ‘evidence’ in this model is gathered politically to “neutralize opponents, convince waverers, and bolster supporters” (Weiss 1979), and denigrated as ‘policy based evidence gathering’ by Sharman and Holmes (2010). Manipulating research outputs to facilitate a predetermined position is seen by researchers as an illegitimate ‘use’ of research; however, accord to (Weiss 1979) political model, it is legitimate in policymakers’ eyes, because research processes and outputs are not distorted or misinterpreted but are selected. Research outputs that match the established position of policy intent are more likely to have an effect. Equity of research outputs access for all could make research worthy ammunition for all involved in policy-making processes.

Tactical model

In the tactical model, Weiss (1979) stated that the ‘use’ of research is not related to the research outputs but to the fact that research has been done, either to provide policy options or not. Research, in this end of the continuum, is used as a screen to stifle understanding of alternatives and to appear to be a rational choice. Research at the other end is used as an excuse for unpopular policy outcomes or as a tacit pretext for delaying action or unwelcome policy demands from stakeholders, which is described by (Weiss 1979).

3.7.3 Different models of policy-making

The nature of policy-making decides how the research is adopted. Within different models of research and different models of policy-making, the interpretation of ‘what counts as evidence’ and ‘how policymakers treat research evidence’ are different (Dovers & Hussey 2013; Weiss 1979). Therefore, policy-making models need to be explored together with research-use models. Three policy-making models are generally identified in the literature (Davies et al. 2005; Dovers & Hussey 2013).

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Rational-comprehensive model

The rational-comprehensive model rests on two assumptions: one is that policy- making is a stepwise and well-defined process, the start of which is guided by the reliable knowledge; and the other is that policymakers actively gather all sources of data and evidence for their identified policy problems (Dovers & Hussey 2013; Doyle & Kellow 1995). Cairney (2016) introduced the idea of understanding policy-making as two-dimensional: comprehensive rationality and bounded rationality. Comprehensive rationality assumes that, from the beginning of the policy agenda setting to the end of policy evaluation, each step is well organised and based on research evidence (Althaus et al. 2007). The popular image of a policy cycle (shown in Figure 3.3) provides a simple image of policy-making under the comprehensive rationality model (Cairney 2016).

Figure 3.3 Policy cycle

agenda setting policy evaluation analysis

policy implementation instruments

decision consultation

coordination

Source: Althaus et al. (2007)

As shown in Figure 3.3, policy cycle starts at ‘agenda setting’. It involves carefully identifying issues that might require the government’s attention, either from private discussion with stakeholders or through the media (Althaus et al. 2007; Cairney 2012; Hanney et al. 2002).

‘Policy analysis’ usually draws on broad debates between experts in policy-making, stakeholders and researchers in the community about the issues that are on the policy 92 agenda. All the information from all these sources, usually in the form of a policy brief, can facilitate an informed judgement by the government (Althaus et al. 2007).

This policy brief includes the ‘policy instruments’ chosen to cause change through advocacy, such as educating or persuading; through networks, pushing the government and other stakeholders to cooperate and implement policy goals; through financial measures, collecting tax or providing subsidies; through direct government intervention, such as delivering public services; or through law, establishing legislation and regulation (Althaus et al. 2007).

‘Consultation’ is necessary to coordinate the help and advice from different agencies and experts, especially for complex social or economic problems, because, with their different perspectives, they can provide different considerations for the final solution. A comprehensive consultation can improve policy analysis, test potential solutions and gather supports when possible (Althaus et al. 2007). Two layers of ‘coordination’ should be reached before a policy is implemented. One is to keep the coherence between a new policy decision and the overall government policy direction; and the other layer of coordination is to reflect the efficient interaction between related policy agencies working together to achieve a common policy goal (Althaus et al. 2007).

In an ideal world, a policy issue would reaches consensus from among its contributing parties and it would then be time to make the policy ‘decisions’. In the Westminster system, the decision-making agency is ultimately the Cabinet, which is empowered to analyse all the submitted information and policy advice. The final judgement for major or overarching decisions is made by the ministers, not the public servants who are to implement the policy (Althaus et al. 2007).

‘Implementation’ must follow the intent and the form of legislation, investment or programs of governments, Cabinets or senior agencies. The organisation that is given the responsibility to implement the policy is allocated with the necessary resources, such as staffing, money and legal authority, and then carries out the policy decisions as planned (Althaus et al. 2007; Cairney 2012).

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Monitoring the implementation of the policy can keep the original policy goals on track or facilitate the government to adjust goals, inputs or policy instruments to achieve better outcomes. The evaluation that comes after the interaction may lead to the beginning of a new policy cycle with fresh look at the policy problem. Therefore, this linear policy-making process can be cyclic with continuity, adaptive learning and improvement (Althaus et al. 2007; Cairney 2012; Cairney 2016).

There are different opinions on the ‘policy cycle’. Dovers and Hussey (2013) believed that it would help the government to produce optimised policies by countering the chaos caused by the endless interaction between political, policy and administrative interests. Many policymakers and researchers believe this defined and linear process should be the one to follow (Dovers & Hussey 2013).

In contrast, Gregson et al. (2015) argued that closing off the political spaces and perpetuating knowledge hierarchies can lead policy-making becoming blinkered. Cairney (2016) pointed out that the policy cycle is a model that provides a misleadingly simple description of policy-making, which diverges greatly from more realistic accounts. Furthermore, the constant pursuit and privileging of research outputs to inform policy decisions can become the dominant policy narrative with an ‘exclusive network’ between researchers and policymakers. This situation would further facilitate the so-called ‘policy-based evidence-making’ (Porter 2010).

Incremental model

The incremental model of policy-making avoids many assumptions in the comprehensive-rational model because it admits that the time and other resources for policy-making is limited and it acknowledges less specification of policy goals (Doyle et al. 2015). As Dovers and Hussey (2013) described it, the incremental model may be “an accurate description of reality for much of the time” because it accepts the complexity of policy contexts and recognises the political nature of policy, but still does not abandon the pursuit of rigour and direction.

The relation between research evidence and policy decisions is usually developed within a web that connects not only scientific or social science knowledge, but also 94 interests, values, established positions within institutions, and personal ambitious (Jones et al. 2009). The final policy decisions are the result of interactions and contests between all the interests in the web. Compared with the policy-making circumstances that are assumed in the rational-comprehensive model, there is less chance for research evidence to influence policy-making in incremental model of policy-making. This is because the ‘habit and tradition’ that is embedded in the empiricism in most routine policy-making would reduce the demand for new knowledge from research (Porter 2010). Results of government-commissioned research or research providing information on specific election-related or policy platform problems, such as climate change or economic restructuring, are more likely to attract policymakers’ attention.

The ‘garbage can’ model

Ignoring evidence and solutions, the ‘garbage can’ model describes policy-making as a most untidy process (Cohen et al. 1972). At the extreme, it is ad hocery with short- term policy goals as a core value. Policy-making professionals view this extremely negatively and assert that such policy-making usually mixes ends with means, rather than following a series of rational and logical steps (Dovers & Hussey 2013).

In summary, there are some commonalities in the different models of research use and policy-making in the way that research is used. For instance, the rational- comprehensive policy-making model establishes the clearest rationale for the knowledge-driven and problem-solving research use model. The incremental model of policy-making underpins the sensibility of the way research evidence is used in the interactive model and in the enlightenment model. In a very negative way, the ‘garbage can’ model (so described by academics) of policy-making offers support for people seeking to understand the political and tactical ways of using research outputs.

These models cover appear to describe almost all the possible situations for evidence- based policy-making. Yet, the ideal model, that of comprehensive rationality is rarely mentioned in practice. The simple pictures of policy-making and its use of research provides some useful insights that help in understanding and improving research use in policy-making (Cairney 2016). However, when the assumptions of the models do not

95 correspond to reality, the limitations and barriers of research evidence influencing policy-making process are highlighted.

3.7.4 Barriers in evidence-based policy-making

According to advocates of evidence-based policy-making, these activities involve three entities: researchers as research suppliers, policymakers as research demanders, and interactions between these two sides (European Commission 2008). Discussions about addressing barriers in research evidence use and improving evidence-based policy- making are predominantly about the problems relating to these three entities. For example, poor supply of policy-relevant research; weak demand from policymakers for research evidence; and ineffective communications between the two groups because of the lack of understanding of policy processes and the political context (Cairney 2016; Nutley 2003; Porter 2010).

Supply

Barriers to the supply of research are usually: 1) that research outputs are poorly synthesised, 2) that the research is not flexible in the face of policy topic changes, and fundamentally, 3) that the research does not take into account the political context throughout the research (Porter 2010). The political context is important because the social and political processes constrain and determine how programs are designed, and affect who gains access to the program and who does not, and even what research outputs can be defined as ‘useful evidence’ for policy-making are all politically framed (Crewe & Young 2002).

Cairney (2016) synthesised the challenges for researchers to be objective when providing results. He stated that researchers face as many problems as policymakers do. Even though research may face fewer influences from political factors than policy- making does, research still faces the challenge to separate facts from values and interpretations, especially when the government puts the research out to contractors. Botterill and Hindmoor (2012) addressed the complex situations of policy issues challenging researchers’ objectivity. This is because sometimes the boundaries of disciplines are drifting because the policy problems cross the boundaries of many

96 disciplines; the variables in the research are ill-defined or research outputs are contested or patchy, especially for complex policy topics (Botterill & Hindmoor 2012; Palmer & Owens 2015). Under these circumstances, as Cairney (2016) pointed out, discussions of research outputs become ‘self-evident’ when presented to policymakers and there might be a risk that people can ‘use evidence to exercise power’.

Communications between suppliers and demanders

Despite the literature analysing supply-side problems, much of it provides strategies for the ‘marketing of supply’ and ‘communication skills’ (Lindén 2014). Considering the six basic models of research use described by Richardson (2013) that all have different assumptions, the major obstacle usually mentioned is that policymakers cannot ‘use’ research outputs appropriately in their policy-making because of interruptions from political changes that cannot be forecast (Richardson 2013). Therefore, some suggest that having a better understanding of the reality of policy-making, and reframing the communication based on a nuanced analysis of the political context, are both essential to improving evidence-based policy-making (European Commission 2008; Porter 2010). The explanation is that a lack of understanding by researchers of the nature of policy- making can mean policy recommendations are poorly framed and reflect researchers reliance on a simplistic and rational model of policy-making that is ‘far from reality’ (Porter 2010).

In addition to better contextual understanding and communication skills, ‘the way forward’ has been identified in the literature as the core spirit of ‘marketing of supply’ (Nutley et al. 2013). The detailed skills recommended to improve supply include providing accessible summaries of research; using policy language and styles to present the research outputs; using a combination of dissemination methods, such as the media, seminars or forums; and being active and informing relevant policy agencies (Bogenschneider & Corbett 2010; Nutley 2003). To improve ‘communication skills’, Lightowler and Knight (2013) emphasised the knowledge broker’s role. Knowledge brokerage is defined a more active approach that links policymakers and researchers, facilitates interactions between these groups and forges new collaborative partnerships in evidence-based policy-making (Lomas 2007). Hickey et al. 97

(2013) suggest that researchers and knowledge brokers should work together in improving the research uptake by policymakers.

Demand

Increasing research supply and bridging communication gaps between researchers and policymakers are both important factors that can improve evidence-based policy- making (Nutley 2003). Moreover, from the demand perspective, increasing the capabilities of policy-making would be likely to increase the adoption of research. To put it simply, increasing research supply cannot cause an increase in demand (Meagher et al. 2008; Newman et al. 2012).

Lack of ‘capacity to access, evaluate and use research’ can be explained by citing technical reasons, such as the different amounts of time needed for scientists to do research and for policymakers to make policy decisions; or the communication skills needed to explain research to policymakers (Newman et al. 2012). Researchers appear to ‘enjoy the privilege of time’, but policymakers are always needing to make decisions quickly; policymakers may not devote sufficient time and effort to understand research, or sometimes even neglect the ‘cumulative wisdom of scientists’ (Cairney 2016).

Newman et al. (2012) identified factors in policymakers’ demands of research included not only the ‘capacity to access, evaluate and use’ research but also the ‘motivation to do so’. Drawing on this statement, Cairney (2016) emphasised that what blocks this ‘motivation’ is the political environment. Policymakers have to face a variety of uncertainties, but the political considerations require them to make decisions quickly. Under such circumstances, policymakers’ cognition of ‘the nature and implications of evidence’ is different from researchers’ and sometimes appears quite limited (Cairney 2016). The paradox is that the breadth of policymakers’ concerns precludes or diminishes their ability to focus closely on one particular field.

Moreover, the ‘motivation’ to collect and adopt evidence actively is seen to be fundamental to increasing the demand for research (Newman et al. 2012; Porter 2010). Yet, Porter (2010) pointed out that even the donors who fund research do not necessarily read the reports, let alone think about the implications of the research; 98 therefore, he believes that not only is it important that effective communication is needed to get the messages through to the intended audiences is important, but also the motivated demand from policymakers is decisive.

3.8 Summary

This chapter provided a review of literature, including the rationalities of government intervention, concepts of ideologies, and their influences in policy-making. It reviewed policy drivers and impacts in the biofuel policy area to facilitate the empirical approach of this work. This chapter reviewed the key concepts in this research and identified the gap in literature. Thus, the contribution of practitioners’ (biofuel researchers and policymakers’) perspectives on evidence-based policy-making to the literature in this field, as would be provided by this research, is highlighted. The research design set out in the following chapter is a response to this point identified in the literature.

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Chapter 4 Methodology

4.1 Introduction

This chapter describes the development of the research design beginning with a conceptual framework that guided the methodological strategy. Identifying the concepts and hypothesising the interactions among them made it possible to set research questions with inherent logical links between each of them (Hall 2008; Shields & Rangarajan 2013). This chapter identifies the interpretive nature of the research questions and explains the validity of using surveys as a suitable way to collect data (Rowlands 2005).

A number of surveys were conducted during fieldwork, using semi-structured interviews and questionnaires. The data were collected from biofuel-related policymakers and researchers in Australia and in China for the two stages of comparative analysis employed in this research. One stage of the comparative analysis was between Australian biofuel policymakers and researchers, and the other was a national comparison between the Australian and Chinese respondents’ answers to the research questions. This chapter also discussed the validity of using purposive sampling and describes why sampling was discontinued because of data saturation.

Methods used to analyse the qualitative data from the interviews and the quantitative data from the questionnaires are described and the function of each type of data is also explained, based on the nature and design of the research questions. Given the relatively small sample size, and to produce more reliable and objective results, a triangulation method is used (Bryman 2008). In Chapter 6 (the discussion chapter), the findings from the fieldwork will be triangulated with data from relevant publications, government documents, biofuel research project reports and media articles. The research design of this thesis is shown in Figure 4.1.

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Figure 4.1 Research design

•Building the conceptual framework of this research •Identifying the research questions located in the conceptual framework Research •Selecting the suitable research methods based on the nature of the research methodology questions development

•Semi-structured interview surveys •Questionnaire surveys Data •Data collection from other sources to cross-check the data from surveys: collection publications, government documents, project reports, and media articles

•Method to analyse the interview surveys data •Method to analyse the questionnaire surveys data •Likert scale questions Data analysis •Ranking questions

4.2 Research design

The context in this research is contemporary biofuel policy-making; specifically, in relation to biofuel research in Australia and China. Policy development processes are barely documented, especially lacking is information on their drivers and other contributing factors. To date, there is a dearth of literature analysing the real biofuel policy drivers and exploring the extent of research evidence use in biofuel policy- making process in Australia and China. Therefore, the data used for this study have been, in the main, acquired by speaking to people who have been directly engaged in biofuel policy-making or in research. Semi-structured interviews were conducted with biofuel policymakers and researchers who subsequently completed survey questionnaires.

The semi-structured interviews were guided by a standard set of topics and questions (see Appendix 2). The discussion guide was tailored for interviewees’ with experience in biofuel policy-making and research but supplementary questions were also asked. This flexibility made the semi-structured interviews more informative (Bryman 2008).

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To guarantee the reliability of the interview data, the author has remained in touch with the respondents to ensure that interpretations of their responses reflect the meanings they intended.

The survey questionnaires were given to respondents and completed immediately after each interview. In this way, the opinions and information given at interviews were reinforced by the numbers gathered from the questionnaires. The data collected from the questionnaires were not intended for making predictions for the whole population but to present the distribution of respondents’ opinions that were given at the semi-structured interviews. Therefore, qualitative surveys were used and this choice also determined the use of a qualitative analysis method rather than a statistical one (Jansen 2010).

The survey data were also cross-checked against data from different sources to improve their reliability and validity and to avoid personal and methodological bias (Bryman 2008). Supplementary sources of data included academic papers, government documents, and project reports of ‘hero projects’. ‘Hero projects’ refers to research projects that were acknowledged by interviewees as having had obvious influences on policy. The rationale for analysing these ‘hero projects’ is that such analysis might help to understand how to improve the policy impacts of biofuel research.

4.3 Data collection

4.3.1 Ethical considerations

From outset of this project, ethical considerations were taken into account. The author requested approval of the project from the Human Research Ethics Advisory Panel of the UNSW, which involved presenting a detailed description of the purpose and objectives of the research, the discussion guide (Appendix 2), the questionnaire (Appendix 3), a consent form (Appendix 4) and a list of institutions from which potential interviewees would be drawn. The fieldwork in Australia was approved by the panel in December 2013 (Approval Number A-13-39) and later, in November 2014, a 12-month extension was granted for the fieldwork in China.

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The quality of this research is determined by the respondents’ honesty and sincerity and their willingness to provide sufficient information. The more ethically research is conducted, the more information respondents are willing to give. The key to making respondents feel secure and comfortable when responding to a survey is to guarantee the confidentiality of the information. The author rigorously defined the terms in the consent form to protect confidentiality and to guarantee the anonymity of all respondents. Before agreeing to participate in the research, all respondents were given a Participation Information Statement and Consent Form (in English and Chinese), a requirement of the Human Research Ethics Advisory Panel, and the respondents were asked to sign the consent form in duplicate.

Additionally, immediately before the interviews, the author asked permission to tape- record and take notes. The interview and survey questions were designed to ensure very little likelihood that confidential information would ever be disclosed that would potentially cause harm to their personal lives or professional careers.

The data were stored on the researcher’s computer and, to guarantee security, the password protected archive system in School of Physical, Environmental and Mathematical Sciences of the UNSW was used. Moreover, all data were anonymised by coding combined letters with numbers to represent each respondent.

4.3.2 Sampling for surveys

The contribution of the specific drivers to policy-making is often unclear, especially for ‘outsiders’ to the government (Brownson et al. 2006; Schut et al. 2013). To obtain a better understanding of the drivers of biofuel policies and policy-making, the most effective and direct way is to synthesise policymakers’ views. In addition, the pathways along which research outputs can have effects on policy-making are many and varied (Bogenschneider & Corbett 2010). To make some recommendations on how to improve evidence-based biofuel policy-making, opinions from researchers in this field are essential. Therefore, it was crucial for this research to choose ‘insiders’ in biofuel policy-making and research who had the necessary and relevant expertise and working

104 experience. The need for expertise means that the purposive sampling approach is an efficient and effective way to collect data for this research (Richards & Morse 2002).

Based on the research design, there are two sets of comparisons in this research. One comparison is of Australian policymakers and Australian researchers, and the other comparison is of Australian respondents and Chinese respondents. Therefore, the sampling should cover four groups of respondents: Australian biofuel policymakers, Australian biofuel researchers, Chinese biofuel policymakers and Chinese biofuel policy researchers.

The author used snowball sampling to let initial contacts nominate other potential respondents at the early stage of the fieldwork in Australia (Hay 2005). The information collected through the snowball sampling in the initial stage helped the author to develop an elementary understanding of this research field. After this, the acquisition of information accelerated. To keep control of the research, after 16 interviews and survey questionnaires had been completed in Australia, purposive sampling based on the biofuel-related scientific system in Australia was applied.

By aiming at specific biofuel policies and typical examples of government biofuel- research investment projects, the research findings were more focused. Using these selected policies and research projects as a starting point, the author traced the researchers who had conducted particular research projects, went to those government departments where a biofuel policy had been developed, and contacted the policymakers who had been in charge of or had been involved in the policy development. In this way, the author collected interview and survey data from 18 more respondents in Australia.

Finding the major government departments involved in biofuel policy-making and with biofuel research institutes in Australia was more like taking a census than sampling. This exercise opened the way to the collection of comprehensive information and facilitated the systematic synthesis the collected data. After 31 interviews in Australia on typical Australian biofuel policies and research projects, there was little new

105 information to be obtained; a sign of data saturation (Mackie 2015; Mason 2010). Therefore, the author stopped sampling in Australia after the 34th interview. The data collection in China followed the same pattern as in Australia and, thus, the author stopped sampling after 15 surveys, when diminishing returns of the results started to set in.

Table 4.1 summarises the biofuel policy-making government departments and the research institutes involved in biofuel research, and the number of respondents from each institute. Policymakers in Australia are mainly from three Australian federal government departments: the Department of the Environment, the Department of Agriculture and the Department of Industry. Eight out of 13 policymakers in Australia are branch heads or directors in specific branches or divisions of those departments. They are referred to in this research as the makers of biofuel policies. The other five policymakers were program managers or project managers in publicly funded research agencies or joint investment agencies. They are described in this study as the policymakers of biofuel research investment policies.

Among the 21 researchers in Australia, there were three professors and two lecturers from three universities; nine senior or experienced researchers from publicly funded research agencies or joint investment agencies; two researchers from authoritative consulting companies; and five researchers from the biofuel industry. Of the three Chinese policymakers, one was from a central government department and two were from national legislative agencies. Of the 12 Chinese researchers, eight were from publicly funded research agencies, three were university professors and there was one researcher from the energy industry.

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Table 4.1 Institutes and agencies in Australia and China and number of respondents

Institutes and agencies in Sample Sample Institutes and agencies in China Australia size size Development Centre for Australian Government Science and Technology, Department of the 3 1 Ministry of Agriculture of Environment People’s Republic of China The Environment and Biofuel-related Australian Government Resources Protection 4 1 policy-making Department of Agriculture Committee of the National institutes People's Congress The Legislative Affairs Australian Government 1 Committee of the National 1 Department of Industry People's Congress Biofuel Office, Government 1 of NSW The Commonwealth Institution of BioEnergy and Scientific and Industrial 4 Bioprocess of Technology, 2 Research Organisation Chinese Academy of Science (CSIRO) Institution of Policy and Australian Renewable 2 Management, Chinese 1 Energy Agency (ARENA) Academy of Science Australian Bureau of Agricultural and Resource Institute of Oceanology, 4 1 Economics and Sciences Chinese Academy of Science (ABARES) Institution of Crop Science of Productivity Commission 1 Chinese Academy of 1 Agricultural Science Grains R&D Corporation Chinese Academy of 1 1 Biofuel-related (GRDC) Agricultural Engineering research Energy Research Institute of Rural Industries R&D agencies 1 National Development and 1 Corporation (RIRDC) Reform Commission Energy Economy and Strategy University of New South Research Institute of National 2 1 Wales, Canberra Development and Reform Commission University of New South 2 China Agricultural University 1 Wales ACIL ALLEN Consulting 2 Renmin University of China 1 Bioenergy Australia 1 Ocean University of China 1 Microbiogen Pty Ltd 1 State Grid Corporation of China 1 Qantas 1 Licella Pty Ltd 1 University of Melbourne 1 Muradel Pty Ltd 1 In total 34 15

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The author used codes to represent each respondent to ensure their anonymity and to keep track of the sources of the findings from the surveys. The profiles of the respondents in Australia and China and their identifying codes are presented in Table 4.2.

Table 4.2 Profiles of respondents in Australia and China and their identifying codes

Respondents from Australia Respondents from China

Groups Institutes codes Groups Institutes codes Au01 Ch01 Au05 Ch02 Au06 Ch03 Publicly funded Au12 Publicly funded Ch04 research agency research agency Au14 Ch06

Au18 Ch07 Researcher Au25 Ch10 Joint investment Au19 Ch12 agencies Au32 Ch08 Au03 University Ch09 Researcher Au04 Ch11 University Au08 Energy industry Ch13 Au09 Au31 Au20 Consulting company Au22 Au13 Au28 Biofuel industry Au29 Au30 Au33 Au02 Government department Ch05 Au10 Policymaker Au11 National legislative Ch14 Au16 institution Ch15 Government department Au17 Au21 Policymaker Au23 Au24 Au26 Joint investment Au27 agencies Au34 Publicly funded Au07 research agency Au15

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When collecting data, the author herself proposed to hold interviews with the respondents and to administer questionnaires. In both countries, the response rates for the requests for interviews were relatively high. In Australia, 34 of 36 respondents agreed to be interviewed and to and complete the questionnaires. In China, all 15 respondents agreed to complete questionnaires, and ten of them took part in an interview. The high response rate and cooperation from the interviewees could be explained by their great interest and the value of this research topic. The time given to the interviews ranged from 30 minutes to two hours. Four interviews in Australia were over the phone, the others were face-to-face.

4.3.3 Semi-structured interview surveys

Semi-structured interviews were used in this research. This style of interview allows questions to be included in a conversation in a more flexible way compared with structured interviews in which questions have a fixed sequence and content (Mason 2004). This method proved ideal for interviewing policymakers and researchers who preferred to respond to questions in a discursive narrative manner (Nevill 2007).

The interviews started with the first prepared question in the discussion guide (Appendix 2). During interviews, the author asked follow-up questions according to the interviewees’ responses. When new issues or the need of clarification arose, the sequence of the questions was changed. However, the author always attempted to use the discussion guide as a checklist and to get answers to as many research questions as possible during the semi-structured interviews. By conducting semi-structured interviews, the author avoided imposing predetermined ideas onto research findings and remained open, as far as possible, to unexpected information provided by respondents (Kitchin & Tate 2000).

The interviews went through three phases, which roughly corresponded to the grouping of questions on the discussion guide (Appendix 2). The interviews started by asking about the interviewees’ working experiences with biofuels, either with policy- making or with biofuel research projects. Asking the interviewees to recall what

109 changes they had noticed in relation to biofuel policies and their government’s biofuel research investment policies, enabled the author to identify the drivers that underpinned the policy changes. After the drivers were identified, the second phase of the interview focused on the gaps and matches between the policymakers’ knowledge and expectations, and research outputs. Questions about gaps and matches were premised on the initial hypotheses related to the research–policy interface in the conceptual framework. The author attempted to find the gaps between policymakers’ knowledge requirements and the kind of information researchers can provide. It was hoped that by identifying the ‘gaps’ that the ’drivers’ of the government’s biofuel research investment decisions would be revealed. The 3rd phase of the interviews was about the impacts of the government’s research investment activities. In this phase, the author tried to test the hypotheses in the conceptual framework by asking policymakers and researchers:

• What factors are involved in biofuel policy-making?

• Do policymakers use research outputs in their policy-making?

• Do they use research outputs in an instrumental way or conceptual way?

• How do research outputs impact biofuel policy-making?

The responses at the first phase of the interview provided information about the interviewee’s expertise and experience in this field. This information could direct the following parts of the interview: for example, whether to discuss one specific aspect of biofuel policy or to talk more generally about the energy policy situation, or to probe for more details about one specific biofuel project, or to talk more generally about the government’s biofuel research investment situation.

The interviews were held in two languages, English and Chinese. The author is a native Chinese speaker and a proficient English speaker. Chinese responses were cross- checked against the English responses to ensure that all respondents had the same understanding of questions. This method was used to increase the reliability of the interpretations of the data collected at the interviews.

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4.3.4 Questionnaire surveys

Interviewees’ opinions were elicited from their written responses to the questions. The diversity of their views made syntheses and comparative analysis difficult. To support the comparative analysis with precise numerical data whenever possible, the author constructed the questionnaire based on the discussion guide for the semi-structured interview and, whenever possible, administered the survey questionnaire right after the interview. In contrast to the open-ended questions used in the discussion, the questionnaire was designed to gather information from the answers to fixed-choice questions, which could indicate the interviewees’ opinions with more precision. Additionally, by administering the questionnaire survey straight after the interviews, the author was more confident that the definitions of the terms mentioned in the interviews were the same as those summarised from the literature reviews.

Sometimes, a researcher might inadvertently shape the interviewees’ responses during the interviews (Silverman 2006). Comparing the qualitative data from the oral and written responses with the quantitative data from the questionnaires made it possible to check the consistency of the responses for both data collection instruments. In this way, potential misunderstandings are avoided, thus increasing the confidence in the author’s interpretation of the data.

Most of the surveys were completed in the presence of the author after the face-to- face interviews. In several cases, interviews were conducted by telephone, and the questionnaires were returned by email. Only four interviewees in Australia did not complete the survey questionnaires. Of these, two declined to complete the questionnaire because they believed it would be improper to comment on policies given their current role in policy-making; one interviewee did not complete questionnaire because her expertise was related to policy-making in general, rather than to biofuels; and one interviewee did not return the questionnaire via email despite several requests. In contrast, all the Chinese interviewees completed their questionnaires directly after the interviews.

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The questionnaire was in two languages, English and Chinese (Appendix 3), and designed to be convenient in the field. There were two types of questions in the questionnaire: one type involved a rating on a five-point Likert scale; the other comprised questions whose answers involved ranking of propositions. The first type of question was intended to show the respondents’ degree of agreement with statements along a continuum that ranged from ‘strongly disagree’ to ‘strongly agree’. The second type of questions was intended to find the top five important elements among all those listed in the questions.

4.4 Data analysis

Data analysis is a process of interpreting research findings, with the intention of answering the research questions and also of testing the hypotheses stated in the conceptual framework. The author synthesised the interviews and data from the questionnaires, compared it with relevant publications, government documents and project reports dealing with biofuel, to improve the reliability and the validity of the results. Data from multiple sources can be cross-checked. Synthesising multi-sourced data can enable the researcher to form a more objective interpretation of the research findings (Bryman 2008).

Coding and synthesising were used to analyse the qualitative data from the semi- structured interviews. This involved separating the data into manageable units and then a process of reconstruction based on the inherent logical links between the units (Bogdan & Biklen 2003). To analyse the quantitative data from the questionnaires, the author summarised the responses to the Likert-scale questions and to the rank-order questions and usually represented the distributions of the answers to each question in column charts or scatter charts. The quantitative data extracted from the questionnaires are to support and to show a clearer orientation of the qualitative data from the interviews.

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4.4.1 Approach for interview data analysis

The 34 interviews recorded in Australia and the ten interviews recorded in China were transcribed with the assistance of playback software called InqScribe. Each transcript document was labelled with the name of the interviewee and the institute they were attached to. The transcripts were converted to Microsoft Word documents, which are laid out in three columns (from left to right in Figure 4.2) that record the time their key statements were made; the name of the speaker (which is covered with mosaic pieces in the thesis to ensure the anonymity of interviewees); and the transcription.

Figure 4.2 An excerpt of a transcript in a Word document

There are three rounds of coding. The first round of coding was by the author using the comments function in Microsoft Word documents. For each paragraph, the author made comments to summarise the content of this part of the transcript. These comments were given Level-3 codes representing the most basic coding (see Figure 4.3).

Figure 4.3 An excerpt of ‘Level-3’ coding in the coding system

The author collected and explored the Level-3 themes over the course of the coding process. Sometimes this required multiple readings and researching follow-up materials. After analysing all the transcripts, the author created a second set of

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Microsoft Word documents for each of the Level-3 coding themes and pasted the matching transcript text with the comments attached to the relevant documents. The new Word documents synthesised the Level-3 coding results and the themes were named accordingly. The Level-3 themes provided the most detailed summaries of the interview contents because the author tried to include all the available data. Therefore, the Level-3 coding results appeared at first to be scattered and trivial.

To obtain a clearer pattern from the interview data, the author undertook a second round of coding. In this round, the Level-3 themes were grouped into more general categories and gathered into one Microsoft folder. This process generated the Level-2 coding themes shown in the format of the folders’ names.

To synthesise these categories to the same degree of generalisation as the research questions that were set in the conceptual framework for this research, the author completed a third round of coding which generated Level-1 themes. The second round folders and the first round Word documents were then grouped into parent directory folders, which were labelled with names of the Level-1 themes. The Level-1 themes were later used to structure the Result Chapter (see Figure 4.4).

Figure 4.4 An excerpt with an overview of the coding system

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4.4.2 Approach for the questionnaire data analysis

The intention in collecting data from these questionnaires was not to predict a population variable to show the frequencies or the means of variables from the whole policy and research field. Rather, it was a purposive census to reflect the proportions of different opinions within the specific group of experts who participated in the semi- structured interviews for this research (Jansen 2010). Therefore, considering the complete sample and the quantitative data’s function, it was not appropriate to analyse the date from questionnaires using inferential statistics.

Analysis of the Likert scale data

The Likert-scale questions (L1 to L30 in the questionnaire) asked for one of five responses to statements, namely, ‘strongly agree’, ‘agree’, ‘neutral’, ‘disagree’ or ‘strongly disagree’. The author’s intention was to make two types of comparisons using the data from the Likert-scale questions. One type involved comparing the distribution between Australian policymakers and Australian researchers of the responses to each statement in relation to the Likert-scale questions. The other type was an overall comparison of the distribution of responses of the Australian versus the Chinese participants.

The author summarised the data to show the counts of each statement in the Likert- scale questions using contingency tables. In each type of comparison, there are two groups of respondents providing their responses to five statement types. This creates a 5 by 2 contingency table for each question. The contingency table in response to L1 is shown in Table 4.3 as an example.

Table 4.3 A 5×2 contingency table for L1 in the questionnaire survey

Strongly Strongly Agree Neutral Disagree Total agree disagree Australian policymakers 13 3 2 0 0 18 Australian researchers 6 2 1 1 0 10 Total 19 5 3 1 0 28

Note: L1: Australia needs to use more renewable energy to reduce fossil fuel consumption.

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Fisher’s Exact Test can be used to determine whether there are significant differences between the responses from two groups of people, when sample sizes are small (Wu & Pan 2014). For Fisher’s Exact Test to be valid, SPSS requires that no more than two cells in the contingency table should contain counts of less than five. Otherwise, the P value in the test would far exceed 0.05, which means that the sample size is too small for Fisher’s Exact Test to show significant differences (Wu & Pan 2014). To meet this requirement there needs to be at least 15 respondents in each group. Shown in Table 4.4, the sample size in this research could not satisfy this requirement. This obliterated the power and the validity of using Fisher’s Exact Test to test for significant differences in the comparisons. Therefore, a simple numerical calculation to show the proportions of different views among the interviewees was applied.

Table 4.4 Sample size summary

policymakers researchers total Australia 13 21 34 China 3 12 15

In the simple calculation, the raw counts of each statement type from each group of respondents (that is, Australian policymakers and Australian researchers; and Australian respondents in total and Chinese respondents in total) were divided by the total number of respondents from that group. This made it possible to convert all the data into percentages, and thus to obtain a proportional comparison. However, the drawback of this method is that the significant differences could not be shown statistically. Nevertheless, the analysis of data from the interviews could compensate and assist in explaining the comparison in more detail. The result of the Likert-scale question L1 is shown in Figure 4.5 as an example.

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Figure 4.5 Example of bar charts to show Likert scale questions’ results

100% 80% 13 Australian researchers % (n=18) 6 60% Australian policymakers % (n=10) 40% 3 2 20% 2 1 1 0 0 0 0% Strongly agree Agree Neutral Disagree Strongly disagree L1. Australia needs to use more renewable energy to reduce fossil fuel consumption.

Analysis of the ranking data

The purpose of the survey questions that required ranking (R1, R4, R5, R6, and R10 in the questionnaire) was to identify what the respondents considered to be the five most important factors in the questions. The elements for ranking were either listed in the questionnaire or provided by the respondents. There were two types of comparisons. One was a comparison of the responses provided by Australian policymakers and Australian researchers and the other was a comparison of those provided by Australian respondents and Chinese respondents.

These comparisons were to identify obvious differences between different groups of respondents’ choices of key factors. Because the sample size was small, it was not possible to do Fisher’s Exact Test for the significant differences between different groups of respondents’ rankings. Therefore, the author adopted a semi-quantitative method to analyse the ranking data from the questionnaire surveys.

One part of this method included identifying those factors in the ranking questions that were consistently ranked with relatively high priorities. This group of factors was named as a ‘consistently highly ranked’ group. There were two dimensions of information covered in the ‘consistently highly ranked’ group. One dimension was the ‘priorities’ assigned to the factors, ranked from No. 1 to No. 5. To quantify the ‘priorities’, the author assigned five points to the ‘No. 1 ranking’ result, four points to

117 the ‘No. 2 ranking’ result, and so on. The other dimension of information relating to the ‘consistently highly ranked’ group covered the ‘frequency’ with which each factor was ranked at each level of priorities. To calculate the ‘frequencies’, in each group of respondents, the author divided the number of mentioned times of each factor was ranked at each level by the total respondent number in that group (for example, Australian policymakers, Australian researchers, Chinese respondents and Australian respondents). By multiplying the ‘priorities’ by the ‘frequencies’, the author was able to derive a relative value for each factor in the ‘consistently highly ranked’ group.

To place more emphasis on the elements that were ranked as being of primary importance (that is, No. 1 rankings), the other step in this approach involved identifying those elements with the highest frequency of being ranked as No. 1 important factors, and this group was called the ‘frequently ranked highest’ group. To identify the top five factors in the ‘frequently ranked highest’ group, the author calculated the percentages of the No. 1 ranking response to each element by dividing the number of times that each factor was ranked as a No. 1 important factor by the total number of that group of respondents.

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Figure 4.6 Example chart of the results obtained from ranking questions in relation to Q1: What are the important drivers of biofuel policy in Australia? 8 100% 7 80% Bar 60% Symbol 6 40% 5 20% 4 0% 3 -20% -40% 2 -60% 1 -80% 0 -100%

The approach for analysing ranking questions in this research is exemplified in Figure 4.6 by the use of the ranking result for ranking question Q1 in the questionnaire. In Figure 4.6, the left-hand vertical axis (Y axis) with numbers ranged from 0 to 5 represents scores of the ‘consistently highly ranked’ factors. The solid columns represent scores of the top five ‘consistently highly ranked’ factors in the responses of the Australian researchers; and the checked columns represent those in the responses of Australian policymakers. The main limitation of this method was that the assignment of values to the ordinal ranking data was not a strictly statistical way of transferring ordinal data to nominal data. However, it was effective for the purpose of identifying which elements were ranked as the top five in the ‘consistently highly ranked’ group in this research.

In Figure 4.6, the right-hand axis (secondary Y axis) represents the percentages of top five ‘frequently ranked highest’ factors. The solid-coloured diamonds represent the top five ranking results of ‘frequently ranked highest’ factors in Australian researchers’

119 responses; and the checked squares represent those in the Australian policymakers’ responses.

4.5 Summary

This study used a conceptual framework that incorporates a hypothetical biofuel policy–research interaction model. The research design that was developed was based on the conceptual framework. Qualitative and quantitative methods were employed for data collection, with semi-structured interviews the primary collection method. To endeavour to ensure the consistency of the qualitative data from the interviews, questionnaires with matched fixed-choice questions were also used. A further measure to ensure the reliability of the interview and survey data was to garner data from journals and academic publications, government documents and biofuel research project reports, which were also used to triangulate, understand and contextualise the research.

Furthermore, incorporating two stages of comparison between Australian policymakers and Australian researchers and between respondents from Australia and China provides a better understanding of the drivers of biofuel policies and, specifically, of biofuel research investment policies. The similarities and differences shown from the comparative analysis make it possible to explain the results of the impact- assessment of biofuel research investments on biofuel policy-making. Thus, the research was designed with the intention that differences in the views of policymakers and researchers would reveal the gaps between biofuel research and the policy world; the national comparison of Australia with China would provide this project with a wider range of information to understand research–policy interaction in the biofuel field.

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Chapter 5 Results

5.1 Introduction

This chapter presents the findings from semi-structured interviews with policymakers and researchers, from questionnaire surveys, and from government documents related to biofuel, and from and research reports identified by the interviewers in Australia and China. A major proportion of this chapter is taken up with findings from Australia and is critically presented by comparing the responses provided by policymakers with those of researcher respondents.

There are four sections in this chapter. In the first section, the rationale for governments to intervene in biofuel development is explored, which lays the foundation for the identification of biofuel policy drivers in the second section because interviewees’ opinions on the rationality of government intervention in biofuel influences and helps decide their views on what factors drive biofuel policies. The third section describes the biofuel policy- making processes, which provides the institutional basis for the core fourth section on evidence-based policy-making in the biofuel field.

In each section, comparisons are made between responses from the Australian interviewers and the Chinese interviewers to seek the answers for research questions from a cultural and institutional structure angle. The aim of these comparative analyses is at providing recommendations for improving evidence-based policy-making in the biofuel field in Australia.

5.2 Rationality of government intervention in biofuel development

Differences of opinions on the rationality of government intervention were reviewed in Chapter 3. Similar to the literature, the findings from the results showed that there was a wide divergence of opinion on whether it is rational for the government to intervene in the biofuel industry. Figure 5.1 shows a very clear and obvious difference between Australian policymakers and researchers. About 60 per cent of policymakers (n=10) thought the government should not intervene in the biofuel industry; about 78 per cent of researchers (n=18) were of the opposite opinion. 121

Figure 5.1 Responses to Likert Scale Statement L4: The Australian Government should not intervene in biofuel development.

100% researchers % (n=18) 80% policymakers % (n=10) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree

L4

In the interviews, some respondents talked generally of government intervention in all kinds of industries, while some respondents explained the specific situations for biofuel industry. It is useful to firstly summarize the respondents’ arguments used to support or oppose government’s intervention in the biofuel industry and then describe the circumstances under which the respondents thought it was rational for the government to intervene in the economy.

5.2.1 Arguments given by respondents against to intervention

Policymakers’ responses (Au15, Au16 and Au21) exposed a deeply held belief in free-market policies of government and they also stated that the government’s preference is to stay out of the market and to let the industry develop itself. These positions were also acknowledged by the researchers (Au05, Au13 and Au14) who thought that the belief in the free-market could be understood as the reason most of the policymakers believed that the government should not intervene in the biofuel industry and should allow the market to function. Typical and highlighted opinions from policymakers are summarised in this section. A senior policy advisor spoke frankly:

In the past, Australia has been desperate to create new industries, [and provided] subsidies, but doesn't do [this] much now. It generally focuses on things like research, or maybe some infrastructure, things that have to be a direct public benefit beyond the private producer, so government doesn't want to give incentive to selling stuff. It doesn't want to be subsidising fuel production. It doesn't want to be involved with fuel production. It says, ‘that is something that the market does, [therefore] we (the government) don't do it’. So this is not restricted to biofuels, but [also] we don't want to

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own the airlines, we don't want to own banks…Essentially we (Australia) have moved much much more to [ensure] the role of the government is not being an owner or being a businessman that is in competition with a private sector. So that is the situation. (Au16)

Reflecting their deep and clearly stated belief in the free market, some respondents (Au14, Au16 and Au21) explained that to them one important function of the market was to make the resource allocation more efficient by using the price mechanism.

Well, I mean that (resource allocation) is sort of the role of markets. I mean it tends to, markets tend to have a good role in terms of efficient allocation of resources, that will give you the best value. And we have these opportunities where there is say huge profits to be made, you will get innovation and it comes in, to actually go for that profit. And so, you know, that is what encourages innovation. People see the opportunities and go for it. (Au21)

In the market, high price and the switching cost are important elements because the price is in competition with the next best available option. One economist (Au18) stated that the price differences between different types of fuels are crucial for the development of biofuel industry. One researcher (Au14) from ABARES pointed to the fact that biofuel’s price is not competitive, even compared with other renewables, such as solar and wind, let alone its ability to compete with the fossil fuels, which have obvious price superiority in the energy market.

Policymakers Au16 and Au21 explained the logic behind the Australian government’s indifferent attitude to the biofuel industry; that it is an extension of its reliance on the price mechanism. Policymaker Au16 stated that Australia has vast quantities of potential fuel sources. “In Australia, we are opening coal and gas production, which brings non-oil sources of energy, so Australia is not fuel limited”, he said. “The global oil market is a very deep and mature market”, claimed Policymaker Au16. Both believed that the supply of oil is not a problem for Australia. Therefore, price is the key to biofuel industry expansion and they believed that if the price is not competitive, then government intervention could only cause market inefficiency.

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So if the price is right, changes can occur, but the governments are generally not intervening for that to occur, so they are saying ‘if the price is right, go for it’, but because it is not right, it (biofuel production) is a waste of feedstocks. (Au16)

The price disadvantage of biofuel not only leads to less investment in this industry, but also leads to a smaller scale of investment in its research, given the comparative disadvantage it has relative to all the other renewables. Researcher Au05 stated that the biggest source of research funding from government for bioenergy and biofuels is ARENA, which aims at facilitating renewable energy more broadly. He believed that ARENA would invest more strongly in solar and wind than in biofuel, because the biofuel industry takes a relatively small proportion of the renewable market. He explained:

My judgement would be that biofuel is not a high priority for them (ARENA) as an investment. … You may be aware there is a thing called “Clean Investment Fund”, and that is for things that are more for getting big projects that are moving towards commercial scales. … It (ARENA) is potentially a significantly funder but I think the case (for biofuel) still needs to be well made to get ARENA to invest to a significant scale. (Au05)

Some policymakers (Au16 and Au17) mentioned that the Australian Government used to give subsidies to farmers but, since the late 1990s, the government has stopped or reduced direct subsidies to the agricultural industry. Also, the government holds a neutral view on whether farmers grow their feedstock for biofuel or for other markets. This policy setting allowed the government to treat differently to those industries that produce additional public goods that benefit the whole society. Policymakers (Au15, Au16, Au17 and Au21) said they believed that for public goods, the government’s additional responsibility is to protect and support their delivery to the community; but for private goods, the market should function efficiently without government interference. One senior policymaker (Au16) commented that biofuel was still a private good, so there was no rationale for government to intervene in its production or sale. He said:

The other thing about biofuel is we (Australia) might give money to people within Australia for producing public goods or non-profit things, but biofuel doesn't fit that category as something that we need as a country, it is not a public good, it is still a

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private good, so we say, ‘look, grow it if you like’, so that is why it is very much the case of a farmer wanting to switch to biofuels and there being enough incentive for him to do so from the market. Now I probably would emphasise that the market and farmer decision–making is essentially independent from the government. That is the system we use here. (Au16)

Besides the deep belief in the free market shown by respondents, the limited budget available, constrained by a lack of government revenue, is another reason for the Australian Government’s reluctance to subsidise industries. Policymaker Au16 said it was risky to “pick winners” among all the sectors considering the relatively limited revenue which is supposed to take care of all the communities’ needs. Choosing the incorrect industry to subsidise would be seen as the government’s inappropriate allocation of its revenue. One policymaker (Au21) from the Department of Industry emphasised that the tax revenue is limited in Australia. He said:

There is a little bit of it (the government’s subsidy to industries), but it tends to be time limited, it tends to be available to the industry to be set-up or developed to the right standard, but really, it is like, and this is probably more a personal observation than a policy observation, it is a small country that has a smaller tax payer base, and still has to fund all of the things that the communities expect, so picking an industry means that if you pick the wrong one, you waste quite a lot of money. (Au21)

Moreover, for liquid fossil fuels, with a relatively high excise of 38 cents per litre compared with other commodities, the government could lose substantial revenue by choosing an incorrect biofuel policy. As one researcher (Au03) stated, the tax excise exemption policy cost the government a lot of money because the excise foregone by a biofuel policy could have contributed to the government’s revenue income. Researcher Au14 also agreed. She said:

Yes, it (the government’s subsidy to biofuel) is just a tax exemption, but like other countries, we tax liquid fuel very very heavily, the federal one is 38 cents a litre, in that order, so that subsidy is a big deal, so it (biofuel) costs the government a lot of money. (Au14)

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There was discussion on the theme that the biofuel industry was an infant industry that would deliver long-term benefits to society, the economy and the environment. In addition, as an infant industry, it was hard to compete with the very mature fossil fuel industry in the market. In the light of those observations, some respondents (Au02, Au05 and Au34) believed that the biofuel industry should get support from the government. In contrast, there were some people who opposed these arguments for government’ subsidies to infant industries. A senior policymaker (Au15) and an economist (Au18) articulated concerns that once the subsidy started, it would be hard for the government to remove it and let the industry develop by itself and they saw this as the key point of subsidies. The economist Au18 explained:

When you support an industry, its costs structure changes to reflect that support, and [when] you try to take that support away, they go, “but we won't survive”, because its cost structures developed around that subsidy rather than standing on their own two feet. And it turns out that once you start to subsidise some industry, removing the subsidy is very hard. So when you take a dynamic, a longer term perspective, there are no sound reasons to provide infant industries with support. (Au18)

While he held that broad view, he also said it was economically rational for the government to subsidise industries by funding Research and Development and demonstration activities, and he also believed that the principle for a government’s subsidisation should be to support one industry’s comparative advantages, which will be explained in the next section.

To explain the justification for governments investing in research on the industries with comparative advantages, respondent Au18 explained that Carbon Capture Storage (CCS) should receive research investment but biofuel should not. This view is paraphrased below:

The comparative advantage comes from technology or from certain accessible natural resources that shape the structure of one nation’s economy. It is quite sensible to do research investment according to the comparative advantage one economy holds, because this is a way to build on the natural structure of one economy. Australia has very low cost of coal reserves and its comparative advantage is in energy intensive

productivities. Carbon Capture Storage (CCS) is the process that can capture CO2, produced from fossil fuel, in order to reduce carbon emissions into the atmosphere.

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According to Australia’s comparative advantage in fossil fuel, and its fossil fuel dependency is a fact, CCS should be an appropriate response to climate change for Australia and it is worth investing in. This is an example of trying to focus on one economy’s comparative advantage. (Au18)

His view on biofuel was to discourage research investment, because biofuel does not possess the comparative national advantage relative to other renewable energies or to climate change mitigation. He said:

That (subsidising CCS rather than biofuel) is an example of trying to focus on the comparative advantage. … So that (CCS) it is easy to tell the story. Can we tell a story about ethanol as a comparative advantage? No. (Au18)

Opposing a total reliance on the functioning of the free market, policymakers (Au02, Au10 and Au34) and researchers (Au03, Au05, Au06 and Au28) argued that there were situations where it was necessary and desirable for the government to give the biofuel industry support.

5.2.2 Arguments given by respondents to support government intervention

Many respondents (Au02, Au03, Au05, Au06, Au10, Au28 and Au34) agreed that government intervention is justifiable when there is a market failure. Corresponding to the literature (Chapter 3), they believed that a market fails when it is unable to deliver fair resource allocations and benefits for the public. Compared with fossil fuel, as policymaker Au02 stated, biofuel can provide some additional benefits for energy security and for the environment, which are desirable public benefits that have not been provided by the free market. He said:

A free market is not necessary to deliver a good outcome for the environment. The subsidies might be welcomed in these circumstances where getting new feedstock, such as sugarcane, into a production system will create ethanol and it is to be blended into a fuel. [It] might be worth it. (Au02)

Therefore, to achieve better environmental outcomes, there is an argument for the government to support the biofuel industry.

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As respondents Au02, Au05 and Au34 stated, the biofuel industry deserves a subsidy because it carries additional new technology and economic opportunities and could provide sustainable and healthy public benefits. However, without intervention, the free market’s price mechanism does not provide an overall environment conducive to a new industry.

Yes, we did this analysis [whether it is rational to develop biofuel industry] a number of years ago. I got really mad about that, because everyone knows that new technologies and new industries need support until there is enough of a scale to actually make it viable. (Au34)

Well if you want to establish the industry in competition with cheap petroleum, then you have to [provide a subsidy]. Well, you are trying to build it up, [and] give it some price advantage, because you can't compete with the stuff just pumped from the ground and put through a refinery. (Au10)

There was no doubt in Au34’s responses that second and third generation biofuel qualified to be treated as a new technology in a new industry, and this idea was supported by other respondents. On whether the government should give financial and technological subsidies to the next generation of biofuels, the survey results showed a very clear agreement of opinion (see Figure 5.2). Most of the policymakers (circa 77 per cent) and researchers (circa 61 per cent) chose “strongly agree” and “agree” to giving more government financial and technological support for the next generation biofuel industry. Moreover, there were more positive statements from Au02, Au09, Au21 and Au28 on government’ support for the biofuel industry.

Figure 5.2 Responses to Likert Scale Statement L7: 2nd and 3rd generation biofuel should get more support (economically and technically) from government.

100% researchers % (n=18) 80% policymakers % (n=9) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L7

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However, some (Au09 and Au21) expressed concerns about when subsidies should be provided. Subsidies in early stages of development received some clear support.

I think the argument was that you (Government) support the industry for a period of time, but then over time you expose them to greater competition from overseas and from other fuels, and so therefore they have to get more efficient about what they do. And that is a general policy principle around these kinds of (subsidies), when you trying to build up the industry, you want to support it for a reasonable amount of time, but phase out that support over time, so that was a sensible measure. (Au09)

Fossil fuels are the current incumbent fuel but biofuels are an alternative fuel in the market. Therefore, as one senior policymaker (Au02) stated, it is reasonable to compare heavily subsidised fossil fuels and biofuels. He said:

I think that subsidies have a role to play. There is a more complicated issue in Australia that is about needing to understand all the subsidies that the government provided on sector-by-sector basis. … So, the reason for mentioning that is, that the relative ranking for who should get a subsidy needs to be probably sorted out more systematically. Before, one would be able to determine where the measures of subsidies for biofuel would be made. But putting that complication aside, within the suite of renewable energy initiatives, it seems to me that biofuels are deserving subsidies to help them to develop, to get launched as an option.” (Au02)

In line with that opinion, researchers Au06 and Au34 also emphasised that the biofuel industry should receive a greater subsidy from the government in the light of the massive subsidies that the fossil fuel industries enjoy, and claimed that the government should deal with this more fairly during policy deliberations:

Yes, there was a complaint that we (Australian Government) want to subsidise it (biofuel), it (Australian Government) has to. You know, on the other side, we actually looked at the amount of subsidies that the fossil fuel industry got, and that was absolutely massive, and it just seems like completely a fallacious argument, that you could argue that, “Well, we can't support this new industry, there will be all this environmental benefits but we are happy to subsidize the fossil fuel industry, even

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though it is not paying for any of its environmental damage”, but it (Australian Government) is still doing [it]. (Au34)

The Australian fuel market is not a level playing field for biofuels, researcher Au06 mentioned. She said that the biofuel industry is subject to additional standards that add costs and uncertainties. For instance, compared with fossil fuel industries, biofuel industries have to comply with an ISO (International Organization for Standardization) sustainability standard that was set in 2011 as a condition by the government to keep the preferential biofuel policy in place. Compared with the fossil fuel industry’s easy government facilitated access to exploring the resources under the ground and taking no responsibility for the consequences of the mined product, this additional sustainability requirement imposed an extra burden on the biofuel industry’s development. Researcher Au06 complained strongly that the fossil fuel industry enjoyed generous conditions: “not just that it receives subsidies in terms of a financial annual subsidy in dollar terms, but enjoys avoiding the informal ‘licence to pollute’ and avoids future responsibilities for the consequences”. She was very critical of the unfair policy settings:

Energy is highly profitable and highly subsidised, even now, and a new emerging industry not only has to struggle for just receiving a tax relief, as the industry would like to call it, rather than an actual subsidy. It is hard to see that there is a level playing field. If any country was serious about getting a new industry up, then to expect it to compete against two incumbents with addition of the hugely higher bar about proving its sustainability credentials, which is a real burden of proof cost to one industry, and then expect it to not require any tax relief after an initial 10-year-period. I think it is very unrealistic. (Au06)

The need to create “a more level playing field”, was identified by respondent Au05, “if Australia desires to have a more sustainable and healthy new emerging industry, creating a more level playing field would be a pretty good start [considering the massive subsidy the fossil fuel industry gets].”

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5.2.3 Rational circumstances given by respondents for government intervention

Three policymakers (Au16, Au17 and Au21) and one researcher (Au18) provided clearly rational narratives for the government to give subsidies to the industry when the public benefits in social and environmental aspects could not be delivered by the free market.

When respondents talked about the public benefits, it was clear they saw it as rational for the government to provide structural adjustment to compensate for changes in the livelihoods of whole communities’, as explained by policymaker Au16.

There is often intervention to assist structural adjustment, because it (structural adjustment) is often associated with managing the impact on people who must exit the industry. … [For example], “we are going to put that area into a national park”, [so] we will give you the structural adjustment money to compensate you for the fact that you have been directly impacted or we need to give you support to get another job, and we might say, “look, we may throw some money to the tourist industry, because that might be your future employment”. It really is about adjusting the structure, it is a compensation subsidy as a result of the government decisions. (Au16)

In contrast to the market’s role in allocating scarce resources efficiently and having the price mechanism to encourage investment, the government has its own role to play when considering the equity of society. Some policymakers (Au16, Au17 and Au21) stated that the government should always direct effort into services to the community, such as health, education and the environment. Therefore, it is accepted that governments should intervene to protect public assets when negative externalities occur. The approaches could be through intervention in supply, demand or manipulating the price mechanism or by regulation. Respondent Au16 provided examples:

If … someone wants to produce a lot of pollution, it (the government) would say “well I'd give you incentives not to do it”, or we (the government) put regulations and say “well, you can't do it, because you impact on others”. (Au16)

5.2.4 Comparing Australia and China: whether the government should intervene in the biofuel industry

On the debate to what extent the government should let the biofuel industry market function without intervention, most Australian respondents (circa 62 per cent) and Chinese 131 respondents (circa 61 per cent) believed that the government should intervene; only 28 per cent of Australian respondents and 15 per cent of Chinese respondents disagreed (Figure 5.3).

Figure 5.3 Responses to Likert Scale Statement L4: In Australia/China, the government should not intervene in biofuel development.

Australia % (n=29) 100% China % (n=13) 80% 8 60% 9 9 40% 3 5 2 20% 3 2 0 0 0% Strongly agree Agree Neutral Disagree Strongly disagree

L4.

In Australia, there were lots of comments and discussions on the rationality of the Australian Government providing subsidies to the biofuel industry, as described previously. However, an interesting finding is that respondents from China barely commented on whether the government should intervene in the biofuel industry. Almost all of the respondents (9 out of 10) took it as a fait accompli when talking about biofuel subsidies. They did not express any doubt about the government’s subsidies for the biofuel industry; instead they described the policies. Only one Chinese researcher (Ch02) mentioned that government subsidies might make the infant industry less independent, but he also said that for biofuel it was necessary for the government to give support while the industry was at the initial stage of its development.

In fact, one new industry with the new technology should try to earn its market share by itself, instead of relying on the government’s subsidies. The one that can only survive with the government’s subsidy would be easy to get “rickets”. If someday the government decided not to subsidise it, the industry may not be able to survive the competition in the market. (Ch02)

It is OK for the government to provide the new energy industry some short term support, but not for a long period. One reason is that the industry may develop slowly; 132

another reason is that the government may not have that much money for this. In addition, if the industry cannot develop well, and the price of the product cannot be competitive, then the consumers would not accept it either. (Ch02)

5.3 Drivers of biofuel policies in Australia and China

Exploring the drivers of biofuel policies enables a better understanding of biofuel policy- making and its relation to research evidence. The drivers of biofuel policies in Australia were ranked by respondents and the results are shown in Figure 5.4. The columns represent the ‘consistently ranked highly’ drivers, ranked by the weighted average scores as described the methodology chapter. The group of ‘consistently ranked highly’ drivers ranked by the Australian respondents include ‘carbon emission reduction’, ‘national energy security’, ‘developing local economy’, ‘replacing non-renewable/fossil fuel’, ‘income generation for farmers’ and ‘global oil price’.

The points represent the ‘frequently ranked highest’ drivers based on the calculated percentages of ‘ever ranked as no. 1 important drivers’. In addition to ‘consistently ranked highly’ drivers mentioned above, ‘diversity in energy sources’, ‘local air pollution’, ‘dependence on oil imports’, ‘local energy self-sufficiency’ are also identified in the group of ‘frequently ranked highest’ drivers.

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Figure 5.4 Results of ranking question Q1 (comparing policymakers and researchers): What are the important drivers of biofuel policies in Australia?

8 100%

7 80% Bars 60% Symbols 6 40% 5 20% 4 0%

3 -20% -40% 2 -60% 1 -80% 0 -100%

These responses show agreement over the important drivers for biofuel in Australia and mainly cover three aspects: carbon emission reduction, national energy security and developing the local economy. As a senior economist at the CSIRO explained:

Maybe there are only three reasons to do anything, it is because of either the greenhouse [gas emission reduction], energy security which you can interpret as cost of the price of the fuel, or regional development. That is the three reasons. So for climate change, energy security or cost of energy, or for regional development, those are the three reasons that are always used to justify biofuel policy’s benefits. (Au19)

5.3.1 Carbon emission reduction

The questionnaire responses showed that ‘carbon emission reduction’ was the most important driver for Australia to develop biofuel from researchers’ and from policymakers’ points of view. It was ranked as the most important driver in the ‘frequently ranked highest’ and in the ‘consistently ranked highly’ group (Figure 5.4). The weighted average score of this ‘carbon emission reduction’ driver given by Australian researchers was 2.56 out of a

134 maximum possible of 5 and frequency of ‘ranking it as the most important driver’ was 28 per cent. Similarly, Australian policymakers assigned to this driver their highest weighted average score (3 out of 5) and 36 per cent of them ranked it as the most important driver.

Even though the results from the questionnaire showed that ‘carbon emission reduction’ was the most important driver of Australia’s biofuel policy, there were quite a few opposing views expressed in the interviews to the ranking of the results of the questionnaire surveys. Some (Au12, Au19 and Au24) of them thought that biofuel actually played a minor role in reducing carbon emissions and some (Au18, Au24 and Au25) even expressed doubts about carbon emission reduction of being a real driver for Australia’s development of biofuel policies.

Some researchers (2 of 18) explained biofuel’s subtle contribution to carbon emission based on analyses of its whole life cycle. They stated that the production of biofuel requires energy for the procedures of harvesting feedstock, transport and processing. In addition, because of the relatively low energy density of the most widely used biofuel, E10, the total amount of the fuel consumed might be more than using unleaded petrol, which might not be very helpful in reducing carbon emission in the transport sector. One former policy and practice research investment manager explained the limited extent to which biofuel could contribute to carbon emission reduction. The interviewee reflected that:

For reducing the greenhouse [gas emission], maybe it is not that great actually in reality. You’re lucky to get more than 50 per cent if you do full life cycle emission reduction. Maybe it contributes but it is not the main driver if we are going to really reduce our emissions profile, there are probably other ways. There are probably more efficient ways to do it. (Au12)

Also there were some respondents (Au08, Au09, Au18 and Au25) who doubted “carbon emission reduction” to be a real reason for the government to set biofuel policies. They had reached the critical conclusion that biofuel policy was driven by the real beneficiary, instead of reducing carbon emission. One economist analysed:

They (Manildra Group) are the beneficiary. Well, I am happy to accept that: I think it is reasonable to think that they (the government) wanted to do something about climate change. You have evidence: they (the government) did the Renewable Energy Target 135

which is in our power system. RET (Renewable Energy Target) has a quota of taking a certain amount from renewable technology, since the absence of an emissions trading scheme or quota on emissions or pricing carbon. I think the 350 million litre target can be sort of a similar [policy measure] to that. … So the government wanted to set a policy, [but] it was not actually implemented, and made to work, and it was a very sound policy. It is economically expensive. What pushed it through implementation was that there was a big beneficiary, because the sugar industry is not a beneficiary. We advised internally that this won't help sugar industry. (A18)

Even though some respondents (Au06, Au08, Au13 and Au28) believed that ‘carbon emission reduction’ was one of the important drivers of biofuel policies, they expressed their disappointment that the government was not convinced by the idea of climate change being one of the drivers. The scientist, Au28, expressed his opinions on this in an agitated manner:

You can't convince somebody of something if their job relies on not understanding. So the Prime Minister and the rest of the government don't want to believe in climate change, and therefore they won't. And so until those [things] change they will. They don't see it as a problem. They see the problem could be managed in the future. They don't see the long term. They don't see that is their problem, so they are not gonna think about it. It is a fundamental question that they don't believe, because they don't want to believe. Any rational person would. (A28)

5.3.2 National energy security

The category of ‘national energy security’ included different aspects, such as ‘replace non- renewable/fossil fuel’, ‘global oil price’, ‘diversity in energy sources’, ‘dependence on oil imports’ and ‘local energy self-sufficiency’. Respondents expressed different concerns about national energy security in general and the aspects in detail. When considering ‘national energy security’ in a general way, Australian policymakers and researchers held the most differing opinions about all the drivers of biofuel policy. Of the researchers, 17 per cent ranked national energy security as the no. 1 important driver, which made it the second highest in the ‘frequently ranked highest’ group. It was also ranked as the second place in the ‘consistently ranked highly’ group; whereas, Australian policymakers did not rank national energy security in the top five in either ‘frequently ranked highest’ or ‘consistently

136 ranked highly’ group. This showed for policymakers ‘national energy security’ was not articulated as an issue in Australia. There were two arguments supporting this point of view. Respondents (Au06, Au14, Au19 and Au20) mentioned that Australia has abundant and secure amounts of fossil fuels and they believed that biofuel could only provide limited energy as a supplement to fossil fuel compared with the total fuel consumption in Australia.

We have an awful lot of energy, so energy security is not primarily a driver in Australia, we even export crude oil. (Au14)

It is fairly limited, the benefit you can get from the first generation [biofuel], um, in terms of energy security. It is just such a small percentage of total energy needs that is really doesn’t give you that option. (Au24)

Two researchers (Au05 and Au06) responded very frankly that ‘national energy security’ was really not a priority considered by the government. Au05 said: “I’ve certainly heard senior government officials say that fuel security is not an issue for us”.

In contrast to policymakers, researchers took the energy security issue very seriously. Researcher Au06 emphasised that there was really a need to consider the energy security issues; such as dependence on oil imports and a trade deficit with the declining self- sufficiency in oil and that there were lots of sophisticated analyses on these issues. However, complained researcher Au06, the government did not think these issues were worrying compared with the benefits it can obtain from coal exports. She said:

The answer that we (researchers) always get back from government is that even though they can see a huge trade deficit in imports of oil products, that is so minor compared to the massive export of coal, that the trade balances are not important, that the differences of biofuels can make the overall of trade of energy is not important, so [they concluded] ‘let’s just maintain the status quo’. (Au06)

Even if some respondents did not directly voice their worries about the national energy security in general, there were concerns about specific aspects of energy security issues, for example, ‘replace non-renewable/fossil fuel’, ‘global oil price’, ‘diversity in energy sources’, ‘dependence on oil imports’ and ‘local energy self-sufficiency’.

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Policymakers and researchers reliably identified ‘replace non-renewable/fossil fuel’ as one important driver of biofuel policies. The policymakers ranked it as the fourth important driver; similarly, the researchers ranked it as the third important one.

‘Global oil price’ was ranked in the first five most important drivers by policymakers and researchers in the ‘frequently ranked highest’ group; whereas, only policymakers ranked it in the top five of ‘consistently ranked highly’ group. For the driver ‘diversity in energy sources’, only in the policymakers’ top five ‘frequently ranked highest’ group, was it ranked as the third important one. It was not ranked in the top five in policymakers’ ‘consistently ranked highly’ group, nor in the researchers’ ‘frequently ranked highest’ and ‘consistently ranked highly’ groups. This showed that policymakers attached more importance to the ‘global oil price’ and ‘diversity in energy sources’ as drivers of biofuel policies than the researchers did.

Only researchers ranked “dependence on oil imports” and “local energy self-sufficiency” in the third place in the five most ‘frequently ranked highest’ drivers. Policymakers did not rank them in the top five important drivers at all. Even though Australia is certainly not self- sufficient in oil, policymakers did not mention it as one of the potential threats or drivers to develop liquid biofuel. One senior policymaker (Au21) in the Department of Industry explained: “Australia takes fairly much a market-oriented approach to the transport fuel market. [Even though] We are not self-sufficient in oil, but the market is a very deep mature market.” Therefore, he trusted that a sufficient supply of oil for Australia could be guaranteed, even if there were some oil price fluctuations.

Well, the oil price can fluctuate, [but] it is not being an issue, um, in terms of supply. However, we do have an area where we constantly assess whether or not we have got security of supply to ensure the amount needed by domestic market, and the current assessment in the last assessment which was a couple of years ago. (Au21)

5.3.3 Development of local economy

Australian policymakers and researchers viewed the development of the local economy as one important driver of biofuel policies. In the survey, policymakers ranked it as the second important driver in the ‘consistently ranked highly’ and ‘frequently ranked highest’ groups. Similarly, researchers ranked it in the second place of ‘frequently ranked highest’ group and

138 in the fifth place of ‘consistently ranked highly’ group. Policymakers and researchers placed development of the local economy highly as a driver of biofuel policies.

The biofuel mandate policy in the state of NSW is a typical reflection of this result. “The major goal [of mandate policy of biofuel use in the state of NSW] is for regional development”, one policymaker (Au10) stated. He pointed out that biofuel mandate policy could help to build a new industry in regional NSW. It could provide opportunities for farmers to grow the feedstock (grain and oilseed), to create new market for the feedstock, to develop local processing businesses, and to increase regional employment.

For the state of NSW, the regional industry likely to benefit from the favourable biofuel policies is the grain and oilseed industry, whereas for the whole country, the beneficiary would be the sugar industry. Some respondents (Au14, Au02 and Au32) mentioned that trying to support the sugar industry during a period of low prices was the direct driver of biofuel excise tax refund policy under the Ethanol Production Grant at the time.

In Australia, it is the fundamental idea of the protection of sugar industry, so in Australia, the subsidy came in because the sugar price tanked, and then the subsidy came in to protect the sugar industry. (Au14)

One policymaker (Au02), in the Department of Environment, referred to using sugarcane for biofuel production as ‘a happy coincidence’ in Australia, because it can add value to sugarcane and diversify the energy sources.

In Australia, there is a view that sugarcane finds the opportunity to be a feedstock if we need more diversity of energy sources. So we have the feedstock already, we have lots of sugarcane. Sugarcane is not a highly valued commodity, so we try to find a commercial use of it. It became a treasure to both farmers and policymakers trying to diversify the economy and in addition to that, we are highly reliant on import oil for petrol, so they seem to go together quite well as policy initiatives. … It seems to me it is the virtuous circle between these two (use of the sugarcane and reduce reliance on imported oil). They are driving each other. I think this is a happy coincidence. (Au02)

However, there were also some opposing ideas from respondents Au18, Au24 and Au25. They believed that helping the sugar industry was not a real driver of biofuel policies. Their

139 argument was policy-based on the low sugar price in the market, as one respondent observed:

So, it was put forward as something for helping the sugar industry. Now, as an economist, [I’d say] it won't help the sugar industry. The price for sugar is set on the world market, and changing the amount of sugar that is consumed domestically won't make any difference to the world price. But farmers think it was right, it was pushed into the policy to support that. (Au18)

5.3.4 Income generation for farmers

Income generation for farmers is an important aspect of the local economy and a social- political driver. To detect the extent to which ‘income generation for farmers’ contributed to driving biofuel policy in Australia, the author listed it separately for ranking. Australian researchers ranked income generation for farmers as the fifth important driver of biofuel policies among the ‘consistently ranked highly’ group and in the third place in the ‘frequently ranked highest’ group. Policymakers only ranked it as the third important driver in the ‘consistently ranked highly’ group and did not rank it in the top five of ‘frequently ranked highest’ group. Compared with policymakers, researchers valued more the ‘income generation for farmers’ as a driver for biofuel policies.

Even though the respondents ranked ‘income generation for farmers’ as one driver of biofuel policies, they also reported some of the difficulties farmers might have in providing feedstock for the biofuel industry. One policymaker (Au16) in the Department of Agriculture explained that uncertainties of returns from the biofuel market might discourage farmers switching from their original production arrangement to grow feedstock for the biofuel industry. He explained the difficulties in detail:

So, when you switch to another product or crop, you might have to change your machinery, or you might not have certainty in selling it. All the things build a way that we grow wheat; there is a lot of certainty in that. People know what they are doing. They don't have to change machinery. So if I am a farmer, I am asset rich but I am capital poor, so I can't just go and change machinery. I can't take a loss. (Au16)

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5.3.5 Local air pollution

Australian policymakers only ranked local air pollution as the fifth important driver of biofuel policies in the ‘frequently ranked highest’ group. Researchers did not rank it in the top five in either ‘frequently ranked highest’ or ‘consistently ranked highly’ groups. ‘Local air pollution’ is therefore a weak driver of biofuel policies and it is only suitable for specific locations in the big city scenario, such as Sydney. One policymaker (Au10) said: “the secondary objectives [to develop the biofuel industry] were air quality improvements, not carbon emission but local air pollution, in particular, the reduction of particulate emissions.”

5.3.6 The political dimension of drivers

Lots of interviewees (21 out of 34) mentioned political drivers during the interviews. A few researchers (Au28 and Au25) supplemented their list of drivers with political ones, such as ‘protection of incumbent industry’ and ‘political influence of some industry groups or companies’ and ranked them with high priority in the survey. This showed the important attribution of political reasons to biofuel policy drivers. A political science researcher (Au03) stated:

[The] question is that “What is driving biofuel policy?” because I think the odds are it is not the relationship between the researchers and policymakers; odds are [it is] the political dynamics within a country…. So that’s not fundamentally about the information flow between the researchers and policymakers. That is fundamentally about the politics of the issue. (Au03)

The lobbying activities of different stakeholders were also reported to influence the decision-making of biofuel policies. For the biofuel industry, the stakeholders include feedstock farmers, processors, distributors and the end-users along the supply chain. As respondent Au09 stated:

…so then when the decision actually gets made, you (the government) had these vast interest groups that lobby for the things that are in their interest. I guess that is politics. (Au09)

There is conflict between the livestock industry and the biofuel industry because they may be competing for the same feedstocks, as one researcher (Au25) stated. The producers of

141 feedstock (grain, oil and sugar cane growers), the livestock industry and the biofuel industry held different and dynamic positions that result from their interests and complex interconnections. She explained that producers of biofuel feedstock would like to have another industry to sell their products to, possibly at a higher price or volume than they would be able to sell to livestock producers or on an export market. However, the livestock industries would prefer not to compete with biofuel buyers for the feedstock. She concluded:

So there are a few, I guess, different actors with opposing views that have lobbied the government at different stages to try to influence policy in their interest. That usually happens. I suppose all those things also have an effect on, you know, how the policy was designed. (Au25)

In addition, the biofuel importing companies also participated in the lobbying. One researcher (Au09) commented that the companies importing ethanol would like to see some policy changes, because the Ethanol Production Grants Program (EPGP) only gave an excise exemption to ethanol produced domestically. They lobbied for a more beneficial business environment for companies importing biofuel.

The competition between the first generation of biofuel and advanced biofuel was also mentioned; members of each side lobbying the government for biofuel policy decisions in their favour. Researcher Au09 described a conversation in a meeting that involved an advanced biofuel sector member lobbying against the excess capacity of first-generation biofuel production. He retold the story:

Some of them [at the conference] were saying, ‘Well, let’s not do anything until we can use up all the capacity of the first generation’. Other people were saying, ‘What a load of rubbish! Forget about [that argument]. Let’s get on and do something more visionary with more advanced second generation biofuels’. So, there will also certainly be lobbyists. (Au05)

Outside the supply chain of biofuel, the fossil fuel industry was definitely seen by respondents as a player in the energy and biofuel arena and sought to influence the policy. Researchers Au05 and Au20 both mentioned that the petroleum companies were the major lobbyists in the energy field to the government. This situation caused the limited interest in

142 biofuel in the Australian energy market, Researcher Au20 stated. She explained two reasons for this:

One is that the petroleum companies, the big lobbyists, so they are lobbying in favour of their own things. Another one is [that] the government makes a lot of money out of fuel taxes, and it doesn't really want to dilute that. (Au20)

Another example of lobbying is on the debate on the nature of the excise exemption for biofuel industry: whether it should be described as a subsidy to the biofuel industry. Researcher Au09 recalled that when the excise exemption policy for biofuel had just started, the farmers group and the biofuel industry were trying to argue via the media that they were not subsidised and that the excise exemption was not a subsidy. Moreover, there were other direct forms of lobbying. Policymaker Au15 said plainly:

In practice, they (the governments in history) are always trying to push some particular favourite, or some businessman who visited the politician in the area, [saying] ‘that all you should care about is my industry’... and sometimes they (the governments) say ‘no’, and sometimes they say ‘yes’. (Au15)

Sometimes, the lobbying could take an implicit form, such as generating panic in the media. For example, several respondents (Au08, Au09, Au19 and Au21) mentioned that at the beginning of the implementation of the biofuel tax exemption policy, there was political manipulation; information was sent through the media to the consumers, claiming that E10 was bad for car engines. This caused resistance to E10 from the end-users. Moreover, a researcher (Au09) said this exaggeration of the risks of biofuel eroded the public perception of it and raised concerns about supporting or subsidising this industry. He recalled:

If you go back overtime, you can see the media played a big role in different issues. Like, they contributed lots of fear around the use of ethanol and the lack of labelling in it. People were concerned about affecting the health of their cars, so I think they (the media) played a negative role, from my perspective, in that, because they weren't necessarily evidence-based when they were reporting it. They were sensationalising it. (Au09)

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Beyond this lobbying, seeking political influence over biofuel policies, some respondents (Au18, Au09, Au08 and Au25) stated that the real driver of biofuel policy was singularly to benefit Manildra’s ethanol production. These respondents saw policy-making in Australia based on inappropriate political negotiation between the former prime minister, John Howard, and the Manildra Group. Respondent Au18 analysed all the so-called drivers at that time for biofuel policy and concluded that all the other drivers could not be attributed to the policy; the real beneficiary was the ethanol producer, Manildra. Therefore, he believed that the real policy driver was to benefit Manildra. He said:

I don't think it (the biofuel policy) is an Australian wide (one). I might be wrong, but certainly it is in NSW, because Manildra is based in NSW. So it starts out as a note to do something about climate change, some words around industry development, some regional development, but what really is the beneficiary? This company. (Au18)

Researcher Au09 also recalled that there was lobbying from Manildra. He said:

There was also controversy, even then, because the major ethanol producer (Manildra), they were selling a lot of the ethanol that was being used, was seen as good friend of John Howard, the prime minister at the time. So, there was suggestion in a lot of the media that this was a special deal and the government was reluctant to close down the ethanol industry or reduce the ethanol industry, because it was providing benefits to this company that was owned by a friend of politicians. So, there was that political agenda going on as well, so, it has always been hard to separate out the politics. To separate which decisions are made based on the good sound evidence from those decisions made because of the political deals and backroom negotiations. (Au09)

The respondents’ explanations for the inconsistencies in the governments’ policies mainly lay in the differences between the ideologies of the two major parties. Respondents Au05, Au19 and Au34 provided two examples where the different ideologies of successive governments led to different policies.

One cited example is the biofuel mandate policy in the State of New South Wales. Respondent Au10 observed that it was the “green government” that introduced the mandate because it was concerned more with climate change issues. The former government leader, Premier Bob Carr, was quoted by Au05 as saying that “If you don’t

144 mandate, nothing happens. If you just leave it to the market, it won’t happen”. Respondent Au05 was reminded the critical role that the leadership and ideology of the government played in pushing the biofuel mandate policy in NSW. He said: “they [NSW] were a very green progressive state under Bob Carr. I think that was the main pressure point there”.

Another frequently cited example was about ARENA. The establishment ARENA was seem as a symbolic action by the Gillard Government in developing renewable-energy industries in Australia. At the Australian Scale, respondents Au05 talked about the clear effect of the Gillard Government, which was necessarily formed by a loose coalition between the Green and Labor parties. To make the coalition work, the Labor Party’s laws and policies were changed to fit the Green’s ideology of prioritising the environment and of taking action and paying attention to building an ecologically sustainable society. Researcher Au05 recalled:

The Greens got a lot of concessions from the government and I think one of them is ARENA, and lots of other things, like the carbon tax and carbon farming initiative. That carbon farming initiative is an opportunity for farmers to participate in GHG mitigation type activities, including biofuels. A lot of that came out of Green’s pressure. I am sure it was a case where government couldn’t function without Green’s support. And they (the Greens) said, "Well, we want this and this and this", so Julia Gillard (Prime Minister and Labor Party Leader) said, ‘You can have it, you got it’. So we shouldn’t underestimate those kinds of things. (Au05)

In contrast to the accord between the Greens and the Labor Party, some researchers (Au05, Au19 and Au34) stated that the Liberal–National Coalition government (the Abbott Government) had a different policy route and put environmental considerations second to economic development. These views expressed of the government’s attitude to climate change and biofuel, which are typified by researcher Au19. He commented:

Politically, I think the new government, the Liberal government, hasn't been as keen on biofuels, and because, I guess, that side of politics is not that keen on climate change. (Au19)

Although establishing ARENA (Australian Renewable Energy Agency) as a major research funding institute was one important policy implementation by the Labor government, the Liberal Coalition government did not regard it as important and sought to remove it.

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Respondent Au05 used ARENA as a symbol to emphasise how the current government’s ideology could influence biofuel policy setting. He said:

I am sure this current [Liberal] government would never establish ARENA but it (ARENA) is there and there is legislation there [for it to function], and it will probably persist. Its budget will be cut a bit but it will probably persist now (February 2014). (Au05)

The short terms in office of elected governments was another political reason identified in the interviews with researchers Au06, Au09 and Au13. The government considered the short-term economic effects when developing policies, instead of considering comprehensively all the environmental, social and economic aspects, stated researcher Au06. She commented that a strong government policy driver weakened the influence of the submissions made by different stakeholders, including the research agencies. Researcher Au06 used her own work experience as an example and complained that this was the typical responses they usually received from the government:

The answer that we always get back from government is that even though they can see a huge trade deficit due to import of oil products, that is so minor compared to the massive export of coal. That the trade balance is not important. That the differences biofuels can make in the overall of trade of energy, it is not important. So (they conclude) “Let’s just maintain the status quo.” (Au06)

Some respondents (Au05, Au13 and Au27) explained that it was hard to develop a strong biofuel market because there were frequent policy changes in Australia, which increased the uncertainties of the investment environment. A short term government cycle drives the government only to aim at short term policy goals and nurtures a lack of long term planning. Researcher Au13, who had working experience in the government, explained these drawbacks of the short terms in office of government and the lack of planning to policy. He said:

In Australia, I think it (the reason of unstable and inconsistent policy) is short-term governments, only three years [for] each government and so … you have seen the change of government, so still the government is still six months into its term, it is still not sort of smoothly and efficiently operating, so you take seven or eight or nine

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months to get accustomed to be in a government and you have only got two years left before you have another election. And you may find yourself not in government anymore, so there has been a lot of discussion about the value of planning. And for some people, planning is a nasty word, because you are trying to sort of influence the government without letting the market sort of develop itself. (Au13)

Researcher Au13 provided a reason the Australian Government lacked enough planning on renewable energy development. “I just think we are probably being so well served in oil and gas that people in government haven’t really thought a lot about ten years, or twenty years into the future,” he said, “but that is where the thinking should be. Now the government people should be thinking about 2030 and 2040, not 2014 necessarily.” He also suggested the Australian government should have a more formal long-term planning, as China and EU do:

So I think we probably have not done much planning as we should, where there are lots countries do, like China and for a lot of European countries, planning is a very important part of government in looking into the future and I think we could take a real good lesson on that. In the future, we could do much more sensible planning and I think we’d be much better off. (Au13)

It was emphasised by policymaker Au27, who works in a government research investment agency, how important it is to have a stable policy environment for a biofuel industry to attract sufficient investment and develop more strongly. He stated, based on his working experience, that;

There are a lot of uncertainties. I wouldn't set up a new plant, even in somewhere in America now, because you don't know with the current economic issues, whether they could get rid of the subsidies tomorrow, in which case you will never see a return on investment. So yeah, uncertainty is very high in this area at the moment. And I think to see strong investment in bio-refinery (capacity) we will need to see good strong policy, that is long term, from the governments around the world. (Au27)

5.3.7 International drivers

From the interviews, there were discussions on the circumstances under which the Australian government would or had made new policies to support the development of the biofuel industry. Respondent Au06 believed that if Australia’s major trade partners started

147 to set stricter sustainability standards and a higher carbon emission standard in their domestic markets, Australia would have to adopt these standards. She said:

(When) other countries start, for example, the way that EU has restricted to the access to the European market, to only those biofuels which can meet a particular sustainability standard. (Au06)

Researcher Au06 thought this would force Australia’s exports to meet the strict emission standards. In addition, she assumed:

If our main trading partner said, for example, ‘well, now in China our new technologies have to meet a certain emission target and anything we import must do the same thing’. Well, that would have change Australia’s mind pretty quickly, wouldn't it? (Au06)

Policymaker Au16 considered that Australia would change its current biofuel policy setting if moral pressure from international criticism of Australia for exporting too much coal and contributing too much to carbon emission. He described the moral driver vividly:

If for example, the world said ‘Look, Australia, we don't like you, you are using too much fossil fuels. I'm sorry. We are gonna punish you for that’, that sort of thing (would change Australia’s energy policy effectively). (Au16)

However, he still emphasised that it was very important for a biofuel industry to be economically efficient if it wanted to be popular in Australia’s fuel market.

5.3.8 Comparison with China on the drivers of biofuel policies

Remarkably, as Figure 5.5 shows, carbon emission reduction, national energy security and income generation for farmers are the common drivers of biofuel policies in Australia and in China. Several Chinese respondents (Ch05, Ch08, Ch02, Ch04 and Ch10) mentioned that biofuels helped to solve the “three rural problems” (that is, rural people or peasants, rural society or villages and rural production or agriculture) in China. One senior researcher (Ch08) stated:

Drivers of China’s biofuel policies wouldn’t be much different from Australia’s. I think the only difference is that China would consider agriculture more. For us, the “three rural problems” is a very tricky problem, so, helping to develop the agriculture should

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be not in the first place. That is because the feedstock for China’s biofuel production is all from the rural area and the rough machining process of feedstock is also there. These business opportunities are very important for the rural economy. (Ch08)

Figure 5.5 The result of ranking question Q1 (comparing Australia and China): What are the important drivers of biofuel policies in Australia/China?

10 100% Bars 9 80% Symbols 8 60% 7 40% 6 20% 5 0% 4 -20% 3 -40% 2 -60% 1 -80% 0 -100%

Carbon emission reduction is a very obvious driver identified by quite a high proportion of the Chinese respondents (Ch01, Ch02, Ch05, Ch06, Ch07, Ch08 and Ch11). They mentioned that China has become the world’s largest emitter of CO2 and China has made emission reduction promises. For example, at the 2010 United Nations Framework Convention on Climate Change (UNFCCC) conference, China promised to reduce by 40 to 45 per cent the emission intensity (ratio of emissions to GDP) by 2020 compared with its 2005 levels. Researcher Ch02 used the establishment of the research institute at which he works as an example to illustrate the importance of this driver.

I think that our government has predicted that bio-energy could be a development direction in future to relieve the pressure of emission reduction. Our research institute was established in 2006 and from the name of our institute (Qingdao Institute of

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Bioenergy and Bioprocess Technology) you can see that we are founded by the Chinese Academy of Science to develop bioenergy exclusively. So, to see it from a national strategy angle, the pressure from the targets of “energy conservation and emission reduction” is pretty heavy at that moment. Moreover, we face the pressure from the international climate negotiation and made several promises. To fulfil these targets, to develop biofuel, well, not only biofuel, but also all other kinds of renewable energy, including water power, wind, solar and biomass is critical. These renewables can at least supplement part of the energy consumption. I think this is the main stream of development in future. (Ch02)

National security is a salient driver of China’s biofuel policies. Chinese respondents gave national security a much higher score in the ‘consistently ranked highly’ group than the Australian respondents did. Moreover, in the ‘frequently ranked highest’ group, 73 per cent of Chinese respondents chose it as the most important driver, which was also much higher than the 10 per cent it was given by Australian respondents.

Other responses include aspects of national energy security, such as global oil prices, dependence on oil imports and replacements for fossil fuels and these were all ranked by Chinese respondents as the top five important drivers, either in the ‘consistently ranked highly’ group or ‘frequently ranked highest’ group or both. In contrast, only replacement of fossil fuels was ranked by Australian respondents in the top five of ‘consistently ranked highly’ group. Neither of the other two drivers (global oil prices, dependence on oil imports) was ranked in Australia’s top five ‘consistently ranked highly’ group or ‘frequently ranked highest’ group.

Some Chinese policymakers (Ch05, Ch07) and researchers (Ch02, Ch10) stated that national energy security was the most important driver. Policymaker Ch07 mentioned that the biofuel could be a substitute for petroleum based fuels and reduce oil consumption. Moreover, policymaker Ch05 emphasised that structural adjustment was a function of renewable energy in the whole energy consumption system. “Increasing the proportion of renewable energy is crucial for the sustainable development in our energy consumption system and is also helpful for the sustainable economy development,” he said. He went on to use as an example to illustrate that the renewables could supplement to other energy sources for use in rural areas. Researchers Ch02 and Ch10 stated biofuel’s 150 importance for energy security from the angle of total and per capita energy consumption. “China has abundant energy resources, but it is also a high energy consumption country”, researcher Ch10 said and, “the fossil fuel would not be enough for China’s future economic development”. Researcher Ch02 emphasised the unsustainability of fossil fuels and added the consideration of global energy price to making the decision to develop bioenergy, saying:

I think the core consideration is that fossil fuel is not going to be sustained forever. This is the point mentioned all the time. Even though our country is rich in coal, the per capita possession is very low. Moreover, our economy is developing fast. The following problem would be the massive energy consumption. Our industries cannot run without the energy and the demand is increasing very fast. Except coal, we have found gas hydrate and liquid gas, but these are also unsustainable. Someday it will run out. Therefore biofuel should be developed as one kind of supplement or even substitute to ensure sustainable energy supply. (Ch02)

Chinese respondents (Ch02, Ch05 and Ch08) mentioned that air pollution is becoming more and more serious and it has been treated with greater attention of policymakers in China. Therefore, reducing local air pollution is one special reason for China to develop biofuels. They (Ch02, Ch05 and Ch08) mentioned that there are lots of waste crop stalks in rural areas. Simply burning them or rural people using them for heating or cooking would cause air pollution and is an inefficient way to use all this potential biomass. Researcher Ch02 used a project in his institute as an example to explain this driver of renewable energy policy. He said:

How to deal with the wasted crop stalks in rural area itself is a problem. Livestock doesn’t need that much of stalks. There is no place for them, plus, the government wouldn’t allow farmers to burn the stalks. They want to avoid more air pollution. There is a typical example of policy guidance to make a good use of the biomass to produce renewable energy. So our institute is trying to do a demonstration of the biogas production in Pingdu (a small town in northern China). (Ch02)

Another novel driver of China’s biofuel policies mentioned by one researcher (Ch01) is the jet fuel consumption. In China, the biodiesel produced from waste cooking oil has been reprocessed for aviation use. “I think the use of biofuel in aviation could be a new opportunity for biofuel and it has been demonstrated that it works,” she said. However, there 151 were also doubts expressed about this driver. Researcher Ch08 stated that the production of aviation biofuel only provided a minimal proportion of the whole aviation fuel demand. He said:

Chinese people consume about 20 million tons of cooking oil a year and among it, the wasted cooking oil is at most ten per cent, which is about two million tons. So, the aviation use of biofuel from it would be about a million tons. Compared with the total consumption of several tens of million tons of aviation fuels, this amount of biofuel doesn’t make much sense. (Ch08)

In contrast to the political drivers suspected or described by some of the Australian respondents, several Chinese respondents (Ch04, Ch05, Ch06 and Ch08) mentioned that one of the original intentions for China to develop biofuel industry was to make a good use of surplus stale grain in 2001. “The initial idea was to digest the expired grains. This was a stronger and more direct driver of biofuel policies than other drivers at that moment [in 2001],” said researcher Ch04, “it could be treated as a short-term policy and research investment trigger”.

5.4 The biofuel policy-making process and policymakers’ key considerations

Insight into the policy-making process in biofuel field, the most relevant policy-making institutions and processes involved in biofuel policy-making in Australia are identified through analysis of the responses from the interviews. The five most important factors that policymakers consider when making policy decisions are explored, based on the analysis of the responses to Q4, where policy drivers were ranked. In addition, the role research evidence plays in policy-making is also identified in the last part of this section, which is to lead the results to answer the core research question (“how to improve the evidence-based biofuel policy-making”) in the next section.

5.4.1 The Policy-making process in Australia

Policy-making is a complicated process, as others have said. Biofuel policy-making is no exception to this generalisation. A senior policymaker (Au02) in the Department of Environment used a metaphor to describe his impression of policy—”It is like making

152 sausages, you know the inputs and you do not want to know how it was made”, he said. It is difficult to complete the policy-making process in an ideal way. According to him, the major reason for its difficulty was that there were always different stakeholders who represent different interest groups being involved in the policy-making processes and this made coordination and communication difficult.

It is really a complex and bureaucratic system where thousands of people are involved and are trying to do even the simplest thing. [So] that the coordination and functions are absolutely huge; the communication challenges are massive; bringing people along is absolutely extraordinarily difficult; and so it is more than the administration. It is really [a] chaotic system, not systematic. (Au02)

In addition to articulating their impressions of the policy-making process, policymaker (Au10) and researchers (Au03, Au04, Au12, Au20 and Au25) also made suggestions about what the ideal process of policy development in Australia would be, and also mentioned that in this ideal policy-making process, there are always some steps that could be skipped in practice.

Based on the interviewees’ responses, the left side of Figure 5.6 describes the basic institutional structure followed by the Australian Government in making policy. The right side of Figure 5.6 illustrates an ideal model of the policy-making process, in the format of a flow chart. Each block in the flow chart corresponds to a specific part of the government on the left.

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Figure 5.6 Institutional structure of policy-making and the policy-making process in Australia

Institutional structure Policy-making process

Sometimes, initiatives could be part of an election The Government platform, which was promised by the government

Cabinet (Prime Minister Cabinet makes the final and Ministers) policy decision

Minister in one Department consults with other Departments and Minister Minister … Minister also civil society sectors. After consultation, agreement between different departments will Minister’s Minister’s Minister’s be finalized office office… … office This minister will transfer the agreement to the cabinet.

Sometimes, initiatives may start from departments Department Department Department Departments report to

Government Government… … Government… Ministers: officials officials officials issues identification policy design

policy analysis

public consultation

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Because researchers Au04, Au12 and Au25 are conscious of the policy-making process and the role of different institutions, they mentioned that there are basically three levels of institutions involved in the policy-making process. As shown in Figure 5.6, from the top to the bottom, these institutions are the Cabinet, the ministers and their offices, and the departments who answer to their ministers. Different institutions in the government play different roles in policy-making.

The Cabinet is composed of the prime minister and his or her appointed senior ministers. Each minister (Cabinet member) leads one or more than one department. The departments are there to implement their ministers’ decisions. People who work in the departments are government officials and these officials are responsible for designing policy, doing policy analysis and giving policy advice to their ministers. Ministers have the right to make decisions within their departments. The ministers do not necessarily accept policy advice from their departments, but they definitely need to listen to the departments’ recommendations.

Not everything goes to Cabinet, but they may go to the government (individual departments). … Sometimes the decision is simply made within a department, or policy is developed within a department, and it goes to the minister [of the department] and back again. But it is very unusual for them not to consult with other people, because a lot of people have [an] interest in one issue. (Au04)

If a minister supports a policy, they will bring the policy proposal to the Cabinet. The Cabinet has the power to make final decisions on policy. It deliberates and allocates resources to implement a policy and adds resources, context and details to its implementation. It ensures alignment with the policy intent as well. Once a positive decision is made, the departments are responsible for implementing the policy.

Cabinet has the power to make decisions, so I mean it depends on how you define the policymaker. You know, the policies are developed within the government departments, but ultimately they will put a policy up to their minister. If the

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minister doesn't want to implement that policy then, you know, they will have to make a decision. It is not up to the department to make that decision at the end of the day, but when it comes to design how the policy will work, and all the details about how will it be implemented. All those things will happen in the department. (Au25)

See the source of policy can come from quite different places. In the end, the big tick for policy-making usually stays with the ministers in the government, or cabinet in the government, if it is a bigger issue. (Au12)

There were other opinions on who were the real “policymakers” in Australia. Respondent Au10 described how the political Parties set the policy agenda.

The policy is made by the Parties: the Liberal and National Parties. … The policies are generated by the political parties in their internal processes, and then the ministers implement their policies that the Party decides. (Au10)

A new initiative or a new policy idea can come from various sources: individuals, promises made by the political parties during an election campaign, requests from industry, protests from communities and from policy issues identified by government officials within departments. Researchers (Au04 and Au12) provided a real policy- making model, in which a new initiative was developed from a specific promise made by one party in their election platform.

Whichever party wins an election and forms government would have decided on the necessary policies and direct themes to be developed. The relevant ministers and their departments would implement a ‘Cabinet submission process’ to make the policy. In the process, they would have to consult other departments that might have interests in it as well as the various sectors within the broader civil society. By collecting information from the consultations, the bureaucrats can identify the pressing issues and make better policy recommendations, or they can keep this information for further use. After reaching an agreement with other relevant departments, the

156 department(s) would make a policy submission to the Cabinet for a final decision on the specific policy.

5.4.2 Skipped steps in the policy-making process

Sometimes, the policy-making process is influenced by other factors, which would make it possible to skip particular steps in the policy cycle. Respondent Au12 stated that policy advisors may provide ministers with very detailed summaries of stakeholders’ opinions, such as those from communities, economists or researchers. However, driven by political forces, such advice may not have a strong influence on the policy-making process.

The policy advisor’s job is often about bringing all that information together, and making a report. …And they give their advice up to the minister [to] let them choose. With their political head on, “I think this is the best one” then they will get around a decision. Sometimes, [the policy-making process may] not [go through] all the steps [of policy cycle]. They jump. (Au12)

Another reason given by respondent Au12 to justify skipping some steps in the policy- making process was the time pressure on the policy-making:

That (pointing to the policy cycle) is a rational model of policy-making, but it does not always work that way. That [is] for political reasons, [there is] not enough time to do it, you know. They’ve (the policymakers) got to make a decision in two months and for whatever reason [they have to finish the task]. (Au12)

In addition to skipping steps in the policy cycle, some steps, such as the ‘cabinet submission process’, may also be omitted in practice, as Researcher Au04 stated;

Sometimes they do [cabinet submission process], sometimes they do not. Sometimes they rely entirely on what happens in the minister’s department, not in his (the minister’s) office, in his department. (Au04)

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Before the Cabinet submission, which is at the end of the policy-making process, the departments would consult their key stakeholders at meetings or forums. This step is to identify stakeholders and also to collect their opinions on a particular policy proposal. However, as respondent Au04 stated, this consultation or opinion gathering could be omitted and added that sometimes the major stakeholders could pass their opinions and requests directly to a minister.

I mentioned earlier as a part of the policy process, they (the departments) do have consultation with their key stakeholders, so they would have a meeting or a forum, and they would talk to them because they have to tell the minister their opinions. But these sorts of people also have access to the ministers. Some of the major stakeholders would have direct access to the minister. For example, Allan Joyce, who is head of Qantas, he can pick up the phone anytime and ring the Minister of Industry here in Canberra, and the Minister will take his call. So Qantas would go straight to the Minister, he (Allan Joyce) would not necessarily talk to the staff of the minister‘s office or department, some of his (Allan Joyce) staff further down would have contact with the department. So it happens down at multiple levels, so there is a contact out there and it is in the interest of both the minister, the department and these stakeholders. They are the stakeholders. They are the interest groups that have that engagement. (Au04)

So it (direct access to the ministers) does exist. The government generally prefers to listen and talk to people who support their view, so they may not always have a complete view, but they will invite people who are more likely to support their view. So, on some level, the government may control what voice they would like to hear, and that includes the media as well. (Au04)

5.4.3 Example of biofuel policy-making process _ E85 Fuel Quality Standard

Biofuel policies developed by the Department of Environment include the fuel quality standards of different types of biofuel. E85 is a kind of mixed fuel consisting of 85 per

158 cent ethanol blended with petrol. One policymaker (Au11) in the Department of Environment described the policy-making process of ‘Ethanol E85 fuel quality and fuel quality information standards’. Policymaker Au11 stated that the E85 fuel standard was initiated by industry groups and the function of the fuel quality standard was to help the consumers to understand exactly what kind of fuel they were using.

That was because there were quite a lot of different products sold in the market place with up to 20% of ethanol and consumers did not know what they were getting. So that pressure was evolving in the biofuel market. [This pressure] is kind of what drives the responses of us setting standards in place. It is quite expensive and it is a long process for us to put in the standard, so we want to make sure that there is a good reason to do it. The E85 standards were put into place, because, again, the industry wanted it. (Au11)

As respondent Au11 mentioned, from the department’s perspective, the purpose of this E85 fuel standard was totally for the environment’s benefit, whereas business wanted increasing market share or to manage economic risks.

So basically by our government setting those standards, it has to create more certainty for the industry, and it means that consumers are guaranteed of quality, certain quality, and those standards are set for environmental purposes only, so they are not set to increase the market, or anything like that, they are just set for the environment, because they were set in response to industry pressure. (Au11)

Unlike policymaker’s (Au11) opinion of only taking care of environment, a senior policymaker (Au21) in the Department of Industry pointed out that the fuel standard should not only aim at lowering the volume of hazardous chemical in the fuel. He emphasised that a proper fuel standard should aim at having an overall better environmental outcome, while providing acceptable efficiency in the combustion engines of the vehicles in use. The logic in this idea, as he explained, was that if a more strict fuel standard decreases the power of a fuel too much, the total consumption of

159 that fuel might increase instead, in which case the overall outcome to the environment might not be optimised.

If you have got a fuel standard, which is set with only the environment in mind, it may mean that in terms of efficiency of vehicles, you have to use more of that fuel. Or you get an improved environment from the quality of the fuel, that is outweighed by the amount of fuel that you have to use compared to, say, that less environmentally friendly fuel that is more efficient to ensure that you get a better overall outcome. (Au21)

As policymaker Au11 recalled, the E85 fuel standard policy was set in response to the industry’s pressure. The E85 fuel standard was requested by Caltex and Holden, pioneers of supplying and adopting E85 in the market. Holden put out press releases announcing that the new Holden Commodores being produced would take E85. Caltex announced on the same day that they would promote E85 and make it available at a large number of petrol stations around Australia. Both companies requested the government to develop an E85 fuel standard for the market.

They (Caltex and Holden) had their press release on the same day, so we took that as a sign that industry was getting behind this, and we were at the same time. We made the E85 standard. We also made E85 information standard, which forces anyone selling E85 to label it in a certain way, so people can't accidentally fill their cars with it, because it is not suitable for all cars. (Au11)

Respondent Au11 volunteered the policy-making process of E85 fuel standard as an example of policy-making. She stated that in Australia, any legislation or regulatory instrument would have to go through a “regulatory impact statement” process, which is an example of structured consultation between the departments and the stakeholders. Jacobs (2006) stated that regulatory impact statement method has been used frequently by governments as a prominent tool to make efficient policy decisions in the complex policy-making environment and open markets. This process analyses

160 potential benefits that a policy could bring to society, with the government’s needs in consideration as well. After this regulatory impact statement process, the government departments would draft discussion papers for the policy proposals. The draft discussion papers would be subject to public consultation. From this, the government could identify who the stakeholders are and also could collect different comments from their submitted responses.

There was a lot of industry consultation and there was a process to decide legally what was the best way to make fuel standards, and then, there were policy discussion papers, so the discussion papers are a pretty important policy-making tool. (Au11)

One researcher (Au19) from the CSIRO mentioned that in the case of two pieces of policy, namely the ‘Energy White Paper 2014’ and the ‘350 Million Litre Target of Ethanol Producing by 2010’, the government asked the CSIRO to review the submission papers from the public inquiry. He said that the usual processes were that the government first consults the public and then reviews the responses, or that there was an independent inquiry and an independent panel reviews it. The independent panel is usually made up of relevant experts.

In particular, the stakeholders for ‘E85 Fuel Quality Standard’ included representatives of the Commonwealth Government, representatives of each state and territory, motor vehicle manufacturers, fuel producers, and non-government bodies with an interest in protecting the environment. Seventeen of these stakeholders formed a committee called the Fuel Standards Consultative Committee, which can implement a formal consultation mechanism. After collecting submissions from the Fuel Standard Consultative Committee, the government would be able to know the opinions of different stakeholders in this field. This aspect of the committee’s work ensures that all the relevant perspectives or interests are taken into the consideration when making policies.

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With regard to the negotiation process, respondent Au11 described in detail a standard for sulphur in fuel as an example. The Department of Environment did the mathematical calculations to decide the range of sulphur levels in typical petrol, based on the total allowed sulphur contained in the atmosphere (70 parts per million of sulphur). She pointed out that usually there were different opinions among environmental groups, motor vehicle and fuel industries. The environmental groups might want the sulphur content to be lower, but industry groups might want the standard not to be too strict considering their cost control in producing the qualified fuel for the market. By negotiation, the department literally brought these stakeholders together to sit around a table and have face-to-face discussions to negotiate the fuel standards. The discussion was based on the detailed stakeholders’ responses in their submissions to the discussion paper. The Fuel Standards Consultative Committee met twice a year and finalised the agreement on the fuel standards.

The last step of this fuel-quality standard policy-making process was to recommend the defining parameters of the E85 standard set by the Fuel Standards Consultative Committee to the minister, who had the authority to make the final decision. Respondent Au11 emphasised that the minister must consider the negotiation results from the committee, but not necessarily to agree with them.

The minister must consult the committee before making a determination. He doesn't have to take their advice, [but] he has to consider it, so that is the decision making process on the Act (the Fuel Quality Standard Act). (Au11)

5.4.4 Examples of biofuel related policy-making _ National Climate Change and Commercial Forestry Action Plan 2009-2012

In addition to public consultation, another form of policy is the “Action Plan” developed by the Council of Australian Governments (COAG). COAG is the peak intergovernmental forum in Australia, and comprises the prime minister, state and

162 territory premiers and chief ministers and the president of the Australian Local Government Association. According to the report, ‘National Climate Change and Commercial Forestry Action Plan 2009–2012’, to deal with the challenges imposed by climate change, the COAG launched this plan for the forestry industry to take action in 2009 to contribute to climate change mitigation. The “Action Plan” established a series of strategies, and one of them was to support the development of “Liquid Fuels from Biomass”, which essentially meant developing biofuel produced from forestry waste.

There should be a review for each Action Plan after every two to four years after its implementation, and COAG should reset the objectives and navigate the strategies. However, this was not done for the “National Climate Change and Commercial Forestry Action Plan 2009–2012”, as stated by one policymaker (Au17) in the Department of Agriculture. It had not been developed further because there was a change of government in 2013 and the new Government (the Abbott Government) held a fundamentally different view of climate change from the previous government.

Unfortunately, we’ve had a change of government, and the Australian government at the moment does not have the same focus on climate change as the previous government had, so there has not been a review of this, and there is really none planned at the moment, which is unfortunate. (Au17)

When asked about the effects of this Action Plan, respondent Au17 commented that it has not had much influence on other biofuel policies.

None of the other biofuel policies have been influenced by this Action Plan, really. Because we have the change of government, the focus is just sort of sitting on the shelf at the moment. Ideally, after reviewing the policy, we would retarget in the areas that we are promising, but that hasn’t happen [yet]. (Au17)

5.4.5 Important factors considered by policymakers in the policy-making process

In the questionnaire, the ranking question (Q4) was designed to explore what important factors were considered by policymakers during the policy-making process. 163

The five most important factors from the perspectives of researchers and of policymakers were identified (Figure 5.7). These are classified into two dimensions: factors that were consistently ranked highly and those that were frequently ranked highest, as shown in Figure 5.7. The left axis in Figure 5.7 indicates the weighted average scores of the ‘consistently ranked highly’ factors on a scale of 0 to 5(as elaborated in methodology chapter). In Figure 5.7 these scores are shown as solid bars (researchers) and checked bars (policymakers). The right axis represents the proportion of the factors most ranked no. 1 in the policy-making process.

Six factors are listed in the horizontal axis and these including the four overlapping factors chosen as most important: ‘scientific evidence from research’, ‘industry representatives’, ‘political concerns between different parties’, and ‘ministers’ or secretaries’ views’ by both groups of respondents; ‘public opinion’ chosen by researchers; and ‘NGO statements and sources’ chosen by policymakers. The correspondence between the factors ‘consistently ranked highly’ and those ‘frequently ranked highest’ confirms the prioritisation of these four overlapping factors in the minds of researchers’ and of policymakers’.

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Figure 5.7 Results of ranking question Q4 (comparing policymakers and researchers): What are the important factors in biofuel policy-making process in Australia?

7 100% 80% 6 Bar 60% Symbol 5 40% 4 20% 0% 3 -20% 2 -40% -60% 1 -80% 0 -100%

At a first glance, Figure 5.7 shows four key differences between the responses of policymakers and researchers. First, as foreshadowed during the interviews, researchers gave a higher ranking to ‘industry representatives’ than did the policymakers. Second, ‘ministers’ and secretaries’ views’ were ranked higher by policymakers than by the researchers. This result, somewhat surprising, indicates the frankness of the policymakers’ responses and also admits the importance of these institutional and political factors in the policy-making process in practice.

However, it is interesting to note that the responses to the questionnaire indicate that ‘NGO statements’ were consistently ranked highly by policymakers, but not with researchers; whereas, the opposite pattern applied to ‘public opinion’. This suggests that policymaker respondents were more inclined to heed the opinions of larger stakeholders, such as NGOs; whereas, the researcher participants tended to include public opinion in the policy-making process.

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Even though the ‘scientific evidence from research’ was ranked as the most important factor in the policy-making process by policymakers and by researchers, some respondents had different ideas about it. For example, one researcher in politics (Au02) claimed that research outputs did not play an important role in the policy-making process. Instead, she emphasised that the three most influential factors in policy- making in Australia in general were ‘industries pressure on politicians’ (represented by ‘industry representatives’ in the original questionnaire); ‘the media’; and ‘the particular political dynamics within a party’ (represented by ‘political concerns between different parties’ in the original questionnaire).

Generally speaking, even with a good policy, you are going to have three pressures on it generally. One is the stakeholders; [one is] the industries pressure on the politicians; one is [pressure of] the media on politicians; and the other thing can be the particular political dynamics within a Party, you might have particular groups within the party, who are advocating it, who might be powerful, who might be marginalised, so you have that sort of issue. (Au02)

That the minister’s view was of crucial significance in policy-making was verified by a senior policymaker (Au02) in the Department of Environment. Another policymaker (Au10) identifies ‘regional development’, ‘air-quality improvements’ and ‘energy security’ as the main drivers of Australia’s biofuel policy, but then added that “they were the main drivers behind it, and it was all driven by ministerial vision”. This point of view was also supported by respondents Au04 and Au25 who pointed out that the ministers are the ones who have the right to make final decisions on the policies developed in their departments. Therefore, the minister’s view is important.

Respondents were asked in the questionnaire to list important factors that they thought policymakers might consider in their policy-making: the list grew longer as individual respondents supplemented it with other factors. These extra factors might only have been mentioned once by some policymakers; however, when they were added they were all ranked as relatively high priority. Sometimes, these factors were

166 quite important, because they added to and improved the author’s understanding of elements that could be included in conceptual models of drivers or in future research.

As shown in Table 5.1, these supplemented factors included economics research evidence, the policy context, the government’s ideology, stakeholders and environmental effects. Whereas scientific research was included in the original list in the questionnaire, the economic research emerged as an important consideration for several respondents, including researchers and policymakers (shown in Table 5.1).

Apart from research evidence, the policy contexts, the government’s ideology and stakeholder considerations in the policy arena were the major additions to the list and most of them were ranked as the most important factors considered by policymakers. The government’s policy priorities and policy goals were ranked as the first and second most important factors, and the fundamental ‘political philosophy’ was ranked as the third main policy-making consideration. From a political perspective, winning stakeholders’ support was also added to the original list. The ‘possibility of winning more votes at election’ and ‘incumbent vested interests’ were both ranked as the most important factors by one policymaker and one researcher. More specifically, ‘farmer’s representatives’ and ‘professional associations’ were also mentioned as influencing biofuel policy-making.

Finally, only one respondent, Au01, added some environmental aspects of knowledge needs to the original list, by ranking the ‘environmental impact of biofuel’ and the ‘land use planning and capacity’ as the most important factors. These two micro factors are more detailed and could have been covered by the category of ‘scientific research evidence’.

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Table 5.1 Supplementary influential factors considered in policy-making process prioritised by individual respondents

Respondent Q4. Other factors (text responses in questionnaires) Ranking Group Economic aspect Au12 Economic analysis/views 1 Researchers Au18 Economic/policy analysis 1 Researchers Au21 Economic costs 3 Policymakers Au29 Economic feasibility 3 Researchers Au13 Economics of producing different biofuel 4 Researchers Au02 Economic opportunities 4 Policymakers Au13 Greater use of forest waste 5 Researchers Political aspect Au16 Relevant government policies 1 Policymakers Au21 Government’s policy priorities 1 Policymakers Au21 Policy objectives 2 Policymakers Au23 Alignment with political philosophy 3 Policymakers Au06 Incumbent vested interests 1 Researchers Au15 Possibility of winning more votes at election 1 Policymakers Au22 Farmers' representatives 1 Researchers Professional Associations (farmers’ federation, Au01 3 Researchers climate advocate) Environmental aspect Au01 Environmental impact of biofuel 1 Researchers Au01 Land use planning and capacity 1 Researchers

5.4.6 The Role of Research Outputs to the policy-making process

As outlined in the preceding section, ‘evidence from research’ was ranked as the most important consideration in policy-making. In the interviews, some respondents (Au12, Au20, Au11 and Au25) described in even more detail the function of research in this policy-making process, but there were others (Au10 and Au21) who expressed different opinions and nominated the obstacles that reduce or prevent effects on the policy-making process.

Researcher Au12 stated that demand for new policies could stem from research in the ‘identification of policy issues’ and the ‘design of policy implementation’ steps in policy-making processes. For example, after a technological breakthrough, the technological innovation might change the whole market, requiring new policies to

168 keep up with the change. Furthermore, all the uncertainties and risks need to be understood by policymakers before the development of policy. Therefore, there would be a need for research in this initial stage of policy-making.

Even the idea, in the first place, often comes from the research side. I guess what I call it is “identify the issues”, is often where the research comes in. … Ask for analysis assessment or some research to try to understand the good and the bad, what might come out of the policy. (Au12)

Another step on the policy cycle that needs research outputs, as stated by respondent Au12, was the design of policy implementation. With the research outcomes, the most suitable and feasible policy instruments could be identified for the implementation of a policy.

…and it (research) may also even [come in] here (policy design) - how to implement it, you know, what is the best way to implement the policy for doing it. Does the government give money subsidy to industry; or give them a tax break, [or] support research. They (policymakers) sit at the table and help to decide what the research is. (Au12)

This important role of research in the design of policy implementation was supported by another respondent (Au25). According to her, government departments would cite research outputs to support their policy analysis and policy design. Such research could be commissioned from research agencies within departments or from other public research agencies, like ABARES (the Australian Bureau of Agricultural and Resource Economics and Sciences) and BREE (Bureau of Resources and Energy Economics).

That is how it works, so, if they need some research to inform the way they design the policy, they would commission somebody to do that research and if the research is not already available, then they will commission some other. (Au25)

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This depiction is confirmed by one researcher (Au20) from a consulting company that was commissioned to do the research to provide evidence to the government in policy-making, after a policy agenda had been set. “They (the government) want some evidence, and sometimes they go to the consultation companies for answers”, said Au20.

One researcher (Au04) considered it important to note that not everyone in the hierarchy of the government critically examined the research outputs, as one researcher (Au04) stated. Staff in government departments collect and interpret the research outputs and the ministers normally rely on the reports or policy proposals they receive.

It is very unusual for the ministers to go directly to researchers. That is why they have the departments. Each minister has an office with no more than 15 or so staff. Some of the departments have hundreds of hundreds of people working there, so, that is how the departments work. (Au04)

With regard to how to adopt research evidence in the policy-making process, a policymaker (Au11) from the Department of Environment described a “desk-top research” style and used the development of the previously mentioned fuel quality standard as an example. This means collecting the current research outputs of Australian and international research agencies.

We (Australian Government Department of Environment) have access to that research. So we know that (the Fuel Standard policy) is evidence based. That is very very handy, [and] that is very useful for policymakers…if there is research applied to that particular discussion question. (Au11)

A few respondents expressed quite a different view of the significance of research in policy-making, contrary to the most respondents and the literature. For the same biofuel quality standard policy decision (E85 Fuel Quality Standard), a policymaker, Au21, in the Department of Industry stated that there was no research involved in its

170 policy-making, because the fuel standard was determined mainly by the vehicles in use in Australia, and not vice versa.

Well, there is not really a research program, because the fuel quality standard is set to ensure that the fuel we have is fit to the purpose of the vehicle we have, so it is not like there is research on what are the parameters required to operate its fuels, so it is sort of basically determined by the type of vehicles. (Au22)

With reference to another biofuel policy: ‘biofuel blending mandate policy in the State of New South Wales’, policymaker Au10 stated that instead of adopting research outputs, the government mainly considered the feedback from the market, especially the capacity of the feedstock market when they set the mandatory target for biodiesel. He emphasised that the producers need to do their own research about market needs and their own productive capacity. There was no research program to inform the biofuel blending mandatory policy in the state of New South Wales. The conversation during the interview with policymaker Au10 is as follows:

The author: I would like also to ask about how policymakers would like to use research outputs. Do they use them directly in an instrumental way? Or do they use... Au10: No, it is the market that decides which technology is the most appropriate. Biofuel production is all about feedstocks. You identify your feedstock resource and you choose the most appropriate technology to transform that into a biofuel for your identified market. The author: So the market plays the major role in this process? Au10: Absolutely, if you cannot give the market the product it needs, there is no point to producing it, so our aim of the mandate was that wholesalers and retailers all create the market for the local production for ethanol and biodiesel. The author: So with this kind of mandate, it is not based on the research results? Au10: Umm, it really has nothing to do with the research.

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5.4.7 Comparison with China on the biofuel policy-making process

The findings from Australia show that new policies can start from the departments which implement the policy decisions, and can also start from the winning political party’s election platform, which is the top level of the governance. Compared with policy-making processes in Australia, findings from the interviews with the Chinese interviewees show that policy-making process in China seems simpler and mainly adopts the top-down approach. As researcher Ch03 stated, the government makes national plans and projections in the form of official planning documents, such as five- year plans, which function as the national policy guidance and benchmarks, following which a series of policies will be made.

Researcher Ch02 said that energy policy-making agencies in China included the National Development and Reform Commission (NDRC), the National Energy Administration (NEA), and the Ministry of Science and Technology. The Ministry of Finance will also be involved when projects need the government’s financial support. Researcher Ch08 mentioned that the policy-making departments usually organise the committee of experts and consult the committee for solid policy advice. Based on his working experience, he said that the contents of the consultation covers not only the current situation of one individual project, but also the predictions of these projects’ future development. Researcher Ch08 stated:

In regard of policymakers’ information collection process, I know not much, since I have not been in the panel. However, I know for sure that there is a Committee of Experts and they discuss and hold meetings with policymakers regularly. (Ch08)

Once the first draft was approved by these policy-making departments, the policy can be sent to the Chinese Academy of Sciences and the Ministry of Education. The relevant departments for these research agencies will also make research investments according to the policy developed by the NDRC, the NEA, or the Ministry of Science and Technology. Ch02 and Ch08 both agreed that the detailed research plans will be

172 reviewed by the policy-making departments and the feedbacks will be provided to these research agencies, repeated two or three times, before the final policy decisions are made. Researcher Ch02 confirmed:

The renewable energy targets in the 12th Five-Year Plan were all developed following this process. The experts in renewable energy field have been involved in the policy-making process. (Ch02)

However, said Ch08:

There may be some exceptions under some very urgent circumstances, for example, a decision about the introduction of biodiesel into transportation use was made responding to the strong voice from industries. This policy was developed based on one leader’s direct approval.

The National Energy Administration (NEA) decides the list of experts that are to comprise the committee. The experts’ rights and opportunities to participate attach a heavy weight to biofuel policy decision-making, which is reflected by the composition of the committee of experts. “The policy advice from the committee is definitely treated with considerable weight by policymakers”, confirmed respondent Ch08. To demonstrate that experts’ research backgrounds can influence policy trends, researcher Ch08 used the composition of the committee as an example:

There is an expert in the bioenergy field included in the first group of the experts: academician Professor Shi Yuanchun (who advocated biofuel development strongly). At that moment, there were relatively strong policy supports for biofuels. However, there is no expert in the bioenergy field chosen by the National Energy Administration working for that committee currently, and gradually, the voice supporting biofuel development is getting weaker and weaker. (Ch08)

When talking policy-making in general, researcher Ch11 stated that the people’s opinions can also be reflected in policy-making processes, except for the research evidence, which is the democratic aspect of the socialism. Respondent Ch11 works in a 173 university and also is a member of the Chinese People’s Political Consultative Conference (CPPCC). He emphasised that the political consultation and the democratic supervision are the major principles underpinning policy-making in China.

Our country’s policy-making is quite different from that of the western countries. The Chinese People's Political Consultative Conference (CPPCC) holds their meeting once a year. Its mission is to collect people’s opinions. For the major social issues, the CPPCC will draft them into bills and will have a discussion during the annual meeting held by the National People’s Congress Standing Committee. In this way, policy-making in our country reflects people’s will and protect people’s benefits. (Ch11)

As respondent Ch11 stated above, the National People’s Congress System is the fundamental policy-making process in China, which allows the people’s opinions to be involved in policy-making processes.

5.5 Evidence-based policy-making in biofuel field

5.5.1 Policymakers and Researchers’ attitude to ‘evidence’ in Australia

Interviews and questionnaires explored researchers and policymakers’ attitude to evidence-based research policy-making in Australia and to understand what type of research is most highly valued by the policymakers.

As shown in Figure 5.8, most researchers agreed (6 per cent) or strongly agreed (56 per cent) that policymakers are willing to find scientific evidence to assist their policy- making process. A similar result emerged from the policymakers’ responses (55 per cent agreed). However, a sizeable proportion of researchers disagreed with this statement (38 per cent disagreed and 6 per cent strongly disagreed), but only 18 per cent of policymakers disagreed (9 per cent) or strongly disagreed (9 per cent). Figure 5.8 also indicates that considerably more policymakers (27 per cent) than researchers (6 per cent) were inclined to provide a neutral response to this statement.

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Figure 5.8 Responses to Likert Scale Statement L9: Australian biofuel policymakers are willing to find research evidence to assist their policy-making process.

100% researchers % (n=16) 80% policymakers % (n=11) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L9

Responses to L9 sought to gauge policymakers’ willingness to use research evidence in the policy-making process, and L16 was to find out how policymakers rated the actual usefulness of that research evidence. Figure 5.9 shows the researchers’ responses were quite divided: 40 per cent disagreed, and 30 per cent agreed with the statement that “Biofuel policymakers can always get very helpful advice or evidence from research in Australia”. On the other hand, most of the policymakers tended to choose neutral responses (40 per cent) and fewer chose to agree (30 per cent) or to disagree (30 per cent).

Figure 5.9 Responses to Likert Scale Statement L16: Biofuel policymakers can always get very helpful advice or evidence from research in Australia.

100% researchers % (n=18) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L16

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After gauging a sense of researchers’ and policymakers’ general attitudes to evidence- based policy-making in Australia, the author questioned the respondents about what kind of research would be more influential in policy-making. Researchers Au05 and Au19 and policymaker Au21 stated that economic research or biophysical research that included relevant implementation costs would be more widely accepted by policymakers than research that only provided biophysical information. For example, researcher Au19 stated:

It (the research) is stronger if it has a link to economics, so that is what we are trying to do with our modelling. We have in-depth biophysical information, but we try to connect that to a market process, so that we can not only say, “OK, biophysically, this is how much energy; this is how much emissions; this is how much land area”, all those biophysical indicators, but you also want to say, “and this is what happens to the cost of travel; this is how they cost the fuel”. If you can add those, that information provides all of it, biophysical and economic. We think that is the most powerful story you can tell. (Au19)

Economics, as you know, is a very powerful way of arguing anything. You can’t say something has potential; but the first thing people will argue about is the economic aspect and (if it is not convincing) they will say, "Come back later". (Au05)

Some research projects are for commercialisation and demonstration, for instance, biofuel projects funded by ARENA, but others are policy-oriented economic research projects funded by the CSIRO and ABARES. The author hypothesised that the amount of funding for a research project could be a useful indicator of which type of research is more influential. However, respondent Au25 rejected this hypothesis. She stated that the amount of research funding should not be the only indicator to show the effect of research or to reflect how well the policymakers would value the research. She explained how useful information and comprehensive knowledge in the biofuel field could be collected and analysed through desktop research. However, she noted 176 that this type of synthesised research might cost less than large research projects for biofuel industrial demonstration or commercialisation, but it still could have more effect on policy-making. She said,

More money has been going into keeping the industry economically viable rather than research. … I mean it is hard to say anything just based on the money, because sometimes you don't need to invest that much money into research to get the answers that you need, so you can't just look at that. (Au25)

The ways to improve the impact of research on policy-making suggested by researchers were to try to publicise the results through all kinds of media, including journal papers, newspaper articles and blogs. One senior researcher (Au08) explained the necessity of using these multiple pathways to assist policy-oriented research to achieve the expected impacts on policy-making.

We have done the economics, published papers on the economics. … Of course this (the example research activity mentioned in the interview) is policy- oriented. … Because the government decision makers don't want to talk to us, they don't want to hear about this, we try to publicise it, trying to go to the media, by publishing articles, in magazines, newspapers and blogs, so I just published an article yesterday in the Canberra Times. (Au08)

5.5.2 Prediction on biofuel research investment in future

On the question of whether there will be more biofuel research investment in the future (Figure 5.10), the researchers’ reactions covered the full range from “strongly agree” to “strongly disagree”: 7 per cent strongly agreed, 33 per cent agreed, 33 per cent were neutral, 20 per cent disagreed and 13 per cent strongly disagreed. Unlike the researchers, a clear majority of policymakers (70 per cent) tended to be neutral on whether there would be more biofuel research investment in future. The fact that the policymakers expressed less strong opinions than the researchers may be explained by

177 their familiarity with the way policy is made and by the likelihood that they would be more constrained in commenting on government policy decisions.

Figure 5.10 Responses to Likert Scale Statement L15: There will be more biofuel research investment from the Australian Government in the future.

100% researchers % (n=15) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L15

5.5.3 Dose research drive policy or does policy decide the direction of research?

It is clear from the interviews and questionnaire data that policymakers and researchers valued research outputs and also believed that research could be very helpful in policy-making. It was also evident that research with clear economic value was preferred by policymakers. Question L23 was included to obtain more information about the relations between biofuel research and biofuel policy-making and, especially, to determine whether policy-making was research-led or vice versa.

In response to the Likert scale question L23 in the questionnaire (see Figure 5.11), over half of the researchers (53 per cent) indicated their belief that research could drive policy changes. It is telling that although 53 per cent of the researchers agreed that policy is likely to be research-led, most of the policymakers (60 per cent) provided a neutral response. It showed the researchers were more confident than policymakers in believing that the research outputs could demonstrate the need for policy changes.

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Figure 5.11 Responses to Likert Scale Statement L23: There are always results from the research investment programs that can drive the need for biofuel policy changes in Australia.

100% researchers % (n=17) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L23

The reason policymakers generally did not think that research could drive a new policy or trigger policy changes might have been that they were able to view the broader context that shapes policy. As policymaker Au02 explained, the interaction between research and new policy was mutual, rather than a one-way process by which one influenced the other. Au02 stated that one biofuel initiative would be achieved when policy priorities and research availability synchronised and both were available in that period. He considered that research could lead policy initiatives.

If you (researchers) have got good researchers with good ideas, that (research) might lead policy initiatives. (Au02)

On the other hand, policymaker Au02 emphasised such policy-initiatives were dependent on research matching the government policy priorities and on the individual policymakers involved. He said:

If we have got a policy champion who is just really looking at green field research policy that might be also in the area of innovation, so that might just be enough to be a driver as well. (Au02)

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More specific information was elicited from question L28 which asked whether the government would control the direction of research. As shown in Figure 5.12, the researchers predominantly agreed with the statement that “policymakers can control the direction of the biofuel research investment”. This result showed that the participant researchers, in general, believed that policymakers could control the direction of the biofuel research investment but this perception was not shared by the policymakers surveyed.

Figure 5.12 Responses to Likert Scale Statement L28: Policymakers can control the direction of the biofuel research investment in Australia.

100% researchers % (n=17) 80% policymakers % (n=9) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L28

In relation to L28, the researchers believed that policymakers could control the direction of biofuel research investment. Researcher Au05 referred to the “National Research Priorities” set by the Australian Government Chief Scientist. This “National Research Priorities” could influence where research investment would be allocated. The CSIRO, for example, is an agency that is obliged to do research that matches the “National Research Priorities”.

If you look to our reports, also the strategic plans for CSIRO [that are published], there would be some agreement with government, so there is a big process about what priorities should be in the different sectors and so on. Yes, so it is definitely well matched into what government should, would want. (Au05)

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In short, the responses to the survey questions L23 and L28 are evidence that research and policy interact mutually. For research to influence policy, it needs to be able to provide outstanding and innovative outputs. In addition, such research needs to match the government’s current research priorities. From the results of questionnaire and the interviews, it is apparent that the government’s policy priority was considered by the policymakers and researchers. By setting the “National Research Priorities”, the government could guide the direction of research, so that it could serve policy-making with closer match of information and knowledge required by the policymakers.

5.5.4 Whether policy-making is evidence-based

To explore whether respondents thought biofuel policy-making was evidence-based, there were three Likert question requests: x biofuel policy should be evidence-based (L8); x biofuel policy-making cannot be convincing without adopting research outputs (L29); x policy-making based on evidence could lead to a successful policy: appropriate, effective and efficient (L30). It is clear from Figure 5.13 that all the respondents unanimously agreed with the statement “Australian biofuel policy-making should be evidence-based”. Among all the respondents, over half of each group (67 per cent of researchers and 60 per cent of policymakers) chose “strongly agree”.

Figure 5.13 Responses to Likert Scale Statement L8: Australian biofuel policy-making should be evidenced-based.

100% researchers % (n=18) 80% policymakers % (n=10) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree L8

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Likert question L29 sought to see if it were true that policy-making based on evidence form scientific research was more convincing to policymakers. As shown in Figure 5.14, the most researchers (89 per cent) and policymakers (66 per cent) believed that evidence-based policy-making was more convincing. The percentage of policymakers (22 per cent) who did not believe so was higher than that of researchers (6 per cent). Overall, more researchers believed that evidence-based policy-making was more convincing than policymakers did.

Figure 5.14 Responses to Likert Scale Statement L29: Biofuel policy-making cannot be convincing without adopting research outputs in Australia.

100% researchers % (n=17) 80% policymakers % (n=9) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L29

Furthermore, as shown in Figure 5.15, the overwhelmingly majority of the researchers (94 per cent) and of policymakers (89 per cent) held the opinion that evidence-based biofuel policy-making was more appropriate, effective and efficient. This distribution of responses to this question showed that researchers and policymakers believed that evidence-based policy-making was crucial to achieving these three broad characteristics of better policy outcomes.

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Figure 5.15 Responses to Likert Scale Statement L30: Biofuel policies based on research results are more appropriate, effective and efficient.

100% researchers % (n=17) 80% policymakers % (n=9) 60% 40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L30

As seen from the analysis of responses to the previous questions (L8, L29 and L30), policymakers and researchers in general believed that policy-making with scientific evidence was convincing, and that policy-making should be evidence-based. However, when asked about the reality of biofuel policy-making (L13), there was a clear gap between the respondents’ belief in evidence-based policy-making and the practice of biofuel policy-making and the extent to which it involved the use of evidence. Neither the policymakers, nor the researchers, thought that it was always based on research outputs, although they clearly believed that if it were then policy-making would be more convincing, effective and efficient.

As shown in Figure 5.16, most of the researchers (67 per cent) and policymakers (80 per cent) did not agree that biofuel policies were always based on specific results of research projects. Even though most respondents believed that evidence-based policy- making was crucial, they disagreed that every biofuel policy in reality was based on research.

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Figure 5.16 Responses to Likert Scale Statement L13: Biofuel policy is always based on specific results of research investment projects in Australia.

100% researchers % (n=18) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L13

After questioning whether biofuel policies were always based on specific research evidence, the author tried to determine to what degree the respondents believed that the results of biofuel research were used when making biofuel policies (see Figure 5.17). In response to L25, none of the policymakers thought the biofuel policy-making was exactly based on research results. To be precise, 56 per cent of them chose “disagree” and 44 per cent of them chose “strongly disagree”. Most of the researchers (65 per cent) reacted in a similar way to the policymakers: 47 per cent of them disagreed, 18 per cent of them strongly disagreed. Only 18 per cent of researchers agreed. Overall, most researchers and most policymakers did not think that biofuel policy was made based on research results.

Figure 5.17 Responses to Likert Scale Statement L25: Biofuel policies are exactly based on the available research results in Australia.

100% researchers % (n=17) 80% policymakers % (n=9) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree L25

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In the interviews, many respondents (Au02, Au04, Au06, Au08, Au09, Au13, Au15, Au17 and Au25) put forward their explanations why the government could not adopt research outputs in the biofuel policy-making process. Through the interviews, the author explored the different types of evidence that respondents referred to when talking about evidence-based policy-making. This indirectly reflects what evidence- based biofuel policy-making is like in practice. As elaborated by respondent Au09, some biofuel policies were made using evidence from the market, by consulting industry, rather than evidence from research. For example, the NSW biofuel mandate was based on simulations and estimates of the biofuel industry. This confirms that, apart from evidence from research, there are various sources of information that can be used as evidence in policy-making processes.

I think the setting of the NSW government mandates, and the adjustment of them overtime, has been done in close consultation with the industry. I guess the evidence that was drawn on was "can the industry provide the level of biofuels that they are targeting?” and “[can this] be done?” and so on. And so, that evidence played a role and there are examples where they had to suspend the mandate for a period of time or slow down the rate at which they were going to increase them, because there hasn’t been enough supply. (Au09)

Another type of evidence accepted by policymakers came from other countries or districts. One policymaker (Au02) stated that a type of evidence-based policy-making was to look for examples and then check whether the example could match the specific policy context they were considering. For Australia’s biofuel policy, respondent Au02 proposed that Brazil’s biofuel policy was an example of best practice, which was used as evidence for policy-making and that the Australian government should consider whether Brazil’s biofuel policy is suitable for the Australian context:

So when we talk about evidence-based policy-making, then the argument would be that government should look for examples, or for something that works; something that is practical. So, it is frequently the job of other jurisdictions to 185

provide that evidence. So, given policies that work somewhere else, the question arises, then, “Could [this] be adopted for the Australian context?”

To give some examples, I might give something that happens in Brazil. Maybe [it is] using a higher amount of ethanol in their fuel blend than we would typically use in Australia, and when [it is] even going to 100%, and then someone could make the argument: “Will evidence like this work?” So that is considered in the Australian context. (Au02)

Apart from the information from industry and other countries’ examples of best practice, one of the major sources of evidence is from the research. The type of research also mattered, according to respondent Au05. He mentioned that if researchers would like to make their research outputs meet the policymakers’ knowledge then there needs to be improvement in the research. Usually, explicit economic or biophysical research was expected to be influential on the policy according to the respondent Au05. “Economics, as you know, is a very powerful way of arguing anything”, he said.

In terms of the intention to influence policy-making, research is usually categorised as policy-oriented or non-policy oriented research. As respondent Au25 stated, the research that was commissioned by the government is usually more influential and applicable because it provides exact information to the government; in contrast, the non-policy-oriented research usually provides neutral information and has less effect on policy.

According to the respondents, one of the reasons why governments could not adopt research outputs all the time was because biofuel policy-making was so contextual and practical. As one senior public servant (Au02) stated, the scientific evidence from research would not be able to change the government’s view if it was against the government’s policy position. Therefore, respondent Au02 believed that using evidence to support the policy was conditional on the policy position and he also mentioned that Australia’s biofuel policy-making used research evidence more in an 186 opportunistic way, rather than using evidence in an instrumental way or in a conceptual way.

I see it (the adoption of research outputs in biofuel policy-making process) probably more opportunistically. So [it is] probably driven by the ideological use of the government. So, evidence by itself, if it is against the government's policy position, evidence won't change government's view. They will argue that there is evidence for, there is evidence against. So, the evidence by itself is not enough to carry a scientific argument. So, it (the argument) has to be at the alignment between the evidence and the policy aspiration of the government. The evidence has to play into the government's mandate. (Au02)

The lack of following-up research activities and policy actions after ‘National Climate Change and Commercial Forestry Action Plan 2009–2012’ is a further example that starts with a statement that “research should match with policy context”. Respondent Au17 explained that just because the government’s priority was not climate change any more, not only did this policy end, but the related research activities also stopped. He mentioned that his department would do research about biofuel if the focus of the policy’s priority returned to climate change.

If the government is sort of interested in the climate change crisis again, we would do a review, collect information, see what has been working, see what hasn’t been worked, [and] refocus. There might be a bigger focus on bioenergy, or a bigger focus on mitigation and we will present government with options about tax measures for instance to drive investment in specific uses, so the liquid fuel, ten per cent [mandate] ethanol in petrol policy, we could look at that, [perhaps] increasing ten per cent or more. But, you know it is ultimately it up to the government. We present options and then they decide. (Au17)

Some respondents (Au04, Au06, Au08, Au13, Au15 and Au25) complained that biofuel policy-making in Australia did not adopt research outputs at all. The reasons they gave are below. 187

One researcher (Au05) stated that biofuel policy-making was ideology-based, instead of evidence-based and that was the fundamental reason for unsatisfactory results in adopting research in the policy-making process. She explained that ideology-based policy-making made research a very “weak pathway” to have an effect on policy. She used a recent survey of economists on climate change policy instruments as an example to illustrate the disadvantages but also the difficulty of avoiding ideological policy-making.

You couldn’t possibly argue for a single minute with, the wealth of evidence about climate change. … They surveyed all the economists recently. There is not an economist in the country that thinks that Abbott’s Direct Action plan is more powerful than the ETS (Emission Trading Scheme); it is just not evidence-based. So this is very weak, because it depends on the government of the day, and that can change all the time. (Au06)

The balance of power between different sectors can influence policy decisions, which is another indicator of ideological policy-making, was reflected by researcher Au08. He mentioned that the fossil-fuel industry held the dominant position in the energy market and that Australia’s biofuel policy was strongly influenced by the fossil-fuel industry. He explained that this situation was determined by the policy context in Australia. Because the government preferred to support the fossil-fuel industry, renewable energy (including biofuel) policies would be ranked well down in policy priority. Researcher Au08 explained that the “blind support for fossil-fuel industries” could be called “ideology-based policy-making” when compared to weak policy measures for biofuel. The reason he believed this happens is that fossil-fuel industries make a bigger contribution to the government’s income than does the biofuel industry. The weak policy reflected the dominant effect of political donations, taxation revenue and royalty statistics. He bemoaned the fact that the so-called “democracy” was not satisfactory in reality:

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Ideology is [the] blind support for fossil fuel industries basically, because they are big industries. They make big political donations. They do give some taxation revenue. They gave royalty statistics to government. They gave a little to the federal government. But, really, the previous Labor Government tried to put a super profit tax on mineral exports, including coal and the mineral industry. They (mining industry bodies) ran a 20million dollar media campaign, and helped to get rid of the Prime Minister, Kevin Rudd. It is democracy; democracy as it actually works in real life, anyway. (Au08)

One former policymaker (Au15) expressed very directly that there was barely any evidence that he could observe of ‘evidence-based’ policy-making: “Not really one (evidence-based policy-making example) anywhere (not only with biofuel policy, but also with all other policies)” (Au15). He explained that the government tends to be more reactive than proactive—“Unless somebody actually challenges the status quo, the status quo will be allowed to continue. … So I guess my view of government says that they respond to a lot of noise. (Au15)”. In his opinion, policy would be changed according to stakeholders’ interests, in order to make one Party more popular when it came to the next election campaign.

I think in many cases, it (developing one initiative) is about popularity, what will be the reaction. If we (one Party) do this or if we don't do this, will this make us more popular or at least increase our chance of getting us elected next time. They ask, “Which group will be pleased? Which group will be unhappy?” (Au15)

In addition to popularity as a motivating factor, under some circumstances, the policy- making was the result of negotiations between political parties. Researcher Au13 mentioned that the political nature of some policy decision-making by the government had negative effects on evidence-based policy-making. He explained that sometimes a policy decision would simply be a political decision that excluded analyses of relevant research. For instance, he mentioned that the Green Party’s pressure for the Coalition

189 parties to develop biofuels, which could be a force coming from the power of parties implementing ideologies instead of from research outputs.

Only one researcher (Au04), in the discipline of politics, explained the government’s decision-making process from the institutional angle. She mentioned that the government’s decision could be made within a government department, instead of collecting research evidence from research agencies, such as the CSIRO.

Let’s say hypothetically, the research could be done by CSIRO, but there is no guarantee that the policymakers would necessarily ask CSIRO. They may not. In my own experience, they will often do things in house, and not ask these people (researchers). They will not ask the researchers’ side.

They rely on their own ability to talk to people. They may do it informally, not necessarily formally. (Au04)

5.5.5 How do biofuel policymakers use research evidence

Even though policymakers could not always adopt the research outputs exactly for their policy-making in practice, as the findings of Likert scale statements L13 (Figure 5.16) and L25 (Figure 5.17), policymakers have their own way of interacting with research that is shown in their responses to questions about whether research investment is an efficient way to obtain useful information for policy-making.

As shown in Figure 5.18, approximately 40 per cent of the researchers and the policymakers agreed that research investment was the most efficient way to get relevant information for biofuel policy-making; similarly, most of the researchers and policymakers recorded neutral responses to this statement, although policymakers were somewhat more inclined to record neutral responses.

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Figure 5.18 Responses to Likert Scale Statement L11: In Australia, biofuel research investment is the most efficient way to get relevant information and knowledge for the policy- making.

100% researchers % (n=18) 80% policymakers % (n=10) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree L11

In general, most of the researcher and policymaker respondents believed that research investment was an efficient way to gather information for policy-making. Based on this common agreement on the usefulness of research investment, it is useful to seek answers to “how do they use research outputs?”.

A considerably higher percentage of researchers (56 per cent) than policymakers (20 per cent) agreed that research results were used directly to answer policy problems (see Figure 5.19). There was a smaller percentage of researchers (17 per cent) who believed that policymakers did not use research results directly. This percentage was lower than that of policymakers (40 per cent in total; 30 per cent of them disagreed and 10 per cent of them strongly disagreed). Even if the distribution of policymakers’ reactions to this question covered all the Likert scale choices, the percentage that disagreed was slightly higher than for the others, which showed that among policymakers, most believed that policy-making did not use research results directly, but most researchers thought the opposite.

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Figure 5.19 Responses to Likert Scale Statement L12: In Australia, biofuel policymakers use the results of research directly as answers for policy problems.

100% researchers % (n=18) 80% policymakers % (n=10) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree L12

With regards to the indirect use of research outputs, Figure 5.20 shows that the percentage of researchers (72 per cent in total; 6 per cent of whom “strongly agree” and 56 per cent of whom “agree”) who thought research results could contribute to shaping policymakers’ knowledge was much higher than that of policymakers (30 per cent). Only 17 per cent of researchers disagreed with this statement. The policymakers were more inclined to respond neutrally. In general, most of the researchers believed that research results could influence the policy-making process by shaping the policymakers’ knowledge and ideas. However, policymakers did not react as clearly as the researchers did; instead, half of them chose a neutral response to this statement.

Figure 5.20 Responses to Likert Scale Statement L17: In Australia, biofuel policymakers shape their ideas from research results in their policy-making process.

100% researchers % (n=18) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L17

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To sum up, the responses to Likert Scale statements L12 (Figure 5.19) and L17 (Figure 5.20 ) showed that the researchers were more likely than the policymakers to believe that policymakers use research outputs, either directly or indirectly, as evidence to support their policy-making. In contrast, the policymaker respondents tended to believe that research outputs influence their policy-making process more indirectly than directly.

These reasons for these responses to the survey were given in the interviews. Policymaker Au02 believed that one agency’s cultivation of science decided the agency’s treatment of scientific evidence when developing policy. He explained:

If it is a strong scientific agency where people are engineers and scientists with very specific skill sets, you could possibly get a stronger project management approach to the policy process. … If you go to an agency [which has] such a really general nature, or people who don't have specific credentials in engineering, or fuels or science and really they are just running to the wish of the minister, you might not get the process so tightly linked or at all. (Au02)

Respondents (Researchers Au12, Au03, Au25, Au13 and policymaker Au17) described the consultation process by which government obtains the information it needs. Some research work by specific research agencies or by public servants is formally commissioned within a department. The more informal way is to have continuing investment in either the CSIRO or some other research and development organisations, or in universities through the education system.

Researcher Au03 and policymaker Au11 described the research and information collection by the public servants in the government departments. The public servants were in charge of the research outputs and information collection and needed to write briefings for the minister on what the minister should do and what plausible decisions could be taken. As policymaker Au11 mentioned, this usually involved desktop research, collecting and synthesising existing biofuel research outputs. She believed

193 that this kind of research and research reports were very useful and helpful for policy- making.

I think that sort of research (synthesizing the existing research outputs) does perform a really important role in the way that the minister is briefed, in a way that shapes the minister’s understanding of the issues and what the opportunities are; what the constraints are; what is possible, [and] what is not possible. I think that sort of information is very important. (Au03)

Several respondents (Au17, Au13 and Au05) mentioned that the government directly commissions research agencies to produce research. One policymaker (Au17) and one researcher (Au13) confirmed that there is a branch of the Agriculture Department called ABARES, and that the economists and scientists who work in ABARES provide advice to the government on agricultural, energy and forest policies. They mentioned that it was the agriculture minister would take it to the Cabinet with an attachment on that submission, summarising key research findings on a specific topic. A second important research agency mentioned frequently by respondents is the CSIRO. Researcher Au13 mentioned that the CSIRO was a very important provider of scientific evidence to the government. Even though the government consulted research agencies, some respondents (Au05, Au13 and Au25) emphasised that there was no guarantee that research outputs would be adopted in, or have an effect on, the policy- making process. Respondent Au25 mentioned that the government would, ideally, consult researchers and use research evidence exactly. However, most of the time, the government adopted research outputs in a more conceptual way and this also depended on the type and nature of the research.

It (whether the government adopts the research outputs and how the government uses the research outputs) depends on what type of research they have asked for…. They can ask for all sorts of different things, and in some cases, they might commission [research], they might want something very specific, that is you know like a scientific question; in some cases, they might just want to know, “What the 194

emissions from livestock in Australia are, so the research gives them the exact number. It is like, as a fact, in other cases, the type of research might be about different policy options; then researchers might tell them carefully-- this policy has this benefit and this cost; that other policy has different benefits and different costs. And then they decide whether to use one of them, or they don't necessarily use them. So I mean it depends very much on what types of research are asked for. (Au25)

Policymakers tended to believe that in biofuel policy-making, the government could not always guarantee to adopt research outputs. Some policymakers tried to explain the reasons for this. For example, policymaker Au21 stated that the government tried to take account of all the evidence and to consult widely. He emphasised that sometimes the government even commissioned research and contracted people to provide additional evidence where it was needed. However, he explained there were still government priorities that led the policy direction.

It is probably not fair for researchers to say that their evidence wasn't given enough weight. Perhaps, it is just a case of when you look at that evidence, the cost of achieving that is beyond the capability of the government. (Au21)

He concluded that policy development was a combination of all the evidence and the government’s priorities.

To sum up, biofuel policy-making uses the evidence directly and indirectly. In general, policymakers could use evidence in a conceptual way, and evidence from the research could influence their thinking. Sometimes, the conceptual thinking about one issue could move to a formal question or an assessment, which would lead to a more constructive way of using research outputs. Some policies were developed in a very formal way with research reports informing them, but some policies could be developed in someone’s office, perhaps with several experts giving suggestions. According to researcher Au12:

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It (the conceptual discussion) can be about any big changes, or about whether people want it, or don't want it, why don't they want it, but we need to understand what these reasons and initiatives are in the first place. And I think policy is being conceptualising there. But I think that happens in general, but some policy issues, they go through the formal process. You have a lot of rigorous analysis, and produce a lot of reports; then in the end there is this recommendation to the government about what to do. Other ones, many don't happen like that. They happen in someone's office, or and it just they are thinking and there are advicing about what they are thinking about, whether it (the market) should have more biofuels; what are the pros and cons. (Au12)

5.5.6 Biofuel knowledge needed by policymakers

As expected, some aspects of biofuel knowledge are more likely than others to be needed by policymakers. Based on the findings of literature review, the author categorised biofuel-related knowledge needs into four aspects: social aspects, environmental aspects, economic aspects and integrated methods of assessment. In ranking question Q6, these aspects of knowledge needs were listed to let the respondents choose the five aspects of the most important knowledge they needed for biofuel policy-making. In Figure 5.21, the left axis represents the weighted average scores of the ‘consistently ranked highly’ aspects of needed-to-know knowledge on a scale of 0 to 5. The scores are shown in solid bars (researchers) and checked bars (policymakers). The right axis indicates the percentages of the aspects of knowledge ranked as the most important in the ‘frequently ranked highest’ category.

Listed in the horizontal axis in Figure 5.21, nine aspects of biofuel knowledge were ranked in the top five in ‘consistently ranked highly’ and ‘frequently ranked highest’ categories. These important aspects of need-to-know knowledge in the biofuel field include the four overlapping aspects ranked by the policymakers and researchers: ‘technology feasibility’, ‘the impacts on carbon emission’, ‘returns of the investment’, and ‘market potential’; three aspects were only chosen by policymakers: ‘impact on

196 ecosystems’, ‘the influences on biodiversity’ and ‘production capacity’; and two aspects of knowledge were chosen only by researchers: ‘cost benefit analysis’ and ‘integrated assessment’.

Figure 5.21 Results of ranking question Q6: The types of knowledge that policymakers expect to know the best from biofuel research.

5 100% 80% 4 60% 40% 3 20% 0% -20% 2 -40% -60% 1 -80% -100% 0 -120%

Note: ‘Technology feasibility’ is an abbreviated form of ‘Technology feasibility of the new generation biofuel production in a commercial scale.’ ‘The impacts on carbon emission’ is an abbreviated form of ‘Impacts on carbon emission in Australia from adopting biofuel’ ‘Returns on investment’ is an abbreviated form of ‘Returns on investment in biofuel industries in Australia’ ‘Market potential’ is an abbreviated form of ‘Market potential of biofuel product in Australia (demand side; for specific kind of biofuel and district)’ ‘Impact on ecosystems’ is an abbreviated form of ‘Biofuel’s impact on ecosystems in Australia’ ‘The influences on biodiversity’ is an abbreviated form of ‘The influences on biodiversity caused by biofuel production’

The overlap between ‘frequently ranked highest’ and ‘consistently ranked highly’ confirmed the importance of these aspects of knowledge needed when making biofuel

197 policies. Shown in Figure 5.21, clearly, that economic knowledge, such as ‘technological feasibility of the new generation biofuel production on a commercial scale’, was of prime importance and was chosen by policymakers and researchers. In addition, economic aspects of knowledge, such as ‘returns of the investment in biofuel industries’ and ‘market potential of biofuel product’, tied for fifth place in the researchers’ and policymakers’ rankings.

In line with ‘carbon emission reduction’ being one of the main drivers of biofuel policies in Australia, the environmental aspect of knowledge, such as ‘impacts on carbon emission in Australia from adopting biofuel’, was ranked as the second most sought after aspect of knowledge selected by researcher and policymaker respondents.

There are two obvious differences between the researchers’ and policymakers’ rankings. The policymaker respondents attach more weight to environmental aspects of concern, such as ‘the influences on biodiversity caused by biofuel production’ and ‘biofuel’s impact on ecosystems in Australia’. These high rankings from the policymakers may derive from the fact that there are several policymaker respondents from Department of Agriculture and the Department of Environment who care more about knowledge of biofuel’s environmental impacts. In contrast, the researchers did not rank these two aspects in their top five most sought after knowledge needs. Instead, researcher respondents thought the economic aspect of ‘cost and benefit analysis’ was more important and included it in their top five group.

There were also several aspects that were supplemented by respondents (Table 5.2), and considerable weight was given to ‘regional development’, ‘usage of the waste from the industry and forest’, ‘air quality’ and ‘economic impact for livestock’ aspects by some respondents.

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Table 5.2 Supplementary aspects of “needed-to-know” knowledge prioritised by individual respondents

Q6. Other most important “needed to know” Respondent Ranking Group aspects Regional development Au01 Rural community impact advocate 2 Researchers Au05 Regional development 2 Researchers Au33 Benefits to rural communities 4 Researchers Usage of the waste products from industry and forest Opportunities to absorb current industrial waste Au33 3 Researchers products Au13 Use of forest waste material 5 Researchers Air quality concern Au11 Air quality 1 Policymakers Au25 Impact on air pollutant emission 3 Researchers Economic impact for livestock Economic impact on other industries such as grains Au25 4 Researchers and livestock

5.5.7 Information channels used when making policy in Australia

After learning what knowledge biofuel policymakers thought they most needed to know, the next question was to find the channels through which this knowledge was obtained. In the questionnaire survey, the respondents were asked to choose the five most frequently used channels for policymakers to obtain this knowledge.

‘Public research agencies’, ‘research investment programs’, and ‘peer-reviewed journal papers’ in Figure 5.22 were ranked as ‘consistently ranked highly’ and ‘frequently ranked highest’ categories.

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Figure 5.22 Results of ranking question Q5: What are the most frequently used channels when biofuel policymakers trying to get information?

5 100% 80% 60% 4 40% 20% 3 0% --20%20% --40%40% 2 --60%60% --80%80% 1 --100%100% --120%120% --140%140% 0 -160%-160%

During the interviews, several respondents mentioned ‘public research agencies’ and ‘biofuel research programs’ in the research agencies. Researcher Au14 said there were two mechanisms for the government to get information. The first main pathway involved the government in collecting the data or research results from research agencies. For example, the Department of Agriculture would commission the research to ABARES (a research agency within the department) or to the CSIRO (a public research agency). The government would also fund universities and experts in this specific area to form a research agency, such as CEBRA (Centre of Excellence for Biosecurity Risk Analysis), to conduct research on specific topics. In these circumstances, the government’s knowledge needs for biofuel policy-making will lead research direction.

What this department (the Department of Agriculture) has done is actually to fund something called "CEBRA" (Centre of Excellence for Biosecurity Risk Analysis), which is headed up by the University of Melbourne. So they actually brought a 200

whole lot of research doing risk analysis, which is essentially what biosecurity is about, and they worked out their own needs. (Au14)

For research programs on biofuel, researcher Au05 mentioned that, for the government, ARENA was a very important source of information and knowledge about biofuel-related programs. He also emphasised that ARENA had played an overarching role in the development of the bioenergy industry in Australia.

I think Australia is fortunate to have had that formation of ARENA, because prior to that, bioenergy was very scattered around the government. But now there is one agency that has the primary responsibility and also has quite a lot of money to invest. So it is an opportunity for any proponents to come up with good ideas, and I think a lot of problems for the bioenergy industry in the past, were because there really is not much industry. It was a fledgling and small emerging industry, so it was not in a good position to argue its case or to have a good strategy. (Au05)

Surprisingly, the ranking results showed that policymakers and researchers included ‘peer-reviewed journal papers’ in the five most frequently used channels for obtaining information when making biofuel policies. It is easier to understand that researchers attached great importance to the ‘peer-reviewed journal papers’, which is really the major information source in their academic world. However, several researchers (Au04, Au09 and Au12) mentioned during the interviews that “reading journal papers” was not a very popular way for policymakers to obtain knowledge for biofuel policy-making, since obtaining comprehensive information about biofuels by reading journals was very time-consuming and not realistic. As researcher Au09 stated, policymakers would instead participate in seminars and conferences more often and, for Australia’s biofuel policymakers, biofuel work done in the EU and USA could be more important to use as policy examples.

To be honest, I don't know how much policymakers would read journal articles about biofuels. I think they would definitely be strongly influenced by ideas that come out of the US or EU, about what they are doing with biofuels and what is 201

working and what is not working. I think that would be strongly influenced by research, sort of R&D around second generation biofuels and groups like CSIRO working on those areas, and the advice those people give about whether the technology is heading into the future, things like that. (Au09)

The other five communication channels listed on the horizontal axis in Figure 5.22 are ‘university researchers’, ‘forums’, ‘conferences’, ‘newspapers’ and ‘seminars’. These were ranked in the five most frequently used channels, either only by policymakers, or only by researchers, and with lower importance.

In the interviews, two respondents (Au17 and Au13) confirmed that attending conferences and seminars was one of the channels most frequently used by policymakers to obtain biofuel-related information. Policymaker Au17 mentioned that officials from the Department of Agriculture would attend Bioenergy Australia’s annual conference and he stated that it was a very efficient way of bringing the researchers, policymakers and the industry together to present papers, share information and inform policy-making in biofuel the field. Also, researcher Au13 illustrated what would happen in a government department after public servants attended a conference:

If I was in the Department of Agriculture, and you know, [if] I went to a conference on biomass, and I came back with a view that Australia should have a bioenergy industry. I would probably write a letter to ABARES, and I would say in that letter, that “I have just been to a conference and I have been convinced that there is a reason for developing biofuel activity in Australia beyond, say, ethanol, and what I'd like from you is a summary paper of all the relevant research that I could put to the government to help me to justify my opinion that a bio-industry would be a good thing to Australia.” (Au13)

Researcher Au06 mentioned that attending forums was one of the most efficient ways for policymakers to collect useful information on biofuel from the research side. For example, she noted that the CSIRO’s Energy Flagship had held several forums, such as the “Energy Futures Forum (2004–2006)”; the “Future Fuels Forum: Flight Path to 202

Sustainable Aviation Fuels (2007–2008)”; and the “Australian Low Carbon Transport Forum (2010–2011)”.

In terms of exploration, the Energy White Paper and the work that Paul Graham's group did in the Future Fuels Forum and Aviation Forum [was a very effective way of informing policy-making]. The way that we are trying to work with policy and influence policy is through these forums. (Au06)

Besides the communication channels listed in the questionnaire, the respondents supplemented the list (Table 5.3). Respondents Au10, Au15 and Au01 added that consulting industry was an important information channel for biofuel policy-making and that the industry provided information and knowledge to biofuel policymakers. Respondent Au02 added one specific source of research, OECD reports, as one of the communication channels. These reports provide international biofuel research results to policymakers. In addition, some respondents also mentioned attending the briefings, reading policy reviews, watching the TV news, or meeting consulting companies. They ranked these among the knowledge-obtaining channels most frequently used in practice by policymakers.

Table 5.3 Supplementary communication channels frequently used by biofuel policymakers trying to obtain information

Respondent Q5 Other frequently used channels Ranking Group Au10 Industry 1 Policymakers Au 15 Industry lobbyist 1 Policymakers Au 02 OECD report 2 Policymakers Au 06 Small meeting/briefings 3 Researchers Au 11 Consulting companies 3 Policymakers Au 13 Policy review 3 Researchers Au 23 TV 4 Policymakers Au 01 Industry contacts 5 Researchers

In the interviews, policymakers Au11 and Au24 from the Department of Environment stated that internal research agencies and their newsletters were the most frequently used channels for them to collect biofuel-related information. Policymaker Au24 said that looking at other countries’ research results and policies was the prime means of

203 accessing useful information for biofuel policy-making. In addition, policymaker Au11 stated that through the newsletters, they could know what research was going on in biofuel field. She said that international research agencies, such as the International Fuel Quality Centre (IFQC) or the American Society for Testing and Materials (ASTM), an agency that sets fuel standards internationally, would send weekly newsletters to the department with information about new research. After department staff had looked through all these research databases, they would analyse the potential results to test whether they could be adapted for the Australian context, she said.

We (the Department of Environment) look a lot of their (IFQC and ASTM) evidence as well, and so we have access to the results. Whether they apply to Australia is often a different question. And we have a lot of scientists in our group, who can analyse the result, and decide whether it can apply to us, whether we can use it. (Au11)

5.5.8 Reasons for mismatches between policymakers’ expectations of research and actual research outputs

As shown in Figure 5.23, the responses to the Likert scale statement, L22, (research outputs always match policymakers’ initial expectation of the research investment) were decisive: most of the researchers (71 per cent) and policymakers (90 per cent) did not believe research outputs could always match the initial expectations of the research investment. Indeed, a considerable number of the researchers (18 per cent) and policymakers (20 per cent) strongly disagreed with the statement. This result showed that there were mismatches between research outputs and policymakers’ knowledge needs.

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Figure 5.23 Responses to Likert Scale Statement L22: Research outputs always match policymakers’ initial expectation of the research investment.

100% researchers % (n=17) 80% policymakers % (n=10) 60%

40%

20%

0% Strongly agree Agree Neutral Disagree Strongly disagree L22

The respondents ranked what they considered to be the five most important causes for the mismatches between biofuel policymakers’ initial expectation of knowledge from research and the actual outputs of biofuel research investment programs (see Figure 5.24).

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Figure 5.24 Results of ranking question Q10: Most important reasons that cause mismatches between biofuel policymakers’ initial expectations and the outputs of the biofuel research.

5.0 100% 4.5 80% 4.0 60% 3.5 40% 20% 3.0 0% 2.5 -20% 2.0 -40% 1.5 -60% 1.0 -80% 0.5 -100% 0.0 -120%

Notes:

Reason 1 - ‘Biofuel policymakers chose the wrong projects’.

Reason 2 - ‘The researchers did not supply the outcomes of the biofuel research in a way that matched the political language’.

Reason 3 - ‘Biofuel policymakers did not make the expectation of knowledge needs clear enough to researchers’.

Reason 4 - ‘Biofuel researchers did not understand the exact points of what policymakers wanted’.

Reason 5 - ‘Biofuel policymakers invest in the research project at a wrong time’.

Reason 6 - ‘The outputs themselves from the biofuel research were wrong’.

Reason 7 - ‘The outputs of the biofuel research supplied at the wrong time (missing the deadline, submit in the time that biofuel is not on the policy agenda, etc)’.

Reason 8 - ‘Biofuel policymakers did not provide the right context/background knowledge to the researchers’.

Reason 9 - ‘Policymakers are unable to access biofuel research’.

At first glance, the main differences between researchers’ and policymakers’ responses are that “Biofuel policymakers chose the wrong projects” and “Biofuel policymakers invest in the research project at a wrong time” were only selected by the researchers, while “Biofuel policymakers did not provide the right context/background knowledge 206 to the researchers” and “Policymakers are unable to access biofuel research” were only endorsed by the policymakers.

‘The researchers did not supply the outcomes of the biofuel research in a way that matched the political language’, ‘Biofuel policymakers did not make the expectation of knowledge needs clear enough to researchers’ and ‘Biofuel researchers did not understand the exact points of what policymakers wanted’ were all ranked amongst the five most important reasons; the only difference was that policymakers attached much more weight to ‘Biofuel researchers did not understand the exact points of what policymakers wanted’ than researchers did.

Responses to the rankings in question Q10 show that the researchers and policymakers ranked “Biofuel policymakers didn’t make the expectation of knowledge needs clear enough to researchers” as one of the five most important causes of the mismatch. The researchers’ reaction to this reason was stronger than that of the policymakers. The former ranked this reason as third in importance; the policymakers ranked it as the fifth most important reason.

The responses to Q10 corroborated the responses to the Likert scale statement L14 “Before agencies make a biofuel research investment, they knew clearly what information was needed” (Figure 5.25). Unlike the policymakers, most (53 per cent) of the researchers did not think policymakers knew what knowledge they needed before the biofuel research investment was made.

Figure 5.25 Responses to Likert Scale Statement L14: Before agencies make a biofuel research investment, they knew clearly what information was needed.

100% researchers % (n=15) 80% policymakers % (n=10) 60% 40% 20% 0% Strongly agree Agree Neutral Disagree Strongly disagree

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One researcher (Au12) emphasised that before policymakers invest in research to serve their policy-making process, they should set clear policy goals and make a basic prediction about what could be changed and who would benefit from the new policy. He indicated that the failure to do this could be one of the reasons why policymakers did not clearly express their knowledge needs to researchers and felt that their information needs were not fulfilled after the research had be done.

I did have some problems with the evidence-based policy idea. I am not against good evidence, but it is often about “What do you try to achieve in the first place?”, “What is the policy change for?” even with biofuel, “Is it about energy?”, “Is it about the environment?”, “Is it about farming or is it about pollution for some reason?”, and “Who is affected by the change?”. (Au12)

Moreover, specific research results, either as statistics or as text, might not be adopted exactly as they were presented in research reports or papers, because policy-making involves many other aspects of knowledge and the research might not cover all of them. In particular, respondent Au12 emphasised that policy-making could not ignore the balancing process of interests and powers between different stakeholders, which was also an important source of information to consider when making policy.

I guess (policy would) not (be) ending up with specific numbers, because practically, I think, [what is important is] what makes the best outcome for society as a whole. … It is not necessary to do a balancing of numbers in a sort of “this number is bigger than that number” [in policy-making processes]. It is a balancing of interests, the policy interest, which requires a bit more judgement than an analysis. (Au12)

The policymakers’ and researchers’ responses to “Biofuel researchers did not understand the exact points that policymakers wanted” were clearly different, with policymakers ranking it highest and most frequent in ‘frequently ranked highest’ and in the ‘consistently ranked highly’ group. The researchers ranked it out of their top five

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‘frequently ranked highest’ group and only ranked it as the fourth priority in the ‘consistently ranked highly’ group.

One function of research that was valued very much by the policymakers, as mentioned by respondent Au05, was that of assessing and reducing risk. He emphasised that reducing the uncertainties of an initiative was most wanted by policymakers:

(Research) showing what is possible (is necessary), but reducing uncertainty is important. The other thing is that governments don’t like uncertainty, do they? You have to live with them (uncertainties). So, if you (researchers) can work and reduce them - the more you can reduce the uncertainties the better - that is the sort of research that they (policymakers) might invest in; reducing uncertainties. (Au05)

Responses to Q10 revealed three types of communication problems that could arise between policymakers and researchers. The first is the lack of political awareness in research reports. In the ranking of question Q10, researchers and policymakers ranked reason2 “The researchers did not supply the outcomes of the biofuel research in a way that matched the political language” with relatively high priority. Researchers ranked this reason as the second most important one and policymakers ranked it as third importance. This result clearly demonstrated that one of the major causes of the unsatisfactory adoption of research outputs in the policy-making process was the language that researchers use in their research reports.

Secondly and conversely, policy language can be ambiguous to the researchers, too. As described in the above section, the policymakers’ ambiguity in relation to their policy goals could also be identified as a “language” issue. Respondent Au05 explained that sometimes “it [the language difference between researches and policy-making processes) was sort of a miscommunication about what the government was doing or

209 trying to do, and why would they try to do that”. Therefore, these communication misunderstandings between researchers and policymakers are mutual.

The third type of communication problems between policymakers and researchers is the mismatch of timeliness between research activities and policy agenda setting. Researchers ranked the timeliness of research investment as one of the five most important reasons for inadequate adoption of research output in policy-making. Reason 5, “Policymakers invest in the research project at the wrong time” was ranked fifth in the ‘consistently ranked highly’ category and reason 7, “The outputs of the biofuel research were supplied at the wrong time (missing the deadline, submitted at a time when biofuel was not on the policy agenda, etc.)” was ranked fifth in the ‘frequently ranked highest’ category. As opposed to the researchers, the policymakers did not rank the timeliness of research investment and research activities among the five most important reasons.

Researcher Au14 stated that policymakers valued timeliness more than preciseness, even though they did not like uncertainties. Researchers would prefer to provide more precise results but sometimes that would take longer time than expected, which would miss the effective timing of policy informing.

Policy people don't appreciate the time it takes to do research, and researchers don't appreciate the fact that policy people would like an answer that is 80% correct today rather than answers that are 100% correct in two years’ time. So, that is one of the things (reasons that cause unsatisfactory research adoption in policy-making) there. (Au14)

The mismatch between the policymakers’ initial expectations of knowledge and the research outputs, revealed some new views. People, instead of thinking there were mismatches, believed that the situation was more about insufficient research adoption in the policy-making process. As shown in Table 5.4, they explained the reasons from a political perspective.

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Table 5.4 Political reasons supplemented by respondents to Q10

Q10. Other important reasons that could cause Respo mismatches between policymakers’ initial knowledge Ranking Group ndent expectations and research outputs Au06 Political ideologies of governing policy˗ 1 Researchers Political consideration stop them from adopting the Au25 1 Researchers results of research Au08 Policymakers give low priority to research 1 Researchers Au22 Policymakers wish to support a particular industry 1 Researchers Au28 Politician do not want to adopt the results of the research 1 Researchers

Respondent Au12 highlighted the political aspect of policy-making, saying that there were always many kinds of information, opinions and complaints from stakeholders and this made policy unpredictable and complex. Therefore, he stated that politics was inevitable in the policy-making process.

That (policymakers could not predict every aspect of potential policy influences) would

happen with policy there all the time. … People you didn't know exist would suddenly be

upset and come out and say, start telling you things, complaining and making a noise in

the newspapers, and on the TV. There is always a non-predictable part of policy, which is

why politics is always there. (Au12)

The results of ranking question Q10 (“Most important reasons that cause mismatches between biofuel policymakers’ initial expectations and outputs of the biofuel research”) showed that biofuel research investments and research activities could influence the adoption of research outputs. Researchers ranked “Policymakers chose the wrong projects”, as the most important reason in the ‘consistently ranked highly’ and ‘frequently ranked highest’ categories. On the contrary, policymakers did not give priorities to this reason, because it was not ranked among the principal five reasons in either ‘consistently ranked highly’ or ‘frequently ranked highest’ category.

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Rather than giving a high ranking to the reason for investing in the wrong projects, the policymakers ranked reason 9, “Policymakers are unable to access research”, as the fifth most important reason in the ‘consistently ranked highly’ and in the ‘frequently ranked highest’ categories. However, the researchers did not select this reason as one of the five main reasons in either of those categories.

In addition to the accessibility of biofuel research, another concern, as policymaker Au24 stated in the interview, was the reliability of the research results. He expressed his concerns about economic modelling, because he believed that economic modelling was sensitive to inputs and assumptions. If the assumptions were wrong, then the results would be wrong, he said. Some research gaps could result because of the wrong assumptions in the modelling.

Economic modelling is partly an art not a science, because your choice of the

assumptions you make will cover what the outcome is going to be. They are useful, but

they are not infallible of most of the question as an answer. (Au24)

Researchers Au06 mentioned “very little investment in biofuels research” was also an important reason for policymakers adopting biofuel research outputs. She pointed out the irony in the fact that policymakers complained that they could not easily to get access to the biofuel research, but that they provided little investment in biofuel research, and that as a result adoption of research in biofuel policy-making was unsatisfactory.

5.5.9 Comparison with China’s evidence-based policy-making

Comparing Australian and Chinese interview responses, a clear difference between the two research systems was the importance in the Chinese system of the status and prestige of the research organisation and of the researcher. Chinese researchers Ch03, Ch06, Ch07 and Ch10 spoke of the importance of researchers’ right to participate in driving research impact on policies. They reached the consensus that not all kinds of research influenced policies, but only that conducted by prestigious researchers from

212 the authorised research agencies. Respondent Ch03 said that research at different levels of authority affects different levels of government policies. He identified that academicians in the Chinese research system often have national strategies in mind when doing research. Therefore, their opinions and suggestions have considerable weight on policy-making, especially to the national science and technology policies.

One typical example is the establishment of ‘973 Project’ set by Ministry of Science and

Technology, which started from a group of academicians’ submission of a joint letter to

the State Council, stating the needs to fund top level of research on a national scale.

(Ch03)

Based on his working experience, researcher Ch03 mentioned that the presidiums in the Chinese Academy of Engineering and the Chinese Academy of Sciences hold a panel and symposium every year to provide comments and suggestions to the major contemporary science and technology developments. The Leading Group for Science and Education under the State Council attend these symposiums and consider the suggestions from these academicians, which can lead to potential innovation and science policy changes.

Researcher Ch06 summarised all the possible communication channels for researchers to provide their research outputs to policymakers. He stated that experts can be involved before, during or after the policy-making processes. Before a policy is set in the policy agenda, scientists can submit a written statement about the potential policy problems to a higher authority. Another situation for scientists to become involved in policy-making is when policymakers commission research or consult the experts in one specific field. To this situation, respondent Ch10 confirmed:

Ministry of Science and Technology and National Natural Science Foundation of China usually collect researchers’ opinions and accept researchers’ applications for research funding. Chinese Academy of Science often holds academician meetings and invites government officials to attend. Policymakers pay attention to

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the technology development, and researchers follow the policy trends, or vice versa. (Ch10)

The third way of collecting expert opinions is after a policy has been put into practice and its evaluation is about to start.

For example, just recently, the government put the ‘Laws On Technology Achievement Transformation’ on the internet to collect experts’ opinions on a broader scale. (Ch06)

Researcher Ch07 is from one research agency in the National Development and Reform Commission. He confirmed that the frequently used communication channels for policymakers to obtain research outputs include submitting statements as policy advice, publishing journal papers or newspaper articles, and providing opinions at the consultation meetings. In addition, according to his own working experience, there is mutual communication between his research agency and the NDRC. Policymakers from the NDRC provide directive opinions to his agency when deploying research tasks and attending their seminars. In the meantime, the research agency submits research reports to the NDRC. Researcher Ch07 stated that:

Even though these research reports are not guaranteed to be adopted directly into policy-making processes, for most of the time, policymakers would use these research findings as references to their policy decisions. (Ch07)

Research conducted by agencies for policy-making departments are more influential to policymakers. “We have more opportunities to reach the policy side. Compared with universities, policymakers can get information from our research agency easier and more frequently”, researcher Ch07 said.

When talking about the biofuel-related knowledge needed by Chinese policymakers, researcher Ch08 complained that Chinese policymakers lack the most up-to-date biofuel development information.

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Just because they (the policymakers) don’t have a proper cognition and study background of this (new technologies in biofuels), none of the experts chosen by them (to form the Committee of Experts) is from this field. (Ch08)

Working closer with policymakers, researcher Ch07 stated that for biofuel policies, the technological maturity is the most important factor for policymakers to consider. The second factor that should be considered is the matching capacity of biofuel industry. Biofuel policies should lead the biofuel industry to a commercial stage. Policies for the following stages of biofuel development should focus on its economic performance.

The ideal situation for biofuel development would be when it is able to be profitable and stand on its own without long-term and high rate of subsidies from the government. Some technology and the production lines rely on the foreign technologies. For China, policies need to guide private enterprises to uptake the production equipment and the technologies independently. (Ch07)

Respondent Ch07 expressed a clear boundary between research and policy-making, using a Computable General Equilibrium (CGE) model in analysing effects of biofuel policies as an example. He said that policymakers do not know about the models; however, they care about the results of the modellings. “Models are too academic for policymakers”, he said candidly. It was research agencies and universities that are using models for analyses and to make predictions, not government departments.

Leadership was emphasised as a very important factor in increasing the effects of research on policy-making, agreed researchers Ch03, Ch08, Ch02 and policymaker Ch05. “In China, leadership tendencies have strong influence in decision making. To some extent, major policy directions depend on a leaders’ guiding principles in governance and judgement of the potential policy problems”, said researcher Ch03. Researcher Ch08 believed that the importance of leadership can also be reflected by the fact that policy led research development. He said:

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Once the government attaches importance to one specific research topic, it will provide more research funding for that research topic. If the policymakers do not think that research is useful, there will not be much funding for that field. (Ch08)

Therefore, one efficient way to increase the effect of research on biofuel policy-making is to promote policymakers’ awareness, as concluded by Ch08. He added:

Senior leaders’ words are influential in the Government. If they made instructions and comments on some submissions about improving the development of biofuel, there will be some movements in the implementation. I once wrote a letter to the Premier Li Keqiang about developing biogas. The letter took his notice and the suggestions were adopted. The Premier gave comments on the submission and there were some policy plans approved. (Ch08)

Leadership tendencies depend on policymakers’ cognitions of the potential policy issues. Energy policy was mainly made by the National Energy Administration (NEA). Adopting the NEA as an example, researcher Ch08 explained why biofuel is not given weight by the policymakers:

The current leaders in the National Energy Administration used to be in charge of the coal-electricity technologies and implementations. On some level, they are an interest group, which would naturally pay more attention and provide more political resources to the traditional energy sectors, instead of renewable energy sectors. With regards to the substitution of , these leaders may be keen on using solar and wind. Lots of leaders do not attach much importance on bioenergy, since they lack the related knowledge. (Ch08)

In addition to policymakers’ education background, their cognition of the capacity of bioenergy also limits the biofuel industry developing into a major energy sector. As Ch08 stated, biofuels in China are still identified by the government as the kind of energy supply that is only for use in rural areas, instead of energy that can be commercialised and be used for the whole nation. The energy demand from the

216 countryside is limited. Researcher Ch08 concluded, “The scale of biofuels that that is decided based on this cognition would not be able to reach commercialisation”.

Some respondents (Ch05 and Ch10) expressed more optimism in comments on the capacity of research to affect policy-making: policymaker Ch05 talked about this from the top level of leadership in China:

In China, more officials in the government have scientific study background, which means the policy fields are tightly connected to the scientific and technological fields. For example, the president of Tsinghua University holds the office of Head of Environmental Protection Bureau. Counting up to the top level of leadership-- former Chairman Hu Jintao, Premier Wen Jiabao and former Chairman Jiang Zemin all once majored in natural sciences. Leaderships with more scientific qualification make it possible for more scientific factors to be involved in policy-making processes. (Ch05)

Researcher Ch08’s response also agreed that policymakers’ education background and leadership tendencies strongly influence policies. In addition, he believed this is because policymakers are the ones who have the right to choose the candidates for the committees of experts. He complained:

They choose the experts in specific fields and only consult the topics and subjects they are interested in. Their interests depend on their personal expertise sources, when they work on the grass-roots level. Decision makers in the Chinese Government believe in planting trees for dealing with carbon emission reduction target. In regards to how much carbon emission can be reduced by adopting renewable energy, the policymakers have not much understanding. (Ch08)

Therefore, one way to increase biofuel research’s effect on policy-making is to include more experts in the committee and obtain the rights and opportunities to participate during the consultation with policymakers. Researcher Ch10 expressed his understanding that policymakers need to consider more factors than researchers who

217 research one specific field. “There must be some effects of research on policy-making. However, the degrees of the effects depend on the policymakers’ cognitions on the research topics”, he said. He emphasised that science is a persistent and long-term process and needs policy support to develop. Therefore, researcher Ch10 suggested that researchers and policymakers should understand the features of each other’s job and try to cooperate with each other, in order to achieve optimal policy results and scientific development as well.

Thinking from another angle, researcher Ch08 mentioned a reliable solution:

In regard of China’s renewable energy development, the only way to attract policymakers’ attention is to demonstrate a successful business model in the energy market. (Ch08)

Demonstrating the success of bioenergy technology in the market can help policymakers to understand the feasibility of bioenergy commercialisation and also can clear away the fear of uncertainty in this field, claimed Ch08. Using biogas as an example, researcher Ch08 said, would let policymakers know that it is good for the economy of the countryside, increases employment, and also be able to reduce PM2.5 and carbon emissions. The demonstration of bioenergy’s advantages to policymakers in practice is a gradual process, which is still more effective than advocating the idea only with research reports.

Two respondents (Ch02 and Ch03) mentioned the same successful example of research being able to lead policy change; coal to olefins (CTO) technology was successfully commercialised for the market. CTO technology was initially successfully developed by the Dalian Institute of Chemical Physics, Chinese Academy of Science, to convert coal into methanol. Ch02 explained:

China is rich in coal and poor in oil. Fortunately, the CTO technology can convert coal into olefins which can save oil needed in producing olefins. It was rapidly commercialised in the market. (Ch02)

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Researcher Ch03 recalled that, following its success in small scale demonstration, this project started to obtain support funding from the government and it was gradually commercialised in the market. As researcher Ch02 stated, there is a virtuous cycle between the feasibility of technology and the policy supports. Firstly, the demand for this technology is wide in the market, which provides a foundation for its survival in the competition with the traditional energy products. On the other hand, its success in the market attracts policymakers’ attention and attracts policy support during its development. “This process cannot exist without the policy supports”, said researcher Ch02.

The CTO technology’s success in the market changed energy policies in China, which, in turn, led to changes in the Five Year Plans. Researchers Ch03 mentioned that the amount of coal used for CTO became a new expenditure subject in the 12th Five Year Plan and the 13th Five Year Plan. He asserted that China has high expectations of technology innovation and also advocates evidence-based policy-making in general. However, the real policy and research funding input in the biofuel field is still inadequate. There is still a need to increase the effect of research on policy-making.

5.6 Summary

Using evidence drawn from interviews, questionnaires and policy and research documents, the knowledge of policy-research drivers was elicited, as the unique contribution to biofuel policy-making domain. The fundamental questions were answered, before examining to what extent biofuel policies were made based on evidence and whether it is rational for the government to intervene in biofuel by making policies. Those who believe in the free-market and neo-liberalism principles in governance deny the rationale for government intervention. In contrast, interviewees, who believed more about sustainability in the environment and the economy, supported government intervention in biofuel. Responses from the Australian biofuel policymakers and researchers exhibited a wide variety of opinions on the Australian government’s policy-making, but responses those from Chinese interviewees showed 219 astonishing consistency. Chinese policymakers and researchers were without any doubts and expressed no negative comment of their government’s decisions on biofuel policies.

The officially recognised drivers of biofuel policies (carbon emission reduction, national energy security and development of the local economy) were also identified in this research for Australia and China’s economic and environmental circumstances. However, there were more responses claiming political drivers of policy-making in Australia than in China.

According to the responses in Australia, the ideal policy-making process was not able to be followed in practice for most of the time; there were always steps skipped. This section also identified the factors that policymakers would like to consider before making biofuel policy decisions and especially, the role of research output in policy- making

Most of the interviewees believed that evidence-based policy-making could deliver better biofuel policies. However, biofuel policies were not made based on research outputs, because the political nature of policy is an inevitable companion of the policy- making process. The types of evidence that were adopted in biofuel policy-making, the knowledge that biofuel policymakers need, the communication channels used by policymakers to obtain the evidence, and the reasons for the mismatches between policymakers’ expectations and research outputs they could use were explored from the Australian responses. The comparison with the Chinese situation, made at a general level and from a smaller sample, showed the influence of differences in cultural and institutional structures to policy-making. In China, the level of research agencies’ authority was emphasised and striving for rights for biofuel researchers to participate and to inform policy was identified as one important way to improve the biofuel research’s effects on evidence-based policy-making in China. The following chapter is the discussions based on the findings synthesised in this chapter.

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Chapter 6 Discussion

6.1 Introduction

This chapter is a discussion of the major research findings in Chapter 5 with a consideration of a synthesis of research findings in academic publications and government documents. The discussion topics are elicited from the four main result themes (Sections 5.2 to 5.5), as shown in Table 6.1.

Table 6.1 Results themes and corresponding discussion items

Themes in Chapter 5 Discussion topics elicited from result findings

Section 5.2 Rationality for Multi-dimensional rationalities of government governments to intervene in intervention in biofuel development biofuel development The decisive position of ideologies Section 5.3 Drivers of biofuel The ‘real’ biofuel policy drivers in Australia policies Section 5.4 The biofuel policy- Exploring to what extent biofuel policy-making was making process and policymakers’ evidence-based, according to the typical three key considerations narratives identified in Australia and China From both biofuel policymakers and researchers’ Section 5.5 Evidence-based policy- perspectives, find obstacles and opportunities to making in biofuel field improve evidence-based biofuel policy-making in Australia and China

6.2 Multi-dimensional rationalities of government intervention in biofuel development

Results in Section 5.2 showed that 60 per cent of Australian policymakers believed that the government should not intervene in the biofuel industry, but 78 per cent of Australian researchers supported government intervention in biofuel (see Figure 5.1). The detailed reasons provided by Australian respondents to support their opinions on whether the government should intervene in biofuel industry are summarised in Table 6.2.

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Table 6.2 Synthesis of respondents’ arguments on the rationality of government intervention in biofuel development

1. Government’s belief in free-market 2. Market’s role 3. Biofuel’s price disadvantage Reasons for disagreeing with 4. Government does not support the production of private goods government 5. Limited tax revenue intervention 6. It is hard to end subsidies to infant industries once started 7. Biofuel does not have a comparative advantage in the energy market 1. Market failure in environmental benefits delivery Reasons for 2. Infant industries y with public environmental benefit, but market supporting failure will prevent its development government intervention 3. Unfair treatment on subsidies compared with fossil fuel industry 4. Unfair request on sustainability compared with fossil fuel industries

In the international comparison of Australia and China, a surprising consistency was found: around 64 per cent of the respondents from each country thought that it was rational for the government to intervene in biofuel development (see Figure 5.3).

The differences between researcher respondents and policymaker respondents in Australia and the similarity in survey results from the two countries have led to the following discussion on the government’s rationalities to intervene in the biofuel industry in Australia and China. Furthermore, these findings trigger the thinking of what dominated the respondents’ reaction to the question of whether governments should intervene in biofuel development.

As presented in Section 5.2, most policymakers did not agree with the rationalities of the Australian Government’s intervention in biofuel development. The concerns, articulated by the interviewees, were all economic and focused on biofuels’ market performance in competition with fossil fuels. They emphasised the neoliberal notion, under which the government usually chose not to intervene in the operations of the economy but instead to rely on the free-market forces. Several times, when the author 222 mentioned market failures during the interviews, the respondents (mostly policymakers and economists in researchers’ group) said that biofuel was not a ‘public good’ and they complained of the desperate requests from infant industries for financial support and asserted that there would be no ending for any such support once granted. Table 6.2 summaries the major reasons against government intervention in biofuel industry by Australian respondents.

There are two weaknesses in the argument (reasons summarised in Table 6.2) against government intervention in biofuel development in Australia. First, (against the neoliberal belief in free markets) biofuel production’s spillover effects are clearly public goods; and second, seeing ‘believing in free-market’ as a fait accompli and quoting it as the main reason why the Australian Government chooses not to intervene in biofuel development reflected that the Government’s decision making is influenced by its ideology. Similar to the comment on neoliberal belief in free market, “state is an inefficient mechanism of resource allocation” was illustrated by Prinja (2010) on Page 65 as a typical neo-liberal ideology that play as a “deep core” role in policy-making.

Biofuel itself is a private good; however, biofuels’ extended benefits are public goods, such as national energy security, national food security, and environmental benefits (Ackrill & Kay 2014; Fisher & Rothkopf 1989; Månsson et al. 2014; Zidanšek et al. 2009). As abstracted from the literature in Section 3.5, biofuels have potential for positive impacts on climate change mitigation, national energy security and regional development. However, when considering different types of feedstock and processing technologies, the researchers tended to agree that the efficacy of biofuels in reducing GHG emission was contentious and policymakers and researchers were aware of this. There are arguments about whether the positive impacts are scientifically true and to what extent these positive effects of biofuels can contribute to the well-being of society, the economy and the environment. Putting these controversies aside for the moment, here we discuss whether the government should support public goods, such as climate change mitigation and energy security.

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As clarified in the literature review (Section 3.4), goods are public goods when one person’s consumption does not change the good’s availability to others (non-rivalry) and when nobody can be excluded from enjoying them (non-excludability). These two features often leads to market failures for public goods, caused by allocative inefficiency and inadequate supply. In the tenets of neoliberal capitalism, when markets fail, the government should intervene; this is one of governments’ core functions. The following paragraphs will support this argument from the point of view of welfare economics, political philosophy, the role of government in social responsibility, and fairness in subsidising industries.

From the welfare economic perspective, welfare benefits are accordingly difficult for the private organisations to provide, which leads to market failure. Because public goods are available to all consumers yet may be costly to sustain, there are free riders who tend to benefit unfairly from people who steward the goods. The lack of assurance for obtaining worthwhile returns from stewardship discourages the producers to supply the public goods. With decreasing supply and increasing demand for public goods, the feasibility of market provision collapses. It is widely accepted that a government, at this moment, should directly supply or indirectly encourage the provision of public goods, to guarantee the welfare provision and to cater for the increasing demands.

Political philosophy has it that political society is discoursed as a ‘cooperative venture for mutual advantage’ (Anomaly 2015; Rawls 1971). When the majority derives the benefits of public goods whose cost is covered by the minority, voluntary exchange of value does not exist; therefore, mutual advantage of exchange will not occur. Under these circumstances, government must mandate to enforce a mutual advantage distribution. Therefore, under economic and political philosophy, ‘It is widely agreed that one of the core functions of government is to supply public goods that the market either fails to provide or cannot provide efficiently’. This idea is supported by Anomaly (2015) and Garnaut (2008).

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Governments take on responsibilities and obligations in considering their stake in all social, environmental and economic aspects of their role. Because of the government’s comprehensive conferring of benefits for the whole society, any ‘rational’ decision making that considers the benefits to one stakeholder alone, is too narrow a standard to judge the government’s policy-making. Instead, ‘rationality’ contains many dimensions or features that a government’s policy-making should possess. As identified in the literature review (Section 3.1), these features include legal, social, technical, economic and substantive rationality (Thacher 2004); and also can be categorised as quantitative aspects of rationality, which refers to ‘effectiveness’ and ‘efficiency’; and as qualitative aspect of rationality, which refers to ‘appropriateness’ (Regan 1978).

The governments’ social responsibility is to provide public goods, including national security against external invasion and the maintenance of a fair legal and judicial system. In the contemporary era, energy security is one core aspect of national security, because it underpins a nation’s economic development and thus affects national well-being and social stability. Climate change mitigation is influential internationally and determines every nation’s rise and fall. Energy security and climate change mitigation are public goods in the market, and no one government department can meet society’s needs for either of them. In addition, the demand is objectively wide spread. As stated in Section 3.2, biofuels have the potential to bring these public goods, along with their consumption, to the transport sector. Therefore, it is worthwhile for the government to improve national energy security and climate change mitigation by supporting biofuels’ adoption in the transport sector.

Security of fuel supply is one of the commonly cited government objectives in subsidising a biofuel industry (Charles & Wooders 2011). However, the Australian policymaker respondents denied this to be the rationale for providing subsidies to the biofuel industry. They complained that there would be no end to financial support for infant industries like the biofuel industry once that support was established (see

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Section 5.2.1). This argument may reflect the ‘once bitten, twice shy’ experience. Even though subsidies for the Australian car industry have not made significant improvements to its maturity (Kohler 2013; Lynch & Hawthorne 2015), it does not necessarily imply that government support and subsidies would not make any improvements to the biofuel industry.

In fact, the growth in biofuel production has clearly been policy-driven in Australia and in China from early 2000 to 2015, because there was a positive relation between governments’ policy supports for biofuels and biofuel production. From 2001, the Australian Government announced a series of policies to support biofuel development, including the 350 Million Litre Target, the biofuels excise exemption, and many research investment programs to facilitate the development of advanced biofuel technology and biofuel production (see Section 2.2). The production of biofuels (fuel ethanol and biodiesel) increased from 26 million litres in the 2004–05 financial year to 318 million litres in 2014–15 (see Table 2.1 and Table 2.2). Similarly, the Chinese Government launched two pilot programs using ethanol-petrol for automobiles: the Pilot Testing Program and the Expanded Pilot Testing Program provided financial incentives; exemption from sales tax (5 per cent) and the refund of value added tax (17 per cent), and the government set biofuel production targets in the Medium and Long Term Development Plan for China’s Renewable Energy. These policies facilitated the increase in biofuel production from 25 million litres in 2003 to 4055 million litres in 2015 (see Table 2.5 and Table 2.6).

At an early stage, biofuels find it hard to compete with the mature traditional energies in price and market share (Hill et al. 2006). Costs are higher and demand is lower because consumers need time and willingness before they have a comprehensive understanding of biofuels’ benefits, and these are uncertain (Biofuels Taskforce 2005). The unsatisfactory economic growth of biofuels is the very likely outcome of an infant industry competing with traditional energy industries in the fuel market. If the government does not support this infant industry because it is tricky to judge if or

226 when to give any support, then it might never mature. This was a vicious circle that appears to have caused the potentially innovative industry to fail.

Biofuel policymaker respondents in Australia consistently cite the belief in the effects of free-market forces as a reason to deny a government’s role in subsidising biofuels. However, the respondents did not mention the huge subsidies provided to the fossil- fuel industry. In Australia, estimates of these subsidies range from AUD3 billion to AUD26 billion per year, depending on the sources of the information (Hogan, 2015 #356). For instance, the Australian Conservation Foundation (ACF) calculated that the Australian Government provided AUD26 billion in fossil subsidies in 2013–14 (ACF 2014); the Australian Green Party’s estimate was AUD3.5 billion (Australian Greens 2013); and the Australia Institute’s figure was AUD8.5 billion (Australia Institute 2013). These estimates are made along with increasing calls for an end to fossil-fuel subsidies. Billions of dollars have been paid to support such a heavily polluting industry and such extensive subsidies are not economically wise, even though it provides jobs. The government would spend more money to resolve air pollution problems and to mitigate the effects of climate change when added to subsidisation costs.

Compared with fossil-fuel subsidies, biofuel subsidies are minimal. They amounted to AUD95 million in 2006 (Quirke et al. 2008), and around AUD94 million in 2009 (Charles & Wooders 2011). Moreover, taxation support and research funding for biofuels started to decline from 2014 (noted in Section 2.2.2). An AUD120 million reduction in subsidies for ethanol over six years from 2015–16 is one result of the cessation of the Ethanol Production Grants Programs (EPGP), and the expected net savings of government expenditure from the cuts to the Cleaner Fuels Grant Scheme (CFGS) was AUD156 million over four years from 2015–16 (Webb 2014).

In practice, the government’s decision making on biofuel intervention faces a range of challenges that include the uncertainties in biofuel development and its effects on the reduction of net GHG emission, land use change and food security. Research testing of biofuels’ effects has been springing up in the literature (Gawel & Ludwig 2011; Koizumi 227

2015; Maria & van der Werf 2008; Oladosu & Kline 2013; Quiroz Arita et al. 2016; Thompson & Meyer 2013; Tomei & Helliwell 2016) and there is rare consensus, especially when different feedstock and production technologies are included in the measuring models (Gawel & Ludwig 2011; Oladosu & Kline 2013). As identified in the literature review (see Section 3.3.1), neither the research on the effects of indirect land use change (ILUC) on biofuel’s part in climate mitigation nor modelling can help lead to consensus (Oladosu & Kline 2013). The disputed research outputs to do with biofuel increase the difficulties for the government in making a fair and effective judgment in the rationality of supporting biofuel industries.

Facing this complex situation of biofuels’ effects and technological feasibility, research is needed for making policy decisions. Research can provide methods to reduce biofuels’ adverse effects on food security and environmental pollution. Otherwise, these adverse effects of biofuels would be externalised. Moreover, research itself possesses the feature of a public good. The knowledge and information spillover may decrease the research investments from the private sector. The government could encourage the private sectors’ research investment by combining the public R&D funding with a proportion of private funding to assist industries’ investment in R&D. The RDCs and the CRCs models in Australia (see Section 2.3) are typical examples of research investment combining Australian Government and industry money. It is rational for the government to invest in biofuel research to improve biofuel industries’ economic and environmental performances and to reduce the uncertainties about biofuels’ adverse effects.

6.3 The ‘real’ biofuel policy drivers in Australia

It was initially surprising that the ‘major biofuel policy drivers’ from the questionnaire survey did not match the responses given at the interviews. A possible reason is that the respondents subconsciously considered writing to be a more restrictive activity because the written responses are more traceable than spoken responses, even if the author promised confidentiality in the consent form (see Appendix 4). Besides, the 228 interactive conversation with probing questions and answers was demonstrably better in eliciting the respondents’ experience and their stories of their involvement in biofuel policy-making or research than was checking answers to the questionnaires.

The major biofuel policy drivers identified from the questionnaires were carbon emission reduction, national energy security, and local economy development. This result coincides with the officially acknowledged drivers for biofuels in the literature (Ackrill & Kay 2014). However, as presented in Section 5.3.6, in addition to these three major drivers, political drivers were mentioned frequently at the interviews (with 21 out of 34 respondents). When prompted with the options in the questionnaire, the respondents might react passively and tend to only tick the obvious drivers, instead of creatively or actively supplementing the list with other drivers they might have in mind. However, when telling their stories during the interviews, more details were articulated. These political drivers identified in the interviews include lobbying from different stakeholders, different ideologies of different political parties and the inconsistencies of policy because of the habit of short-term thinking in government institutions.

Analysis of the narrative of the interviews identified three recurrent circumstances and justifications for these responses (see Section 5.3 for detailed responses): x Policymaker respondents argued against policies that deliberately supported biofuels. They emphasised that the high cost of biofuel policies outweighed biofuels’ environmental and social benefits. Therefore, there was no appropriate reason for government to make policies to support biofuel development. x Researcher respondents who supported biofuels were articulate in advocating biofuels’ benefits for climate change mitigation and energy security consolidation; and they commonly criticised the Australian Government for not wanting to believe in climate change and its refusal to have a long-term view on fossil-fuel depletion. They strongly support biofuel for its climate change mitigation and energy security benefits. 229 x Researcher respondents who argued against favourable biofuel policy settings, especially economists, most often criticised biofuels’ benefits in climate change mitigation, energy security and regional development for being too expensive. They believed that the only beneficiaries of biofuel policies were the major producers of ethanol in Australia; therefore, they believed that political favours were the real driver of key biofuel policies.

All these three narratives seem to be rational and the biofuel policy drivers each group supported seemed to be reasonable within each narrative. Therefore, in order to interrogate the ‘real’ biofuel policy drivers, triangulating the findings from fieldwork with literature and government documents is necessary. During the interviews, some biofuel researchers were recognised and mentioned by respondents. Chronologically, these well-recognised biofuel reports mentioned by Australian respondents are listed in Table 6.3.

Table 6.3 Well-recognised biofuel reports mentioned by Australian policymaker respondents

Recognised or Well-recognised biofuel research in Australia commented by respondents Appropriateness of the 350 ML Biofuels Target, Report to the Au18 Australian Government (CSIRO et al. 2003)

Report of the biofuels taskforce to the Prime Minister (Biofuel Au18, Au24, Au34 Taskforce, 2005)

Au07, Au21, Au24, Biofuels in Australia--issues and prospects (O'Connell & RIRDC , 2007) Au26, Au34 Advanced Biofuels Study: Strategic Directions for Australia (L.K.E, Au07, Au21, Au26 2011)

Notes: Au18: an experienced researcher who was involved in communications with the Department of the Prime Minister and Cabinet about the CSIRO et al. (2003) and Biofuel Taskforce (2005)

Au21: a senior policymaker in the Department of Industry

Au24: a senior policymaker in the Department of Environment

Au34: a program manager involved in research with O'Connell & RIRDC, (2007)

Au07 and Au26: program managers in ARENA

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Carbon emission reduction, national energy security, and local economic development were identified as biofuel policy drivers, because they were assumed to be the benefits that biofuels could bring. (The term ‘biofuel policy drivers’ is used in the sense that they promise to bring about such potential benefits.) If the research concluded that these officially acknowledged benefits could not be delivered by biofuels, the claimed biofuel policy drivers are not soundly evidence-based, which leads to the doubt whether the initial biofuel policies were based on research evidence. Results of these well-recognised researches are summarised in Appendix 5, and policymakers’ briefs are in Table 6.4.

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Table 6.4 Policy brief results of well-recognised biofuel research in Australia

(CSIRO et al. Biofuel Taskforce, O'Connell & RIRDC , L.K.E, (2011) 2003) (2005) (2007) Desirable, Desirable, GHG Desirable, ………… Desirable, the extent for 2nd emissions but expensive. but expensive. depends on generation feedstocks. biofuels. Desirable, Desirable, Energy Desirable, but only in Not mentioned. but only but minimal. medium to supply theoretically. long term. Desirable, Desirable, Regional Desirable, 648 direct and Desirable. promising for economy but small. indirect jobs 2nd generation regionally biofuels.

Desirable, Desirable, Health but the benefit Desirable, especially for Not mentioned. benefits was found to uncertain. replacing low be small. sulphur diesel.

Negative, Land use Uncertain, not significant Not mentioned. Not mentioned. depends on scale. change impact.

Negative, Negative, nd Food price 2 generation Not mentioned. Not mentioned. not an issue for increase biofuels would Australia. prevent. Competition with Positive, Positive, Positive. depends on particularly in Not mentioned. livestock feedstocks. drought years. industry

Meeting a 350 ML Biofuels excise target estimated advantage cost Cost to reduce GDP by around $90 Not mentioned. Not mentioned. around 70 million million in in 2010. 2009/10.

As assessed by these well-recognised research organisations before 2013, biofuels’ impacts were basically desirable in climate change mitigation, energy security consolidation and regional economic development. This finding matches the questionnaire results provided by Australian policymakers and researcher respondents

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(in Section 5.3). However, according to the research, such benefits of biofuels were not economical in Australia. For example:

Assistance to the biofuel industry would generate some benefits in terms of health (via improvements in air quality), reductions in greenhouse gas emissions and regional employment opportunities. However, in all cases, these benefits were found to be small and varied with the biofuel source, production practices and utilisation circumstances. (CSIRO et al. 2003)

There would be some greenhouse gas emission benefits, of the order of AUD7 million a year, which could vary greatly depending on plant design and feedstock. On their own, these are not sufficient to warrant significant policy intervention, given that cheaper carbon reduction options are readily available. (Biofuel Taskforce, 2005)

One curious finding was that there was no specific publicly available research on policies’ feasibility before the biofuel policies were set. Rather, the government commissioned reports assessing costs and benefits of the biofuel policy EPGP that emerged just before or at the same time as the Government ceased the EPGP. These two reports were An Assessment of Key Costs and Benefits Associated with the Ethanol Production Grants program: A Report for the Department of Industry by BREE (2014); and The Auditor-General ANAO Report No. 18 2014–15: Performance Audit: The Ethanol Production Grants Program by ANAO (2015). The conclusions of these two reports (summarised in Table 6.5) are worth comparing with the conclusions provided by those well-recognised biofuel research organisations (as in Table 6.4).

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Table 6.5 Summarised results of recent authorised and government commissioned impact assessment of EPGP

An Assessment of Key Costs and Benefits Performance Audit: The Associated with the Ethanol Production Ethanol Production Grants Grants program (BREE, 2014) Program (ANAO, 2015)

Relatively modest but come at a very high cost; GHG emissions Quoted BREE (2014) 0.39 million tonnes CO2-e abated at an effective cost of AUD274 per tonne of CO2-e.

Negligible supply chains are more vulnerable Energy supply and less robust and responsive than those of Quoted BREE (2014) the conventional oil market.

Relatively modest, at a high to cost; no net benefit for agricultural producers, feedstock Regional economy is waste or sold in other markets; estimated Quoted BREE (2014) 160–200 direct jobs at a cost of AUD545k to AUD680k per job.

relatively modest and declining; AUD10.6 Health benefits Quoted BREE (2014) million p.a.

Land use change Not mentioned Not mentioned

Food price increase Not mentioned Not mentioned

Competition with Not mentioned Not mentioned livestock industries

Total expenditure on the costs A$108 million of payment in 2012/13 EPGP was A$895 million

Examined the effectiveness Objects of the Assessed the key costs and associated of the Department of assessment and benefits from the operation of the EPG Industry and Science’s evaluation program for the year 2012-13 administration of the EPGP

Clearly, there were no significant contradictions between the evaluation results of these two research reports (BREE’s and the ANAO’s report in Table 6.5) and the ones from those well-recognised biofuel research organisations before 2013 (as in Table 6.4). Looking into the details of the responses, it was also clear that environmental benefits, regional development and health benefits were all assessed as ‘positive’ by research projects and evaluations in Table 6.4 and Table 6.5. The CSIRO et al. (2003) described 234 these using the words “costly” on page 16, and the Biofuel Taskforce (2005) used “expensive” to describe “regional policy development goals” on page 115 and "energy security” on page 124; similarly, BREE (2014) referred to the benefits as “modest” on page 4.

However, the tone of these recent reports was quite different. BREE (2014) and the ANAO (2015) emphasised that benefits were “modest” and costs were “very high”. They denied these benefits were feasible and valid as the potential targets for the major biofuel policies (350 Million Litre Target and EPGP). After the release of these two reports, the Abbott Government announced biofuel policy changes. The policy advice provided by the CSIRO et al. (2003) and the Biofuel Taskforce (2007) did not have significant policy impacts as did BREE (2014).

The ANAO’s audit report on the biofuel policy of the EPGP (Ethanol Production Grants Program) provides more information about the drivers of it. The ANAO (2015) intended to measure the effectiveness of the Department of Industry and Science’s administration of EPGP. In the report, the details of the history of the EPGP program development were comprehensively explored. From the start of EPGP, the ANAO stated that it could detect no clear program objectives:

When the EPGP was first established, program documentation did not include explicit objectives or outcomes, but referred to the terms of the Prime Minister’s media release when announcing the program. A specific program objective and outcomes were introduced in July 2012. (ANAO, 2015)

ANAO’s report pointedly observed that one biofuel producer, Manildra Group, received most (70 per cent) of the program funding:

The Australian Government’s total expenditure on the EPGP program since 2002– 03, including estimated costs in 2014–15, is expected to be some AUD895 million. … Between 2002–03 and 2013–14, one participant (Honan Holdings Pty

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Ltd) [Manildra Group] received AUD543.4 million (70.2 per cent of all program funding). (ANAO, 2015)

The report offered a hint leading to the problem mentioned by respondent Au18 who said, the “Australian biofuel policy driver is to benefit a specific ethanol producer” (in Section 5.3.1). Respondents who mentioned this thought it had a perverse and inappropriate outcome and stood as a bad example for future efforts. The BREE and ANAO reports both provided prescriptive pieces that capture a frustrated narrative on their evaluations: 1) the biofuel policy goals were unclear; 2) the program was poorly accounted; 3) there were no adaptation to stop the perverse outcome; and 4) the policies were neither efficient nor appropriate.

According to the evidence gathered for this research, environmental and social benefits drove biofuel policies before 2013; however, they became ‘too costly’ to be sufficiently strong to drive policy after BREE (2014). This could be because the Rudd Government had attached importance to long-term environmental and social benefits, even if these were uncertain; therefore, the prospect of ‘costly’ environmental and social benefits from biofuels was acceptable. In contrast, the Abbott Government democratically gave weight to economic benefits and represented the views of Australians who could not bear inefficiency in the economy. Ironically, this type of explanation per se admits that the ideology of the government is decisive in biofuel policy-making, because it decides through a complex web of influence whether a report emphasises environment and social benefits to be ‘positive’ or ‘costly’.

The transformation in biofuel policy drivers, based on the questionnaires, interviews, and biofuel reports before and after 2013, is dramatic. Under these circumstances, the inside stories and the comments given by the researchers and policymakers who were involved in the research and developing policy are thus valuable components of a more convincing and explorative narrative of the ‘real’ drivers of biofuel policies in Australia.

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Beyond the literature and questionnaire surveys, engagement in gathering these narratives provided opportunities to hear background stories that sit behind Australian biofuel policies. Movements of personnel in the government departments are frequent and involving those key people in this research was difficult, especially when considering the fact that these policy-making exercises were 10 years ago. However, some of the most valuable insights from the insiders’ personal experiences make the effort worthwhile.

One senior researcher (Au18), who worked in ABARE in the early 2000s, participated in a taskforce from 2003 to 2005 that was involved with the whole series of research on the feasibility and viability assessment of biofuel. Au18’s narrative identified that climate change mitigation was taken as a valid biofuel policy driver, endorsed by the Australian Government, even though the report Biofuel Taskforce (2005) concluded that the climate change benefits from biofuels were limited and not economic, given that cheaper carbon reduction options were readily available.

When we (the Taskforce) said that the study suggested that the health effects are quite small, well, they (the policymakers) said we don’t want to look at health, we just want to look at whether climate change is there. (Au18)

This response corresponded with the drivers distilled from biofuel policy documents shown in Section 2.2.2. The increase in biofuel policy expenditures and research program investments followed the Australian Government’s ratification of the Kyoto Protocol. Conventionally speaking, at least before 2013, climate change mitigation was one of the strongest drivers of biofuel policies in Australia, as reflected by the consensus derived from the questionnaire survey (results shown in Figure 5.4), interviews (quotation on Page 132), policy documents (e.g. Clean Energy Security Future White Paper 2004 (Australian Government 2004b) in Section 2.4.1 ) and authorised biofuel research (summaries shown in Table 6.4) before 2013. Even after 2013, the Abbott Government announced cuts to major biofuel supporting policies in their efforts to reduce Australia’s burden in fulfilling its commitment to the Kyoto 237

Protocol. This also demonstrates the tight correlation between climate change policies and biofuel policy settings in Australia.

6.4 The extent to which biofuel policy-making was evidence-based

Before 2013, well-recognised research outputs with comprehensive assessments of the effects of biofuel policies (in Table 6.4) did not significantly influence biofuel policies at either the macro-level (through national policies) or the micro-level (through program investments in biofuel). This can be clearly seen through the Australian biofuel policy changes spectrum shown in Figure 2.6. Before 2013, there were no significant changes in biofuel policy expenditures and research program investments related to biofuels. In contrast, BREE’s evaluations (2015) of the costs and benefits of the EPGP, have led to the government’s decision to cease the excise exemption for ethanol production in Australia. This causal relation between BREE’s research (2014) and policy change was supported by the ANAO’s report:

A 2014 report by Industry’s Bureau of Resources and Energy Economics (BREE) provided a concise high level assessment of the program’s costs and benefits, leading soon after to the Australian Government’s decision to close the program. (ANAO, 2015)

There were no contradictory results discovered from an analysis of the well-recognised research reports before 2013 (in Table 6.4) and BREE’s research in 2014 (in Table 6.5). But, clearly, similar research results had disproportionately different influences on biofuel policy changes. To explain this phenomenon, a reasonable deduction would be that at least one period of change in biofuel policies was not based on research evidence. The biofuel policies (including major ones, such as the 350 Million Litre Target and the EPGP) had not changed before 2013 (described in Section 2.2.2). Therefore, research outputs in Table 6.4 apparently have a limited effect on the policy decisions. In contrast, according to the clearly causal relation between BREE (2014)

238 and the cessation of the EPGP, the cause of the end of that biofuel policy could be seen as evidence-based.

However because the BREE’s report (2014) was commissioned by the Department of Industry, and the timing was so close to the biofuel policy changes in 2014, it is possible to speculate whether BREE’s research came first or the policy intention came first. Attribution is difficult to prove. The author tried several times to contact BREE for interviews. The answers were always “BREE has no position in commenting on the Government’s policies” or “what we do is economic assessment, and the detailed contents are all available in the report”. Therefore, without further insights, the relation of this BREE report and the cessation of the EPGP cannot be known.

Situations like this indicate that the inside stories are especially important when no other research evidence and policy documents are available. There were two more narratives provided by Australian senior researchers, Au18 and Au06, which reveal the extent to which biofuel policies before 2013 were based on research evidence.

6.4.1 Australian Narrative 1: absence of research evidence to justify the biofuel policies before 2001

The 350 Million Litre Target was set by the Australian Government in 2001 (the policy contents was provided in Section 2.2.2). However, in 2003, the Australian Government commissioned the CSIRO, the BTRE and ABARE to test the feasibility and effects of the biofuel policies after the 350 Million Litre Target had already been operating for two years. That is to say, prior research on the feasibility and validity of these policies was absent. Researcher Au18 commented:

When the government made the commitment in the 2001 election, it (the potential impacts of biofuel policies) was unknown, they thought it (ethanol) might be useful, but in Australia, there was no work before. If you look at the 2003 CSIRO report, I don’t know if there is any Australian study before we do [it], I don’t think

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there were. 2001 is the start point. And is it (the 350 Million Litre Target) a good idea? Not clear.

The Australian National Audit Office’s performance audit report of the Ethanol Production Grant Program, repeated the assertion:

When the EPGP was first established, program documentation did not include explicit objectives or outcomes, but referred to the terms of the Prime Minister’s media release when announcing the program. A specific program objective and outcomes were introduced in July 2012. (ANAO 2015b).

Another report, well recognised by policymaker respondents, was Biofuels in Australia—issues and prospects, which was written by the CSIRO and the RIRDC in 2007 (O'Connell & RIRDC 2007). Au06 revealed the motivation of this research project:

…the first RIRDC report, which is called “Issues and Opportunities” that was very strongly driven by the National Farmers’ Federation, because they had a very difficult situation where different parts of the farming sector [were] at absolute conflict, internally, in the National Farmer’s Federation about biofuels. So, the sugar and the wheat growers were very excited about the new opportunity. The feedlotters (grain-fed livestock farmers), the people who grow cows, were incredibly angry and didn’t want the government to support [biofuels], because they didn’t want the cost of feed grain or low quality grain to be pushed up, because that means it will be more expensive to feed their cows. So mostly the opposition still comes from the feedlotters, because of that, the [National] Farmer’s Federation went to the government who sent them to RIRDC, who came to us [CSIRO], to say, “can you take an even-handed view, an unbiased view, on biofuel?”. They thought they should not do it themselves, because they have different interest groups, within them [the NFF and the RIRDC]. (Au06)

This report on biofuels was not initially intended to test the benefits and costs of biofuel policies in Australia, but was driven by key lobbyists’ arguments about the price

240 of feedstocks for biofuels and livestock. Both these reports by the CSIRO et al. (2003) and O'Connell and RIRDC (2007) were commissioned after the launch of the Ethanol Production Grant Program (EPGP) and 350 Million Litre Target in 2001. There were no specific publicly available research outputs testing the feasibility or impacts before the biofuel policy decisions were made.

Biofuel policies were launched before the pilot research was funded, which stands in direct contradiction to the idealist framework of evidence-based policy-making. That policy-making would start from research investments was assumed in the conceptual framework of this research (see Section 4.2). The indication here is that scientific evidence did not play a major part in biofuel policy-making in Australia. Instead, the fact that the Australian Government endorsed an excise exemption policy, and the 350 Million Litre Target for biofuels, without publishing a full assessment of its effects, suggests that political motives played a major role in biofuel policy-making, rather than vigorous scientific evidence related to climate change mitigation, energy security or regional economic benefits.

6.4.2 Australian Narrative 2: communication with the Australian Government on the research for the 350 Million Litre Target

Providing subsidies for infant industries that have positive spillover effects for society and the environment is seen as an appropriate government intervention. However, from the narratives recorded for this research, the Australian Government’s supportive policy for biofuels was not based on research evidence. The contrast between policymaker respondents’ consistent argument against government intervention and the government’s practice in providing biofuels subsidies, even without a clear basis from research evidence, is confusing.

A series of feasibility reports of biofuel policies were commissioned from 2003 to 2005: Appropriateness of a 350 ML Biofuels Target, Report to the Australian Government (CSIRO et al. 2003); Revised assessment of biofuels industry viability (Short & Dickson

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2004); and Report of the biofuels taskforce to the Prime Minister (Biofuel Taskforce, 2005), of which the most recognised one was Report of the biofuels taskforce to the Prime Minister (Biofuel Taskforce, 2005). Researcher Au18 participated in this research and the communication with the Department of the Prime Minister and Cabinet about the research results.

The Australian Government had brought together experts in agriculture, economics, health and transport to form a ‘Biofuel Taskforce’ and commissioned the taskforce to find whether a goal of 350 ML by 2010 for biofuels could be met. The major conclusion was that meeting the 350 ML Biofuels Target by 2010 was unlikely, based on policy settings and consumer demand at the time (Biofuel Taskforce, 2005).

According to researcher Au18, the Publicly Funded Research Agencies’ independence was slightly weaker than the official definitions summarised in Section 2.3.1. Au18 recalled that Publicly Funded Research Agencies (PFRA) were only to do research in relation to the Government’s commissions, and the results were usually consistent with the Government’s expectations:

The Government wants information and advice. … When they ask you [researchers] for a submission, they usually know what the answers are going to be. …It [research] might have contrary views to it [government’s policy intention], but the governments don't want attacks from the people they employed. (Au18)

Au18 recalled the communication experience with the policymakers about the outputs of their report, which exposed policymakers’ knowledge needs and their attitude to research outputs in biofuel policy-making.

We did economic cost and benefit analysis. Here were the threshold prices for ethanol and biodiesel to changes under different exchange rates, different oil prices [pointing to Figure6 and Figure7 on Page 113 of the Report of the Biofuels Taskforce to the Prime Minister]. … The subsidies to ethanol and to biodiesel to make it worthwhile to produce in Australia are high. … So, 30 cents or 35 cents

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per litre subsidy for ethanol, and between 50 and 65 cents for biodiesel, so it is uneconomic.

The Prime Minister’s Department officers asked how confident I was about the numbers, I said I was very confident, and they said, “OK, that is the level of subsidies that we will set”. … They don’t even care about the benefit that didn’t quite match up. They had a policy about clean fuel that helps support the industry; helps support their friend in Manildra.

Because this [the subsidy level] is highly dependent on the world oil price and the exchange rate. [I told the policymakers that] you might want to know that our policy will link to the world oil prices and the exchange rate, but advice on putting so, we wanted to talk about this, [but] they [policymakers] don’t want to know. [It seems like they were saying] “No we don’t want that. Just give us a simple set of numbers”. So, this is how government policy got set. They [policymakers] are asking specific things, and we [researchers] are limited at what we can advise. So, that is how the policy was developed and that is how this number was selected.

This narrative suggests an age-old problem: that biofuel policymakers prefer to know research results for the policy options that they already have in mind. They may lack interest or capacity for fully understanding the analysis provided in that report or research, because there are multifaceted factors and complicated, variable relations covered in biofuel research, which is outside the policymakers’ expertise. This shows that the political model of research is in use (the concept of the political model of research use was provided in Section 3.6.2). Experience shows it exists in biofuel policy-making in Australia because of the subjective wills of people and the objective limits of communication and expertise.

To sum up these two Australian narratives, if the initial motivation for developing a biofuel policy was to support the ‘friend’ in the business or was driven by other political factors, this policy from the beginning could not be based on research

243 evidence. That is to say, if political factors drove the biofuel policy to the greatest extent, it could not be developed based on research evidence at all. Biofuel research that was conducted after the biofuel policies were set was either ignored or used purposely to reduce the noise from stakeholders outside the ‘privileged’ interest group.

6.4.3 Chinese Narrative: apparent harmonious findings

Most of the questionnaires and interview responses from Chinese researchers and policymakers identified ‘national energy security’, ‘climate change mitigation’ and ‘local air pollution reduction’ to be the biofuel policy drivers in China, as shown in Section 5.3.8. Consensus was reached between policymaker and researcher respondents.

Compared with Australia, the unique biofuel policy drivers identified from the interviews in China include the following three aspects.

First, unlike the findings in Australia, policymaker and researcher respondents reached consensus that ‘national energy security’ was the major driver for biofuel policies. In China, to consolidate ‘national energy security’ has been put forward as a long-term national strategy because of the heavy pressures from a large population and fast growing economy. Researchers and policymakers agreed that energy security is a problem and has been given the highest priority to be solved. As shown in Section 5.3.8, the concerns about fossil fuels’ unsustainability, and gaps between energy supply and consumption, were very clear and were of prime concern to the interviewees.

Second, the initial idea that biofuel policies were intended to make good use of stale grain in China’s national grain storage. This is the direct reason of developing biofuel in China from 2001, which was also recognised in the literature and as recorded in Section 2.2.3.

Third, the illegal use of waste cooking oil is threatening food security in many districts in China. Illegal processors refine waste oil into usable oil, and sell it cheaply in the 244 food markets and to catering industries. These refiners are scattered about the country and are small-scale operations, but there are many. It is challenging for the Government to control the situation. Therefore, the Chinese Government is giving this issue a high priority to make sure the waste cooking oil does not return to people’s dining tables. Using waste cooking oil to produce biodiesel is a desirable way to use it and has the added special benefit of improving food security; and it has become a special biofuel policy driver under China’s special circumstances.

The significant finding in this research from a comparison of Australia and China is that, in China, there was no major divergence of opinion between policymaker and researcher respondents about biofuel policy drivers. Unlike Australia, Chinese researchers’ thinking synchronised with the Chinese Government’s guiding principles, especially on national macro-strategies. ‘Large population’, ‘limited energy per capita’, ‘urgent need to reduce GHG emissions’ and ‘potential serious impacts from food shortages’ are commonly accepted as basic knowledge about the social, economic and environmental circumstances of China. In addition, there was no controversy or disagreement between the responses from policymaker and researcher respondents about stakeholders in the biofuel field and there were no doubts expressed about whether the Chinese Government should intervene in biofuel development. The consensus provided a clear picture of biofuel policy-making with obvious policy drivers.

Biofuel policy drivers and reasons for biofuel policy changes identified from the fieldwork in China, not only match most researchers’ and policymakers’ responses but also match the mainstream of recent literature, including government commissioned biofuel research programs and academic papers published in highly ranked journals.

There was one major government-funded research program about biofuel in China: Analysis on economic impacts and strategies of China’s biofuel development, Science Press by Huang and Qiu (2010), which was published in 2010. This research program was commissioned in 2008 with funding from the National Natural Science Foundation of China (NNSFC). The NNSFC is an organisation directly affiliated with the State 245

Council for the management of the National Natural Science Fund (NNSF). This fund is the major research funding organisation in China’s academic world and it promotes and finances basic and applied research in China. In 1997, the NNSFC started to provide special funds for research projects that are able to respond, within nine to twelve months, to urgent policy problems in national economic, technological and social development. This special funding enables research to provide prompt policy solutions and advice to the Chinese Government when it faces major challenging governance issues.

Huang and Qiu (2010) (Analysis on economic impacts and strategies of China's biofuel development) was a program with a set of research projects looking into various aspects of biofuel policy and development, including global biofuel development analysis, the feasibility of China’s biofuel development, economic and social effects assessment of biofuel policies and technologies using different feedstocks. In this research, it clearly pointed out that national energy security and GHG emissions reduction drove biofuel policy development and the major reason to turn to the non- food-based biofuel development was the expectation of increased food price resulting from food-based (first-generation) biofuel production. These propositions from this research are similar to those in other journals Yang et al. (2009), Tao et al. (2011), Qiu et al. (2012), Zhao and Liu (2014), Ren et al. (2015), Chen et al. (2015) and they concur with the findings from the interviews.

Even so, major responses showed that there was not much divergence of opinion about the biofuel policy drivers and the Government’s adjustments to the policies. Research results aside, the interview with Ch09, one of the major authors of this major government-commissioned biofuel research report (Huang & Qiu, 2010), explored some inside stories about the process of biofuel policy development and the adoption of evidence from research for policy-making in China. From Ch09’s point of view, China’s biofuel policies started ‘just on the spur of the moment’, and the later policy

246 adjustments launched by the Government presented a dilemma where a decision to quit is as difficult to make as one to continue the policy incentives.

I feel that China’s policy-making is a top-down model. Biofuel policy development was a typical example. At that moment (2001), Premier Zhu Rongji initiated a plan to develop ethanol to make good use of stale grain, and then we [the Chinese Government] subsidised ethanol producers. Later (2005), there was no more stale grain for biofuels, but the plants had been already established with plenty of infrastructure investment in it. Therefore, we can’t just close those plants. Fortunately, the country was facing the pressure of reducing GHG emissions, [so] we could advocate ‘reducing GHG emissions’ as a reason to continue the subsidies for those ethanol producers. However, later, there was research that pointed out that biofuels were not quite so useful for reducing GHG emissions. “Now, what reasons can we quote to rationalise biofuel subsidies?” Then, the policy incentives were phasing out quietly and gradually [for the food-based biofuels]. (Ch09)

Researcher Ch09 explained that the rationale for the initial biofuel policy was to treat the biofuel market as a “buffer area” for the grain market.

If, someday, the price of grain were too low, biofuel production can adjust the grain price. However, research predicted that the domestic supply of agricultural products would fall behind demand for a long time. Now, considering the initial purpose of biofuel policies, what reasons do you still have to rationalise the existence of these ethanol plants? (Ch09)

The government’s biofuel policies are also influenced by biofuels’ economic performance. Around 2007 and 2008, international oil prices increased sharply. However, they dropped from over AUD100 per barrel in 2008 to around AUD45 per barrel in 2015. Australian researcher Au18 and Chinese researcher Ch09 mentioned that only when the price of oil was over AUD70 a barrel would biofuels be profitable

247 without subsidies. Chinese researcher Ch09 commented that non-food biofuel (second-generation biofuel) would be a hope for biofuel development in China, but Ch09 also mentioned the difficulties for second-generation biofuels to develop, considering their immature technologies, high production costs and low international oil prices.

However, there is still hope for solving this dilemma through the technological progress for non-food based biofuels. It will be difficult and won’t be realised in a short term. Just see how low the oil price is now! There will be a very difficult time for the ethanol producers [to operate profitably without government’s subsidies]. … (Ch09)

Researcher Ch09’s comments on biofuel policy drivers and development revealed dissonance with the findings from interviews with other Chinese respondents and with the questionnaire results. However, the narrative Ch09 provided made sense and hinted that biofuel policy-making in China might not be based on an a priori comprehensive feasibility test. However, biofuel policies were adjusted from time to time when unpredicted conditions arose. For example, a major adjustment in China’s biofuel policy was the reduction from 2006 in incentives for food-based biofuel production (recorded in Section 2.2.3), and the strict control of food-based biofuel production since 2007 (Huang & Qiu 2010). For most of the time, as researcher Ch09 said, “There are always time gaps between the emerging situations and policy adjustments”.

The apparent harmonious responses from a majority of the Chinese respondents that matched findings in the literature were quite different from the narratives expressed in Australia. Different political environments cause people to discuss and focus on different topics. For example, Australian respondents mentioned political drivers more often than did Chinese respondents. In addition, there were more concerns by Australian respondents about how the Australian Government spent the taxpayers’ money. In contrast, there were few arguments or criticisms of the Chinese 248

Government’s supports to biofuel development, especially the second-generation biofuels.

The narrative by researcher Ch09, who was involved in one major government- commissioned biofuel research program in China, broke the consistency of the initial findings derived from interviews in China. His inside story revealed that biofuel policies that had started were not subjected to feasibility tests but were based on short-term political expediency, which might cause high policy costs later or lead to passive policy adjustments when having to deal with unpredicted situations in biofuel markets.

In fact, the Chinese Government is still continuing to develop renewable energies in its macro-policies in the format of Five-Year Plans. The Government set the biofuel production targets in its 12th Five-Year Development Plan (2011–2015) for biomass energy, as shown in Table 2.14. Implementation of these biofuel policies aside, they show that the policy consistency of socialist government, with less noise from the academic field or the media.

6.5 Suggestions to improve evidence-based policy-making

As previously discussed, there was no straight and clear evidence showing that Australia and China developed their biofuel policies based on research evidence. Only BREE’s report was claimed as evidence that led directly to the Abbott Government’s cessation of the excise exemption for biofuels in Australia. The abruptness of the change in policies matched the timeframe of the release of the report. No other research that was recognised by policymaker respondents had recognisable impacts on biofuel policy development. However, as presented in Section 5.5.4, the findings from the questionnaires suggested that all the Australian policymaker and researcher respondents believed that biofuel policy-making should be evidence-based (Figure 5.13). Therefore, there is a clear gap between the desired situation (shown in Figure 5.16) and the current view that policies are exactly based on research evidence (shown in Figure 5.17).

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Following this previously identified gap, this section will discuss the reasons that led to this unsatisfactory situation in which evidence was almost absent in biofuel policy- making in Australia and in China. Furthermore, based on the understandings of policy- making from researchers and policymakers’ perspectives, suggestions to improve evidence-based policy-making in the biofuel field in both countries will be provided.

6.5.1 Obstacles to evidence-based biofuel policy-making – from the policymakers’ perspective

Australian policymaker and researcher respondents’ attitudes diverge on the following:

x whether biofuel policymakers can obtain helpful advice from researchers (in Figure 5.9); x whether there would be more biofuel research investment in Australia in the future (in Figure 5.10); x whether biofuel research results could drive the need for policy changes (in Figure 5.11).

Most policymaker respondents chose ‘neutral’ to these Likert Scale questions. Biofuel policymakers showed consistency in their attitude being ‘neutral’ or ‘intervention-free’, not only to biofuel industries, but also when commenting on the usefulness of biofuel research, predicting biofuel research investments and even forecasting future policy changes. Moreover, they did not think that the Australian Government could control the direction of research investment (in Figure 5.12). However, most research respondents held more positive and optimistic attitudes towards all three questions.

There is a need to increase policymakers’ capacity to demand and to use research (Newman et al. 2012) (in Section 3.6.4), and this study found that policymaker respondents’ ‘intervention-free’ (‘indifferent’) attitude to biofuel industries and biofuel research investment indicates that they are important if a balance is to be achieved in evidence-based biofuel policy-making. As Newman et al. (2012) remarked, increasing the availability and accessibility of research, its relevance, and effective

250 communication, are all important factors that go to improving the adoption of research in policy-making; however, these efforts would be futile if there were no corresponding demand for them from policymakers. Therefore, changing policymakers’ indifferent attitude to biofuel research, would increase the demand for such research, and is pivotal to rebalance the current situation to an evidence-based process

By stating that biofuel policymakers’ ‘indifferent’ attitude to evidence-based policy- making, there is a need to find which issues they are enthusiastic about. As shown in Section 5.4.5, ‘scientific evidence from research’ was ranked as one of the five most important factors by the Australian biofuel policymaker respondents; however, three of the other four factors were influenced by political perspectives, including ‘industry representatives’, ‘political concerns between different parties’, and ‘Ministers’ views’. This suggests that it is unrealistic to ignore political factors in policy-making. It is inherent in the policymakers’ choices to ignore or pay attention to particular biofuel research. As suggested by Cairney (2016), this reflects how policymakers ‘frame’ the policy problems and the factors they decide to link to the solution of a particular policy problem. According to the findings in Section 5.5.4, biofuel policy-making in Australia is ‘framed’ by suppression from the major political donations from fossil-fuel industries (identified by Au08) and the stimulation by the Green Party’s pressure on the Rudd Government (pointed out by Au13).

Not only the scientific evidence from research but also the other three political aspects were considered during biofuel policy-making. This draws on a remark by Head (2015) on the diversity of knowledge that is needed for policy-making. He pointed out that besides research evidence, political, professional, and stakeholder information also have a legitimate voice in a democratic society. Therefore, it is impossible to eradicate political issues from policy-making, but it is feasible to make research evidence an indispensable part of the decision-making, together with the stakeholders’ interests, power contests between political parties or the intention of gaining popularity.

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Research evidence is but one body of knowledge along with political and other professional knowledge and, again, is one of many influences that can be brought to bear on biofuel policy-making. Therefore, biofuel research outputs need to compete with all the other influences and pressures vying for policymakers’ attention. Acknowledging this fact can lead to a proper understanding of biofuel research’s position in policy-making. This balanced understanding is the prerequisite for meaningful and practical suggestions to improve research’s effects. Without it, criticisms, such as “biofuel policy-making is just ideology-based” (mentioned by Au06), would occur. Similarly, some complain that it is not a balancing matter at all.

As pointed out by Nutley et al. (2013), bemoaning the inability of policymakers to prefer research evidence ahead of other factors is cynical, and this attitude will not be helpful in finding solutions to improve the situation. This is because thinking that ‘following research evidence is the only rational way to develop policies’ is extreme and can lead to a narrow-minded debate of policy-making. When closing off political spaces and crowding out other professional bodies of knowledge and expertise, a technocratic approach may creep in (Porter 2010). When there is no clear research evidence for a particular policy problem, the technocratic approach will not be functional because policy issues are not always simple and uncomplicated, but are complex. To presume a linear relation between research and policy is not realistic (Young 2008). If, under these circumstances, policymakers still claim that their policy decisions were made based on research evidence, there must be a suspicion that the reality checks from scientific knowledge have been subsumed by political interests and they would definitely be expressed in research or scientific language, which was called ‘policy-based evidence gathering’ by Sharman and Holmes (2010). Framed as a requirement, this extreme might only “encourage policymakers to overplay the role evidence played in informing policy, preventing them from being honest about the use of evidence” (Porter 2010).

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Expecting transformational change in biofuel policy-making where research outputs would be treated as the most important factor is unrealistic. Instead of holding the extreme or unrealistic views of evidence-based policy-making, direct discussion with the biofuel policymakers about how they treat and use research evidence in practice is helpful in identifying some useful and practical tactics to improve evidence-based policy-making. For instance, interviews with biofuel policymakers (Au02, Au17 and Au21 in Section 5.5.5) revealed that biofuel policy-making in Australia did not adopt research evidence directly, nor were policies based on research evidence only. However, policymakers pointed out that indirect ways of using research evidence do exist, and they believed that biofuel research outputs played an important role in briefings to ministers and in shaping their understanding of the biofuel issues. This is a useful finding about the role of biofuel research in policy-making practice, because it showed that biofuel research evidence might be able to infiltrate subtly the policymakers’ cognition of biofuel issues. The ‘subtle infiltrative’ way is identified by Haynes et al. (2011) as the ‘conceptual route’ that refers to a more nebulous indirect effect. Based on the proper understanding of evidence-based policy-making and the identification of the hope of ‘subtle infiltration of research into biofuel policy-making’, this research encourages biofuel research to aim at assisting policymakers to shape ideas, to improve their knowledge perspective, to improve problem identification, and to develop and evaluate during the making of policies.

For research to be available before policy development is important. For Australia and China, biofuel policies initiated prior to and not based on research evidence might waste government resources. Australian biofuel policies initiated for political reasons, such as to favour a specific producer, or to develop renewable energy for the sake of being seen to be doing it, or to advance a political party’s ideology are judged repeatedly as being inefficient. Their environmental benefits and social benefits were described as “small”, “minimal”, or “costly” by the CSIRO, BTRE & ABARE (2003), the Biofuel Taskforce (2005) and BREE (2015). Similarly, in China, biofuel policies were initiated to make use of the stores of stale grain without ordering a comprehensive 253 feasibility assessment of the potential effects in the long-term of developing grain- based biofuels. As the reserves of stale grain depleted, the adverse effects of grain- based biofuel production on food prices could be seen. In the meantime, biofuels lacked the capacity to be profitable without the government subsidies. Consequently, the government and the market lost confidence in the first-generation biofuels in China. The Chinese Government’s subsidies for infrastructure and production gradually became a sunk cost and an impediment to future biofuel initiatives.

Australian policymaker Au02 said that agencies that employ staff with scientific or engineering backgrounds would operate “a stronger project management approach to the policy process” (in Section 5.5.5). This provides a clue that one efficient way to promote scientific thinking within a government department is to increase scientists’ involvement in its operation. More directly, hiring employees with a scientific background is also a way to increase a government agency’s capacity to consider research evidence.

Biofuel production may affect GHG emissions, food prices, land use change, feedstock markets and employment along the supply chain. Therefore, research is needed to investigate to what extent biofuel production may have positive impacts or adverse influences; furthermore, biofuel policy analysis needs to inform the instruments the government needs to use in its selection of policy and how much the government needs to pay in supporting the biofuel industries to realise the expected positive benefits. Policymakers with scientific, educational or employment backgrounds will have a better ability to follow the information provided by the biofuel researchers, because the research evidence and attitudes to evidence may be given more weight and continue to shape policymakers’ understanding of biofuel related issues, and make them sufficiently confident and competent to drive agendas.

This indirect use of research evidence would thus be achieved through workforce change. This evidence-based understanding of biofuels might be manifested in the communication between policymakers and stakeholders, making it widespread and 254 more influential. The dispersion of biofuel research evidence could eventually cause it to have some influence on policy-making or it might promote the consideration of biofuel policies to a higher level in the government’ policy priorities. Along the continuum of knowledge, there is an expectation that biofuel policy-making could be influenced more directly by research results.

The review (Section 3.6.2) of Weiss’s (1979) comprehensive typology of the nature and extent of research take-up in policy-making was useful. Collating my findings and Weiss’s (1979) typology, the use of research in biofuel policy-making in Australia is closer to the ‘enlightenment model’, in which the research and policy have a dynamic shifting common border. With robust and publicly available biofuel research, there is space for new research to influence future biofuel policy development. However, it is alarming that biofuel research was recently used politically to pave the way for biofuel policy changes. This was described by Weiss (1979) as a ‘political model’ of research use and it is a degradation of the road to enlightened evidence-based policy-making. The independence and credibility of biofuel research and evidence from the moral perspective needs to be further developed.

The unsatisfactory quality of evidence from research has been cited as a reason for the government to exclude it from their policy-making. Therefore, to increase the take-up of research evidence in policy-making, the first step is to guarantee the quality of the research. The government acts not only as a knowledge receiver but also as biofuel research investor. The government should guarantee the quality of biofuel research by enforcing prompt and thorough supervision and implementing a final audit for biofuel research programs. Australian researcher Au20 and Chinese researcher Ch02 mentioned that there is still inadequate management of research monitoring of biofuel research projects.

Researcher Au20 had worked in one department of the Australian Government for ten years, and is currently working for a consulting company. With experience working for the government and a consulting company, Au20 pointed out that the “12 month 255 budget cycle” of the government put commissioned research in a situation of uncertain continuity (as explained below), which contributed to its relatively low quality.

The problem is that they [research commissioning processes] are driven by a ‘12 month budget cycle’. The money gets approved in August, usually, then the departments got told this much money is to be spent on such and such things. For some reason, they spend forever mucking around, and they usually don’t put out the tender until February. They have to spend their money in that financial year, so the tender got out in February, and we have got to put a proposal by March, and we have got to do the work in April or May and have to finish it by the end of May, because they are going to pay us in June. So, there is always this incredible time pressure. I don’t know why it works like that. It is one of the frustrating things about the consultation from the government. You just don’t seem to have a decent amount of time on these things. So, all those sorts of projects, most of those got done in eight weeks. … It is the challenge. (Au20)

According to Au20’s complaint about the frustrations caused by having too little time to do government commissioned research, one suggestion for the government’s administration is to increase its efficiency by contracting consultation plans and selecting suitable researchers. Good quality research requires sufficient time. Proper planning for the research commission is required if a government department is to avoid spending the research funding hastily, as supported by Campbell and Schofield (2006).

A possible approach to improve efficiency and provide commissioned research within a reasonable time would be to maintain a dedicated group of experienced staff in the department because successful work requires relevant professional knowledge. The additional benefit of such a group is that it helps to avoid commissioning duplicate research as Researcher Au20 has pointed out. This kind of duplication often arises

256 from the gaps between work handovers because of rapid employment turnover in the departments:

Usually, the other problem [is that] you should get a lot of change-overs of staffs in these organisations. So, you may have a quite good relationship with the person in the section, and then six months later, you go back and they are not there, and nobody else knows that you have done the work. So, you know, [one report] sitting on their website, but people will say, "Oh, really? Did we do this three years ago?” (Au20)

This situation is similar to the statement in Porter (2010): “Even the research donors who fund research do not necessarily read the reports, let alone think about the implications of the research”. Personnel changes in a government department may be inevitable; however, retaining some key experienced employees who can take charge of any research that is commissioned is an efficient way to make the government’s research funding worthwhile. Alternatively, continuous training for new employees can also help to avoid inefficient research purchases. In addition, there should be strict ex post evaluations of outcomes of the research, so that the quality of the research and proper use of taxpayers’ money can be guaranteed.

There is still space for the Chinese Government to improve the evaluation of government-commissioned research. The evaluation process, according to Chinese researcher Ch02, is still an opportunity space for Chinese policymakers to get more access to biofuel research outputs. Researcher Ch02 worked as a senior researcher at the Institution of BioEnergy and Bioprocessing of Technology, Chinese Academy of Science. He stated that the assessments of government-commissioned biofuel research were usually by peer researchers in the same research field, instead of by staff in government departments.

There are two major sources of our research funding. One source is the industry research investment. If the company thinks we have solved their technological

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problems, then they are satisfied with our research outcomes. The other part of research funding is from particular government departments, such as the National Natural Science Foundation and the Ministry of Science and Technology. Usually, the research commissioned by these departments is to achieve theoretical innovation in a specific research field. These departments will hire expert committees to evaluate the research outcomes. The assessments rely on peer- reviews. (Ch02)

If policymakers in government departments had the capacity to follow and judge the outcomes of biofuel research programs, there would be a greater chance for the policymakers to use these research outputs. This reiterates the previous point made in this section that increasing the numbers of policymakers who have had a scientific education or working background in the government is to increase the chances of more take-up of research evidence in policy-making. However, for China and Australia, policymakers’ conceptual capacities in scientific fields are limited. As Researcher Au20 said, most policymakers are without a scientific background and “are learning on the job”.

6.5.2 Suggestions for biofuel researchers

As previously discussed, it is plausible to expect incremental changes to the institutional structure for policy development in the government. Biofuel policy- making will continue to be a complex and a less-than-pragmatic process. Besides scientific knowledge, other bodies of expertise and knowledge disciplines have legitimate claims to contribute to policy-making, such as political, professional and stakeholders’ knowledge (Head 2015). For instance, stakeholders’ opinions and relevant research outputs were all taken into account in policy decisions for the E85 fuel standard, as described by Australian policymaker Au11 (in Section 5.4.3), and stakeholders’ opinions were given more weight by the government than was the research evidence. This tells us that biofuel research evidence must compete with

258 political and other knowledge. To have greater weight in biofuel policy-making, biofuel research needs to be improved in the following aspects.

Head (2015) stated that there is a ‘research hierarchy’ in policymakers’ minds that ranks the reliability of different research modes. He emphasised that quantitative research is more credible and popular than qualitative research. In his mind, a research-method hierarchy dictated the reliability of drivers. This research identified a research hierarchy that was strongly articulated from the perspective of the type of research. It was consistently found that economic biofuel research and biophysical research that included relevant implementation costs would be more widely accepted by policymakers than research that only provided biophysical information (see Section 5.5.1). This not only provides biofuel researchers with valuable advice to ensure that they use economic concepts and language in their research, but it also to reminds research investors that economic feasibility is a more important variable in the complex set of factors in policy development. Research that adapts to this policy preference is more likely to be positively received.

In Section 5.5.6, from the researchers’ responses to the five most expected types of knowledge wanted by biofuel policymakers, it is clear that most of the researcher respondents were aware of the economic aspects of knowledge, such as ‘cost–benefit analysis’, ‘returns on investments’ and ‘biofuels’ market potential’, were in strong demand (shown in Section 5.5.6). ‘Biofuels’ technology feasibility’ and ‘impacts on carbon emission’ were stated by policymakers and researchers to be the most important knowledge required. Two of the researchers’ five most needed aspects of knowledge, ‘impacts on ecosystems’ and ‘influences on biodiversity’, were included in policymakers’ five most needed information about biofuels. Talking to biofuel policymakers about what aspects of knowledge they needed to have was an efficient way for researchers to increase their research outputs’ acceptability. This research provides evidence from interviews and surveys with biofuel policymakers directly, and valuable insights into what they want or need.

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Knowing the information that policymakers expect is especially important for the biofuel research that is not commissioned directly by the government but still is done with the intent to have an effect on policy, for example, the research done by academics at universities and published in reputable journals. Without governments’ commissioned research, biofuel researchers would have to put more effort into choosing the direction and topics of their research to fit the policymakers’ expectations. Therefore, the research by academics should avoid being only interest- driven, but should also take practical policy demands into account. Without policy relevance, research would barely obtain policymakers’ appreciation.

Knowledge of even the popular types of biofuel research, judged by the researcher and by policymaker respondents to have policy-relevant content would need to be transferred effectively for policy-making through channels familiar to policymakers. In Section 5.5.7, this study found that ‘publicly funded research agencies’ and ‘research investment programs’ were the most usual channels for biofuel policymakers to obtain the relevant knowledge they needed. Indeed, as researcher Au05 mentioned, ARENA’s funding for biofuel related projects is the largest (in amount and dollar value) in Australia, and research funded by ARENA has high credibility.

As noted in Section 5.5.7, “biofuel policymakers’ personal friendship with university researchers” was also a very frequent way of obtaining information. Biofuel policymaker respondents ranked information from ‘university researchers’ higher than ‘peer-reviewed journal papers’. Two interesting deductions were made from this fact. First, it is surprising that ‘journal papers’ were ranked by policy-making respondents to be among their five most frequently used information sources. In other research, such as by Porter (2010) P29, using journal papers was too slow to inform policy agenda changes. Even the interviewees (Au09 and Au12) complained that it was unrealistic for biofuel policymakers’ to read journal papers because that was too time-consuming. The reason that journal articles were ranked highly but rarely recalled or used might be the result of biofuel policymakers’ respect and recognition of journal’s credibility,

260 relevance and quality was, in reality, not as important as meeting deadlines and keeping to a schedule.

Second, consulting university researchers was claimed to be a more frequent than reading journal papers according to answers to the questionnaire. This showed that policymakers preferred that pathway for the information for its immediacy and its comprehensiveness. The knowledge from a researcher can be more comprehensive and lead to greater understanding than the generic conclusions in a journal paper. That is to say, consulting researcher directly enables policymakers to obtain comprehensive policy suggestions; it is also direct, prompt and efficient. From the university researchers’ perspective, this pathway for policymakers getting access to the research evidence saves researchers the effort to be an efficient knowledge broker, because building relationships with industry or government is time consuming and does not afford much reward (Shergold, 2011). The direct, sometimes casual, conversations between policymakers and their researcher friends are firstly in a natural conversation; and secondly an interactive mode from the policymakers’ perspective. The communication improves the understanding between the academic and policy-making types of language. This interactive mode shares the inspiration, makes publications from university researchers more accessible, and offers opportunities to tailor and to correct it in application to specific policy. This short and condensed format of transmitting scientific information appears efficient and preferred.

On the other hand, the academic style of journal papers was inferior for the purpose of gathering evidence for policy-making. However, publishing papers in prestigious journals is encouraged by current universities’ academic incentive systems. Universities should encourage academics to publish in peer-reviewed journals but also set incentives for academic staff to publish publicly available policy briefs and to be available for and engage in public policy development and debate to increase the dissemination of researchers’ knowledge beyond academia. As researcher Au09 said,

261 using the media by giving interviews on TV and radio or writing articles for newspapers is a more influential way to disseminate research outputs.

This research also identified that ‘forums’ and ‘conferences’ were two frequently used information sources for the biofuel policymakers. As presented in Section 5.5.7, researchers (Au06 and Au19) and policymakers (Au21 and Au24) all mentioned that they had participated in the forums held by the CSIRO’s Energy Flagship, such as the “Energy Futures Forum (2004–2006)”; the “Future Fuels Forum: Flight Path to Sustainable Aviation Fuels (2007–2008)”; and the “Australian Low Carbon Transport Forum (2010–2011)”. The function of these forums is to bring together all the stakeholders who are interested in the particular topics and these gatherings are widely acknowledged to be successful. As Au24 commented, “forums open the debate up to people who have different experiences and different levels of information and expertise”. Besides communicating within academic circles, conferences are to disseminate knowledge to stakeholders and to policymakers as well. However, as policymaker Au24 mentioned, there was no guarantee that policymakers, researchers and industries could reach a consensus. In his opinion, biofuel researchers are also lobbyists:

Obviously, they use it [forums] to lobby [the] government for their own funding programs, where they want the government to put money. … They also do it to expose different views to other parties. (Au24)

He admitted that forums were not a place to reach final agreement:

It is difficult to get final agreement, and the way that the forum was set up, is that in fact, you are not asked to reach consensus. … The ideas get in there and get tested, but they are not put down as a means of developing policy. (Au24)

As a policymaker in the Department of Environment, Au24 gave a clear narrative and showed his understanding of biofuel researchers’ performance and purposes in a forum. This demonstrates just how challenging it is to inform policymakers of biofuel

262 research, because Au24’s responses showed that biofuel policymakers treat researchers as another industry lobbyist, arguing for more government support. This means that policymakers have not attached extra weight to research evidence and they still frame their decision-making in a typical political cycle, weighing power and interests of stakeholders. There is not much researchers can do to change policymakers’ beliefs and value judgements. Policymakers’ appreciation for research is strongly influenced, perhaps fixed, by their ideological inclinations and their professional expertise (Porter 2010). To improve research’s weight in policy-making, policymakers need a sophisticated and considered appreciation of research, stronger expertise in appropriate domains and less ideological preference for narrow policy responses. It is to be hoped that their educational background can help them to cultivate inquisitive, open minds and quick learning capacities, which would facilitate their ability to evaluate and appreciate research evidence in their policy work.

Compared with the obstacles within Australia’s biofuel policy-making and its take-up of research evidence, China’s story seems to be simpler. Under the one-party system, China can make long-term plans for national development and ensure the stability of its policies without being affected by the alternation of governing parties that have different positions and ideologies. Under the powerful leadership of the Communist Party of China, the Chinese Government formulates and enforces policies and programs quickly and effectively. Each party in the Western multiparty system represents all the people but different interest groups. In contrast, the Chinese Communist Party purports to represent the whole people. Therefore, there are fewer controversies and distractions in how to make policies in the ‘right’ way and in the ‘right’ direction. For everyone, the right way refers to policy-making based on scientific evidence and the right direction refers to the ultimate purpose of making policies, which is to benefit all people in the nation.

Chinese respondents mentioned the formal consultation in evidence-based biofuel policy-making in China (in Section 5.4.7). The policy departments usually select experts

263 from organisation in the relevant fields to form a Committee of Experts for policy consultation. The Committee of Experts functions similarly to a taskforce in Australia. Energy policies and renewable energy policies use this procedure for policymaker consultation with a committee. According to most of the Chinese respondents, there were no doubts about policymakers’ appreciation and respect for research and scientific evidence in China’s policy-making. However, there is some space for China to improve in evidence-based policy-making, especially in innovative industries, such as biofuel.

As Ch08 mentioned, many researchers in the biofuel field could not access the government’s policy-making in China (in Section 5.5.9). Reading between the lines of the responses by the Chinese researchers, Chinese policymakers form their ‘research hierarchy’ based on the researchers’ ‘hierarchy of authority’. Only those researchers with a very good reputation, such as academics in the Committee of Experts, have sufficient prestige to get access to the policy-making departments to present their research outputs. Compared with Australia, there were fewer claims about the policymakers (public servants) in Chinese Government departments collecting research evidence or writing briefs for their ministers. Only the senior officials in national biofuel policy decision-making departments would consult these top-level experts in energy. This tradition constrains policymakers’ motivation to collect research evidence and can lead to judgements of policy decisions being limited to the information and analysis provided only by the Committee of Experts.

In regard to the analysis provided by the Committee of Experts, there is no doubt about its authority or quality. However, as Ch08 pointed out, the expertise of the members Committee influenced the direction of the policy decisions and an instance, provided by Ch08, was when they drafted energy policies, there were at the time no biofuel experts on the Committee, but lots of experts in fossil fuels. This situation led to less attention being paid to biofuels, but lots of weight being attached to research investment and policy directions favouring fossil fuels. Most important, the

264 government usually selected the membership of the Committee. To avoid prejudicial advice on potential policy issues, the government should consider if the committee comprehensively covers the relevant aspects of policy-making. Alternatively, they could choose the experts from all these fields to obtain a comprehensive understanding of the policy problems.

For most of the biofuel researchers in China, there are few opportunities to be chosen as members of the Committee of Experts. Researchers (Ch02 and Ch08) wanted to obtain the rights and opportunities to participate and to contribute to the biofuel policy decision-making process. To increase the researchers’ influence, first, the government should reform its research take-up to allow research evidence fit into the policy cycle. Institutionally, research outputs and researchers’ opinions need to be part of the policy processes through activities, such as consultation, negotiation with stakeholders, and the assessment of options in a regular or a routine way. To make this improvement, the government should collect and report the research evidence used in a more active and comprehensive way, instead of relying on supply from the Committee’s feed of information and analysis of policy issues.

Second, biofuel researchers need to become more conscious of their role in policy and stay sensitive to the policy changes occurring in their research domains. In China, some biophysical researcher respondents (Ch01, Ch06 and Ch09) did not show much interest in biofuel’s economic performances and were not aware of biofuel’ policy history or current policy changes. According to their responses, they narrowly focused on their research projects in their research field and have no broad views or opinions on the government’s policy directions. This clearly showed the lack of policy awareness and held a risk that knowledge is not available for the policy-making. Therefore, some biofuel researchers should be responsible for being aware of policy context in the biofuel field because they intend to inform policymakers about biofuels’ potential and their research outputs. This can also help avoid complaints from policymakers, who say that biofuel research is not contextualised enough to be useful in practice.

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Confidence and enthusiasm are demonstrated by the positive responses of the majority of Australian researchers who believe biofuel research’s effects on biofuel policies (as shown in Figure 5.11). However, increasing the supply of research does not guarantee its adoption by policymakers. To avoid mismatches between policymakers’ expectations of the research supply, this study identified the importance of ‘paying attention to communication skills’, ‘using policy language when writing for policymakers’ and ‘improving research’s timeliness to catch up with policy agenda’ in Section 5.5.8. These aspects of knowledge brokering are issues suitable for careful consideration in Australia and in China, and these findings are supported by many evaluations of research investment impacts in ‘evidence-based policy-making’ domains such as those evaluations by Meagher et al. (2008), Nutley (2003), Porter (2010), and Newman et al. (2012) and identified in literature reviews in Section 3.6.4.

In addition to effective communication and policy acceptability, the quality and the independence of research contribute to but do not guarantee high quality and meaningful evidence-based policy-making. With biofuels’ multi-faceted impact on environment, social and economic affairs, relevant research is challenged to deal with large and complex problems of policy. Improving the interdisciplinary research capacity is necessary to deal with this complexity. In addition, biofuel researchers still need to keep their academic integrity and not exaggerate the situation nor seek to manipulate the policy direction with their research outputs.

6.6 Summary

This chapter has discussed the major findings on four themes: rationality of government intervention in biofuel development; the real drivers of biofuel policies; the extent to which biofuel policy-making is evidence-based; and suggestions to improve evidence-based policy-making.

This research discussed various rationales for government intervention in biofuel industries. The discussion took a critical look at the Australian policymaker

266 respondents’ neoliberal belief in free markets. This argument was supported by the widely accepted economic theory that free markets often fail to provide public goods (Randall 1983), such as biofuels’ environmental externalities. In addition, the discussion also identifies governments’ social responsibilities and fair treatment of incumbent fossil-fuel industries and emerging biofuel industries. Inspired by the different responses from Australian and Chinese interviewees, this research more clearly identified the important role that ‘ideologies’ play in policy. In the context of a one-party government and socialist political ideology, Chinese respondents had few comments on the rationale for their government’s policy intervention in industries. Instead, they talked about biofuel policies as a fait accompli, in contrast to Australian policymakers’ strong belief in the free market, which was demonstrated in their comments.

This chapter, collating the findings from insiders’ responses in interviews and questionnaire surveys and the research outputs of biofuel research they recognised, explored the policy drivers that underpin the biofuel policies set in Australia and China. In Australia, the initiator of biofuel policies was a response to climate change policies, according to people with working experience of the Cabinet, and this was supported by the observed correlation between biofuel policy supports and the changes in Australia’s climate change policies (identified in Chapter 2). ‘National energy security’ and ‘regional development’ were identified in the surveys as being among the most important biofuel policy drivers; however, the content of the biofuel research outputs pointed out that these potential benefits of biofuel were “small”, “minimal” or “costly” (Biofuels Taskforce 2005; BREE 2014a; CSIRO et al. 2003). This mismatch between biofuel research outputs and the claimed biofuel policy drivers led to the reasonable inference that political reasons might be the real drivers of biofuel policies in Australia. There were three respondents and two reports that mentioned that the major beneficiary of the Ethanol Production Grants Program (EPGP) was one major ethanol producer that had close links to the prime minister’s redirection of policy. The three major biofuel policy drivers identified from the surveys are ‘climate change mitigation’, 267

‘national energy security’ and ‘regional development’. They match the ones acknowledged officially by the Chinese Government’s commissioned research program, ‘Analysis of economic impacts and strategies of China’s biofuel development’ (Huang & Qiu 2010). In addition, the reason for the Chinese government to support major biofuel operations was to use stores of stale grain in 2001 to avert an agricultural disaster and sustain support for the Chinese agricultural industry.

The necessity of considering political factors in biofuel policy-making and the fundamental ideologies behind these political factors were acknowledged in this research. Exploring the rationalities of government intervention in biofuel development and, specifically, identifying the biofuel policy drivers makes a significant new contribution to this research. The crosschecks between fieldwork findings and well-recognised biofuel research outputs verified and supported the judgement of the extent to which biofuel policy-making was evidence-based in Australia and in China. The inside story of the communication with the Cabinet during the research process, observed directly by one of the experts who had participated in the Biofuel Taskforce (2005), shows that the ability for research to influence biofuel policy-making is weak because policymakers already have policy intentions settled in their minds when they look for research evidence. They may attribute value to research evidence that corresponds to their policy agenda. Furthermore, the absence of an assessment of the effect of potential biofuel policies as perceived by policymakers showed that biofuel policy-making in Australia and in China might not be based on research evidence in practice. In China, the current dilemma of the government’s financial support for biofuel industries is a direct consequence of developing biofuel policies without an ex ante feasibility study before the infrastructure and production subsidies were deployed, and questions about ‘how the biofuel industries would be after the stale grain is used up’ were not asked.

Despite considerable program and project investments, the failure to identify routine examples of evidence-based policy-making in Australia and China indicates the shallow

268 adoption of research evidence in biofuel policy-making. Realising that political ideologies and other honest and programmatic factors play important roles in biofuel policy-making, this study suggests in the discussion that having a practical and ‘proper’ view of evidence-based biofuel policy-making is a prerequisite for biofuel researchers if they are to strengthen their influence on biofuel policy-making. Most of the research that is well thought of by policymakers is government-commissioned research. In Australia, to improve the quality of this research, the government should increase its investment efficiency in selecting researchers and contracting research, to allow enough time for the research work to contribute outputs within the budget cycle, as supported by Campbell and Schofield (2006). In China, to increase the policymakers’ capacities to follow and use research evidence, government departments should take action to improve their employees’ expertise in their fields and get more involved in research investment and evaluation, instead of relying on peer reviews only for the evaluation of the government’s commissioned research programs.

As identified from the literature and interviews, political knowledge and expertise have legitimate contributions to make in biofuel policy-making. To complement or compete with them and have more weight in policy-making, biofuel researchers need to be more aware of the research and topics that biofuel policymakers’ value and how they (the researchers) might be seen as more useful sources of information. In Australia, biofuel research that accepts and expounds economic values or analysis has more chance to be noticed by policymakers; conferences, forums and direct consultation with university researchers are the preferred sources for policymakers for their research information.

In China, the most powerful way for researchers to have effects in policy-making, according to Chinese biofuel researchers, is to be selected for membership of the Committee of Experts, whose members have the rights and opportunities to provide their opinions directly to the policymakers. However, only the researchers with high- level authority and reputations (such as academicians) are invited to join these

269 committees. Having experts who support biofuel development on the Committee when the government consults for a round of energy policy development, is an important way to attract the government’s attention and support for policies to improve biofuel development.

The specific findings in this research about evidence-based biofuel policy-making in Australia and China contribute new insights on this significant subject. It contributes previously unavailable insights from researchers and policymakers’ perspectives, and draws new comparisons of policy-making under different cultures and political ideologies. The ambitious international comparison contributes to a greater awareness and a deeper understanding of the obstacles in developing evidence-based biofuel policy. It increases the possibilities of identifying new ideas in improving the current situation of such policy under two different political systems: a Westminster system and a centralised system. Even though national cultures and political systems appear to be so fundamentally different, it is surprising that in understanding its value system, learning and adjusting to the way research is conducted and brokering the knowledge to policymakers is necessary and is possible. In the future, as complex policy decisions are being made, understanding and insight for evidence-based policy-making is pertinent. In the context of maintaining one nation’s original political ideology and system, purposively drawing lessons of the merits of evidence-based policy-making between East and West is a wise move.

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Chapter 7 Conclusion

7.1 Returning to the study aims and research questions

This study employed an empirical approach; triangulating data from semi-structured interviews, questionnaire surveys, academic and government publications, to explore the real drivers of biofuel policy and to improve the understanding of evidence-based biofuel policy-making by investigating the interactions between researchers and policymakers in Australia and China.

Biofuel policies are generally regarded as complex because they contribute value to climate change mitigation, energy security and regional economic development in Australia (Azad et al. 2015; Batten et al. 2007) and in China (Chen et al. 2015; Huang & Qiu 2010). In both countries, macro policies promoting the development of biofuel industries started abruptly in the early 2000s; however, they were recently terminated controversially in Australia and phased out quietly in China (as presented in Section 2.4 and Section 2.5).

The three major potential benefits that research and policymakers both claimed originally were that biofuels could bring ‘climate change mitigation’, ‘energy security’ and ‘regional economy development’, and these are still fitting benefits for Australia and China currently, and definitely no less than they were in the early 2000s. The rationale for biofuel policies in both countries seemed to be well justified and foresighted, yet remarkably, both governments stopped their consistent support for biofuels. This contradiction triggered this research to discover the real biofuel policy drivers, from the documentation and from the people directly involved. This study, in achieving a solid and realistic understanding of the real policy drivers, fills the gap in the literature that explores biofuel policy drivers, and has contributed support to a number of biofuel researchers who quoted the three named drivers as the policy context of their research.

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During biofuel policy-making, policymakers have to cater to different stakeholders with very different views, values and lobbying capabilities. Policymakers’ beliefs and the political ideologies they must work with clearly influence their policy priorities and decision making as well, as was also found by Parsons (2002). These mixes of views about the issue of biofuels and the acceptability of other possible options bring a high degree of complexity into biofuel policy-making. In addition, the myriad uncertainties in the economic, social and environmental effects from different biofuels from many types of feedstocks (Mohr & Raman 2013; Petersen et al. 2015) multiplies the complexity for policymakers who must make judgements and policy decisions. To tackle such complex policy-making problems, a systematic evaluation of credible research or information is widely accepted as the best practice (Nutley 2003). There were two policy areas for which strong links were identified in the literature between production of research evidence and policy-making: these were health and the environment (Cairney 2016). Therefore, this research, using biofuel policies as an example, achieved a practical understanding of evidence-based policy-making and makes suggestions on how to improve it, and has contributed to the literature pertinent to the research–policy interface in energy policy.

To achieve this, this research clearly identifies to what extent biofuel policy-making was based on credible research evidence in Australia and in China; explores the relative importance of the factors that biofuel policymakers consider in policy-making; and has clarified the role research evidence has played in biofuel policy-making. Ultimately, this research provides actionable recommendations and suggestions to improve evidence-based policy-making in Australia and China.

7.2 Rationalities of governments’ intervention in biofuel development

There were obvious differences between policy-making in Australia and China. Most Australian biofuel policymakers thought the government should not intervene and most Australian researchers believed, on the contrary, that the government should.

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This research showed there to be a surprisingly strong policy preference by biofuel policymakers that emphasised the market’s role in allocating resources efficiently. The policymakers stated preference was to step back and keep an appropriate distance from the emergent industry: this position was justified by their claim that the government should not “pick a winner” or “support private goods production” (Au16). This claim (that the government should not interfere in market operations) was refuted by this research. Biofuels are private goods; however, their environmental externalities are public goods. These include the positive externalities, such as climate change mitigation and consolidation of national energy security, and the negative externalities, such as food price rises and threats to food security. When dealing with public goods, the market often fails in matters of supply and efficient distribution of the economic and the environmental benefits (Winston 2006). The government should intervene with a ‘visible hand’ in the economy to encourage and support the industries that could potentially bring positive environmental benefits to the society.

In addition to this argument against what policymakers say is their belief in the free market, this research shows convincingly that governments act differently and appear to meet responsibilities and obligations by considering the stakes from all social, environmental and economic aspects. This includes, especially for China and Australia, climate change mitigation, more effective action for energy security, and regional economic development. Supporting those innovative industries in their early stages of development, industries that can be expected in time to bring social and environmental benefits, is one of the rational acts of government intervention, and is beyond the capability of the free market. The infant industries that produce biofuels using non-food materials, organic waste or algae, have huge difficulties competing with the traditional fossil-fuel industries in terms of economic efficiency and profitability. To realise the potential environmental and social benefits, and to promote innovation in advanced technologies for renewable energy, there is no harm and considerable advantage for the government to provide policy or financial support

273 for biofuel development at an early stage and then to adjust the policies and level of support gradually during development.

Arguments against this rationale for government intervention are based on a strong belief in a free-market economy. This line of thought, asserted repeatedly, showed that the ideology embedded in policymakers’ value systems and in the political system plays the fundamental role in policy-making. The responses provided by the Australian policymakers show that neoliberalism predominates in their belief systems; their responses followed from neoliberalism’s basic assumptions and disregarded the public benefits from good biofuel research and policy.

No Chinese respondents in the interviews commented on the rationality of government policy decisions. Instead, when asked whether they thought it was rational for the government to intervene in biofuel development, they talked about biofuel policies as a fait accompli. Their euphemistic and cautious ways of avoiding commentary on their government’s policies was clear. This was in sharp contrast to the situation in Australia where people made a wider variety of responses and provided very frank comments.

‘Socialism with Chinese characteristics’ is the mainstream value set and the accepted political position (Qiu 2016). In addition, this research provides an example of a one- party system, in which the government can set policies with clear policy goals, establish and implement policy decisions efficiently. The political correctness of these goals and their implementation is fixed in people’s minds and the government’s ideological work is of great significance (Qiu 2016). In the context of Chinese one-party government, the responses provided by the Chinese policymakers and researchers apparently showed their trust and confidence in the Party and the government, and this attitude showed their responses to questions about the policies in China. The contrast between the attitudes of Australian and Chinese respondents to the part played by governments in setting market conditions could not have been starker: one

274 group quite opposed to government intervention—the other seeing it as normal and expected.

By comparing and contrasting the opinions by Australian and Chinese respondents of their government’s rationality of intervention, this research identified that ideology apparently plays a fundamental role in policy-making and in people’s views of policies. Different ideologies in Australia and China can explain the different behaviours of respondents from these two countries. Knowledge of this informs a recommendation to deliberate seek a diversity of views.

7.3 Drivers of biofuel policies

Most of the Australian and the Chinese respondents identified the three generally claimed reasons (climate change mitigation, national energy security and regional economic development) to be the most important drivers of biofuel policies; however, there were two major differences between Australian and Chinese views that showed in the literature and the interviews.

First, in Australia, there was a gap between policy drivers (the potential benefits that biofuels could bring) and the research outputs that was well-recognised by policymakers, but there was no such gap in China. Authoritative government- commissioned research, CSIRO et al. (2003);Biofuels Taskforce (2005) and Batten et al. (2007), in summary, reported the benefits promised by biofuel policy were either “small” or “costly”, but still desirable in general (see Table 6.4). In 2014, the government commissioned research BREE (2014a) to assess fully the costs and benefits of one of the major constituents of biofuel policy, the EPGP (Ethanol Production Grants Program). However, this time, again, government-commissioned research (BREE, 2014) concluded that the potential benefits that biofuels could bring were “modest but comes at a very high cost”. Those comments, in 2015, directly led to the cessation of the EPGP (ANAO, 2015). The cross-checking of responses in the questionnaires with information from the literature showed that, in Australia, biofuel policy drivers were

275 certainly not as clear as they appeared at the outset. In contrast, in China, peer- reviewed journal papers, such as that by Chen et al. (2015), and the famous government-commissioned biofuel research Huang and Qiu (2010) all clearly recognised these three potential benefits as biofuel policy drivers.

Second, a high proportion (21 of 34) of Australian respondents mentioned the importance of political factors in the interviews, such as lobbying from different industries, influence from political parties with different ideologies, and short-term policy goals. In contrast, no such topic was ever raised in the interviews with Chinese respondents, but the often-repeated policy trigger for China’s biofuel policies was a need, in 2001, to make use of the stores of stale grain.

Similar comments made on the assessment of biofuels’ potential benefits from Australian government-commissioned research that was done before and after 2013, had dramatically different policy influences. Before 2013, ‘small or costly, but still desirable’ according to the CSIRO et al. (2003), Biofuel Taskforce (2005) and O'Connell & RIRDC (2007), which was not contradictory to the original policy setting. These researchers continued to imply that these potential benefits of biofuels were justified rationally to be the policy drivers. Dramatically, after 2014, BREE (2014) was able to influence the change in the major biofuel policy (EPGP) in Australia by announcing that the benefits were modest but at a very high cost. The cessation of the EPGP, based on the negative evaluation of the biofuels’ potential benefits, showed the government’s willingness to abandon the drivers of biofuel policies that included social, environmental, and economic aspects. A reasonable inference is that those three potential benefits of biofuels might cover other realistic biofuel policy drivers and this inference leads to the political factors mentioned by most of the Australian respondents (see the results in Section 5.3.6).

Among the political factors mentioned by Australian respondents, three of them told the Manildra story. This specific subsidy, confirmed by two important government- commissioned assessments of the EPGP: BREE (2014, 3) and ANAO (2015, 14), 276 concluded that it was not a rational program for the government to run. It spent hundreds of millions (AUD895 million estimated by the ANAO [2015]) to benefit one company and failed to prove that the environmental, social or economic benefits exceeded the costs. This empirical evidence shows the policy drivers were strongly political and provide an important insight into the risk of policy-making without robust evidence or careful policy analysis, as a first step in understanding biofuel policy- making in Australia.

There was no dispute about the important biofuel policy drivers among the responses from Chinese interviewees. The emphasis was on ‘national energy security’, ‘regional economic development’, ‘climate change mitigation’ and ‘local air pollution’. They were all seen to be rational drivers in China’s environmental, energy and economic contexts, as described in Section 1.1. These findings support statements made in journal papers, media articles, and government-commissioned research. Unlike in Australia, the political factors did not emerge from surveys or from the literature. For China, strategies of long-term social and economic development were clearly presented at the interviews and in the macro policies, such as the five-year plans. However, some of the detailed biofuel policies and the amount of government expenditures for the policies were not publicly available. Biofuel policies often appeared as a component of larger renewable energy target set within the five-year plans. Under these circumstances, there was no publicly available evaluation of the biofuel policies to test whether the claimed policy drivers and outputs had addressed the claimed benefits. An interesting finding during the interviews with Chinese respondents is that they recognised that making use of the reserves of stale grain was the policy trigger in 2001, and Qiu et al. (2012 79) confirmed this was the direct driver. This policy intention, on some level, was driven by the Chinese Government’s strong and consistent support for agriculture and the peasantry. This was deeply political, while the respondent did not recognise it as being so.

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In Australia, the policy’s contents and evaluation reports are relatively transparent and usually publicly available, but the policy drivers are complex and controversial. In comparison, China’s policy drivers are firm and clear; however, the real policy expenditure on some of the detailed arrangements and policy evaluation reports are confidential. By comparing the situations in Australia and China, these apparent differences provide greater insights to the ways people understand policy drivers under two different political systems and two different ideologies. Furthermore, this comparative approach and its findings provide a stronger foundation for further research to explore the merits and optimisation of the evidence-based policy-making model working in a Westminster system and a Socialist system.

7.4 There was a lack of research evidence used in biofuel policy- making

This research used an evidence-based approach to discover whether biofuel policies in Australia and China were formulated using evidence from research. By triangulating the outputs of research that were recognised by policymaker respondents, the documented policy changes, and the inside stories provided by the respondents, it becomes very clear that there was a lack of research evidence used in biofuel policy- making in Australia and in China.

Careful examination of the biofuel policy evaluation reports showed that similar evaluation results had very different policy influences before and after 2014 (for detailed discussion (see Section 6.4.1). The environmental, social and economic benefits of subsidies to biofuels were ‘small’ or ‘costly’ but still ‘desirable’ before 2014 according to the CSIRO et al. (2003) and the Biofuel Taskforce (2005). However, biofuel subsidies were suddenly found not to be desirable any more after another evaluation concluded much the same thing, “modest but comes at very high cost” (BREE 2014). Clearly, the contextual environment of biofuel policy, defined as drivers in this research, had changed. It had a dramatic impact on evaluation of policy and seems to

278 be politically motivated. The speed and timing of change suggested that a political decision rather than one made on environmental, economic or social grounds.

This research identified that prior to 2001 there was no published, clear policy- informing research on biofuel policies in Australia. The government commissioned biofuel policy evaluation research with ABARE from 2003. In China, even though the respondents were clear about the biofuel policy drivers, none of them could tell which piece of research evidence was used to inform the Chinese government’s biofuel subsidies. The most formal and only public government-commissioned evaluation of biofuel development was published in 2010 (for details, see Section 6.4.1).

An inside story told by one researcher, who was involved in the Biofuel Taskforce, revealed that it is clear that at times and at the highest level (the Cabinet), that policy is made sometimes through purposive selection of information (for details, see Section 6.4.2). It is chosen sometimes to reflect what politicians already had in mind and the research evidence is fitted to their policy priorities. Other research evidence had little influence in policy decisions.

The Chinese government started to subsidise biofuel industries to make use of stale grain without anticipating, or making predictions and plans for, how the industry would continue after the stale grain was used. China’s initial biofuel policies lacked foresight of the grain-based biofuels’ potential to threaten food security. The grain- based biofuel plants rely on government subsidies. With the infrastructure investment being a sunk cost, the government faces an awkward situation as it phases out its subsidies. If there had been feasibility studies, a more policy might have been set. To sum up, this study concludes that Australia and China’s biofuel policy-making was only tangentially based on research evidence.

7.5 Improving evidence-based policy-making in biofuel

Most policymakers showed their ‘intervention-free’ preference or their lack of enthusiasm for those questions about to evidence-based policy-making, which was 279 shown by their responses to such statements as ‘biofuel policymakers can obtain helpful advice from researchers’ and ‘biofuel research results could drive the need for policy changes’. In contrast, most researchers were positively disposed to these statements. The policymakers’ demand for evidence is pivotal to rebalance the current situation into an evidence-based process with a robust foundation. This finding echoes the conclusion of Newman et al. (2012) that increasing research supply does not mean the demand will also be increased. More research to better understand the reasons why policymakers would think like this and how this has become a feature of policy- making in Australia will be critical to improving the adoption of research for policy- making.

It is unrealistic and unwise to ignore the political factors in policy-making. In addition to research evidence, political, professional, and stakeholder interests have legitimate voices in policy-making. All these voices ‘frame’ policymakers’ cognition of the policy problems and their choice of the factors they decide to drive and link to the solution of a particular policy problem, which has been described well in health and environment policy areas by Cairney (2016). Biofuel policy-making in Australia is ‘framed’ negatively by major political donations from fossil-fuel industries (identified by Au08) and at critical moments positively stimulated by the Green Party’s pressure on the Rudd Government (pointed out by Au13). Research needs to compete with these other factors if it is to get a more prominent role in policy decision making.

Bemoaning policymakers’ inability to use research evidence was a consistent theme of researchers. That simple view does not reflect the complexity of practice. Researchers overplay their evidence’s role in policy-making. As Head (2015) stated, political spaces, professional knowledge and expertise exist in real practice. If programmatic influences like these were closed off or crowded out of the policy arena and a technocratic approach was used exclusively, it could prevent research evidence from being used honestly by policymakers. Alternatively, manipulating research evidence to cope with

280 political goals will not optimise policy outcomes. In fact, it would be a kind of degradation of the road to enlightened evidence-based policy-making.

This research identified that biofuel policy-making in Australia does not adopt research evidence directly but in indirect ways (stated by policymakers Au02, Au17 and Au21). Claims that biofuel research outputs play an important role in the briefings to the ministers and in shaping their understanding of the issues were made, and this aligns with the ‘conceptual route’ of influence mentioned by Haynes et al. (2011). Increasing scientific thinking within government departments is a way to increase research’s traction and involvement in policy because the indirect use of research relies heavily on the policymakers’ opportunity to absorb the information. When talking about the governments’ capacity to implement evidence-based policy-making, the scientific backgrounds of senior government officials’ were recognised in the literature as key drivers. Especially noteworthy is that eight of the nine top government officials in China have scientific backgrounds (Paulos 2012). In this research, the findings further emphasised that scientific backgrounds of lower-level government officials are also important because they are the people who deal with policy as a matter of routine and have the most direct contact with researchers and research outputs. These employees with scientific backgrounds might be more capable of accessing research and have a greater capacity to understand the research results. Therefore, for the government to employ more staff with scientific backgrounds in government departments is an important recommendation.

To influence policy outcomes, the quality of research must be excellent. One condition for achieving better quality research is to guarantee sufficient time and other resources. This study found that inefficiencies in arranging contracts have meant that the selection of suitable researchers can take most of the time available and often there are only weeks left for the research to be done. This contributes to poor quality and less effective research. Government departments can increase their access to high quality commissioned research to inform policy.

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Policymakers should possess more than a basic knowledge in their work. In China, some research is funded by the government but evaluated by peer researchers from other research agencies. Policymakers or the policy-making agencies should be more involved in project selection and evaluation, so they can better understand where the frontiers of knowledge are in their fields, instead of outsourcing the tasks and deliberately distancing policymakers from the research.

To increase the adoption of biofuel research by policymakers, researchers should direct their research into the channels and styles that biofuel policymakers prefer and they also should be alert to those they habitually use in practice. This research used surveys to explore biofuel policymakers’ preference for different research types and information channels. This research identified that economic values in biofuel research or biophysical research with economic values in it were identified to be more likely to be positively received. This research also detected that biofuel policymakers’ most frequently used information channels are conferences, forums and consulting university researchers. Researchers used these channels to increase their chances of disseminating biofuel research outputs to policymakers. Instead of counting on journal papers to carry their work, researchers can also use the media, such as writing blogs, newspaper articles and interviews on TV or radio to express their opinions and reframe problems for policy. Brevity is critical.

A novel suggestion to improve research adoption in policy-making in China was to increase researchers’ opportunities to be selected for the ‘Committee of Experts’. The Chinese Government’s formal consultations with its ‘Committee of Experts’ that comprises those of the highest authority and reputation in academia was explicitly mentioned by Chinese respondents. However, there are few researchers at the highest level of authority and expertise to be chosen by the government to join this committee. It works as a small group but is very close to policy-making. Therefore, they hope to attract policymakers’ attention and to increase the adoption of research evidence in

282 the biofuel field. Increasing biofuel researchers’ opportunities to be included in that committee is particularly important when developing the next round of energy policies.

To avoid mismatches between biofuel policymakers’ expectations of the research supply, this research identified the importance of paying attention to communication skills, using policy language when writing for policymakers and improving research’s timeliness to catch up with the current policy agenda (see Section 5.5.8). These aspects of knowledge brokering are issues suitable for careful consideration and further research in Australia and in China. These findings are supported by many evaluations of the effects of research investment in the ‘evidence-based policy-making’ domain, such as those by Meagher et al. (2008), Nutley (2003), Porter (2010), and Newman et al. (2012).

According to the political nature of policy and the complexities of policy-making, particularly in biofuels that have public and private values, any policy-making will be challenging and will struggle to find research evidence that is valued in the policy arena. It is also notoriously difficult to detect the influence of specific research on policy. However, in this empirical study, the significant contribution is to reflect the issues and obstacles identified by the practitioners (biofuel researchers and policymakers) during their working experience as they try to inform policy-making in practice. First-hand information from Australia and China is valuable and contributes important insights to analyses of evidence-based policy-making.

7.6 Summary

Policy drivers and policy-making are rarely well documented and are usually regarded as a ‘black box’ for outsiders. Evidence-based policy-making is widely accepted as an ideal way to deal with complex policy issues and to achieve appropriate, effective and efficient outcomes. This research, by comparing opinions from biofuel researchers and policymakers in Australia and in China, uncovered the real biofuel policy drivers and provide the first real understanding of evidence-based policy-making in that policy

283 area. Ultimately, the analysis provided some empirically supported suggestions to improve evidence-based policy-making in Australia and China.

The comparison of Australia and China helped detect the significant role of ideologies not only in policy-making in specific political systems, but also in the way people react and think about the rationale for government intervention. This study has identified the real drivers of biofuel policies in Australia and China and provides a strong foundation for further research to explore the theoretical contribution to policy drivers. The empirical work provides actionable suggestions that are viable, considering they are credible first-hand information provided by ‘insiders’. By detecting the factors considered in policy-making in a tightly defined reality and identifying the role research evidence played, this research provided some potential solutions for the issues and obstacles recognised in the practice of complex evidence-based policy-making.

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Appendix 1 Background (supplementary content)

1. Other Australian biofuel policies Before Australia’s ratification of Kyoto Protocol

Ethanol Production Bounty Scheme 1994-1996

As early as 1994, the Keating Government announced the Ethanol Production Bounty Scheme (EPBS) to support domestic ethanol production. It provided an AUD 0.18 bounty for new ethanol, in excess of 350,000 litres, produced from biomass, in addition to zero-rating of excise (Roarty & Webb 2003). In 1994–95, AUD3 million was paid to subsidise ethanol production and an additional AUD4 million was committed to research and development programs over two years (IEA 2016). In 1996, the Bureau of Resource Sciences and the Australian Bureau of Agricultural and Resource Economics evaluated the EPBS. It concluded that evidence for the reduction GHG emissions from the use of ethanol is ambiguous. Reducing emissions by using ethanol more in the transport sector was costly (ANAO 2015b). “While the Scheme has initiated new production, distribution and use of fuel ethanol, an economically viable industry has not been developed” (Roarty & Webb 2003). Based on these conclusions, the Australian Government announced the abolition of the bounty in 1996.

Renewable Energy Commercialisation Program (RECP) 1999-2001

With AUD26 million from ‘Measures for a better future’ and AUD28 million from the ‘Safeguarding the Future’ package set up in 1997 to respond to climate change (Roarty 2002), the Renewable Energy Commercialisation Program (RECP) was to support the commercialisation of renewable energy technology that would reduce GHG emissions. There was also a component within the Renewable Energy Commercialisation Program of AUD6 million for the Renewable Energy Industry Program (REIP) (IEA 2014). Both these programs were to support the renewable energy industry; the subtle difference between the two was that the RECP was to specialise in projects that had a promising commercial future and the REIP was to support new technology that was in the laboratory or at the testing and demonstrating stage.

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Under RECP, the Manildra Group in the financial year 1999–2000 received AUD1 million to support the commercial application of the new ethanol producing technologies of continuous fermentation and molecular-sieve dehydration (Quirke et al. 2008). These two new technologies saved about 26 per cent of the costs of ethanol production by reducing energy consumption during production.

Renewable Energy Development Initiative (REDI) 2006

Compared with the Renewable Energy Commercialisation Program (RECP), the expectation of the degree of commercial readiness of the Renewable Energy Development Initiative (REDI) projects was lower. It emphasised the early stages of the commercialisation of potential projects. REDI was planned to be a seven-year program that would allocate AUD100 million to renewable-energy technology and production projects from 2005. In 2006, REDI provide AUD5 million to CSR Ltd for its high-yield sugarcane feedstock development for ethanol production; and awarded about AUD2.48 million to MicroBiogen Ltd to develop ethanol production from plant waste (Quirke et al. 2008).

Greenhouse Gas Abatement Program (GGAP) 2000-2004

The Greenhouse Gas Abatement Program was an investment by Australian Government to meet the Kyoto GHG reduction objective. It invested AUD400 million over four years and its stated goal was to reduce GHG emissions by 10.3 million tons by 2004 (Australian Government 2004b). These investments were made to private companies and also brought new opportunities to the economy (Andrews 2000). Under the GGAP, there were two major grants for ethanol. One project provided AUD7.25 million for one ethanol plant in Queensland and the other invested AUD8.8 million for BP Australian Limited in Brisbane to support building another plant and developing the market for E10 (Quirke et al. 2008).

Biofuels Capital Grants Programs (BCGP) 2003-04

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During the Fuel Taxation Inquiry, on 25 July 2003, the government announced the establishment of the Biofuels Capital Grants Programs (BCGP), which was also a component of Measures for a Better Environment (ANAO 2015a). The BCGP was granted AUD37.6 million, which was provided as a subsidy at a rate of AUD0.16 per litre for biofuel products, with a minimum production of five million litres, until the biofuel production capacity reached 350 million litres, or by the end of financial year 2006–07, whichever occurred sooner (IEA 2014; Quirke et al. 2008).

In addition to this immediate capital subsidy, there were other policies and programs to support the 350 million litre goal. For instance, the Ethanol Production Grants Program (EPGP), Energy Grants Credits Scheme (EGCS) and Energy Grants (Cleaner Fuels) Scheme were major biofuel programs to support the biofuel industry’s development (Quirke et al. 2008).

The Energy Grants Credits Scheme (EGCS) (2003-2010)

Part of the Measures for a Better Environment policy to encourage use of cleaner fuels, the Energy Grants Credit Scheme (EGCS) was established in 2003 to provide credits on excise and customs duty for specific purposes. These included the off-road and on- road use of diesel fuel and other fuels, including ethanol and biodiesel, that were used for eligible activities (ANAO 2004). The grant and transfer payments of the EGCS was administered by the Australian Taxation Office (ATO). As shown in Table A, the grant credits started in 2003 and were phased out gradually and ended in 2010 (Australian Taxation Office 2014b).

Table A. Fuel grant rates offered by Energy Grants Credits Scheme (EGCS) from 2003 to 2010

Fuel type 2003 2004 2005 2006 2007 2008 2009 2010 Ethanol (A$ per litre) 0.17 0.17 0.17 0.17 0.12 0.08 0.04 0 Biodiesel (A$ per litre) 0.15 0.15 0.15 0.15 0.11 0.07 0.03 0

Source: (Australian Taxation Office 2014a)

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The grants provided by the EGCS were minimal compared with the fuel excise collected from petroleum fuel consumers. In 2002–03, approximately AUD13 billion in excise was collected from petroleum fuel users, from which AUD3.1 billion was transferred under the EGCS for consumers of diesel and all the alternative fuels (ANAO 2004). The proportion transferred for ethanol or biodiesel was small, although, between 2004–05 and 2005–06, AUD3.5 billion was paid under off-road and on-road schemes and less than AUD3 million was for biodiesel (Quirke et al. 2008). Few eligible users took advantage of EGCS ethanol credits (Biofuels Taskforce 2005).

Ethanol Distribution Program (2006-2008)

To encourage the blending of ethanol with fuel, and its distribution, the Howard Government established the Ethanol Distribution Program (EDP) to subsidise petrol retailers: the program paid out AUD17.2 million from 2006 to 2008 towards the cost of installing new pumps or converting existing ones (ANAO 2015a). In October 2008, the Rudd Government approved an additional AUD6 million for EDP, making the total funding AUD23.2 million (ANAO 2015a).

2. Introduction of Australian research agencies in relation to biofuels

CSIRO

The CSIRO adopts the enterprise governance mechanism making the CSIRO board accountable to the Australian Government for its performance, and enabling the CSIRO to fulfill its obligations to independent and objective research that improve Australia’s ability to confront its most significant challenges and opportunities.

CSIRO is one of the biggest research agencies set up by the government and about half of its research funding is from the Australian Government (Productivity Commission 2011). About 50 to 60 per cent of its research funding is co-invested by the CSIRO and its partners working as contract researchers; about 20 to 30 per cent of the CSIRO’s

288 research funding is invested by these entities and drives the need for consultation; and about 5 per cent is the basic research totally funded by CSIRO (Interviewee Au 05).

The CSIRO has a massive research coverage, including agribusiness, energy and transport, environment and natural resources, health, information technology, telecommunications, manufacturing and mineral resources. Biofuel is one of them. The users of the CSIRO’s research include researchers, businesses and policymakers.

BREE

The Bureau of Resources and Energy Economics (BREE) is administratively within the Australian Government Department of Industry, but what is interesting is that BREE is professionally independent with its own economic and statistically focused research into resources and energy. With its independent research role, BREE’s mission is to contribute evidence-based policy suggestions, empiric and theoretic; to provide disinterested predictions for markets without being influenced by stakeholders; and also to give a critical evaluation, uninfluenced by political factors, of the effects of government policies. In addition to providing knowledge to the Australian Government, BREE also is a consulting organisation in research for outside clients. Therefore, sources of BREE’s research funding are the Department of Industry and other non- government entities.

ABARES

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is a research agency administered under the auspices of the Australian Government’s Department of Agriculture. Like BREE, ABARES is professionally independent with its research activities that mainly work with industries in agriculture, food, forestry, fisheries, energy, minerals, productivity and water with biophysical and socio- economic research interests. The mission of ABARES is to provide suggestions and strategic plans to tackle the potential challenges for decision-makers in the Australian Government and the primary industries. Therefore, research funding for ABARES is

289 from different stakeholders who have needs and interests in the research results, groups that include the Australian Government, industry, and the investment partners in the research.

RIRDC

The Rural Industries Research and Development Corporation (RIRDC) is in charge of the research investment in primary industry to help small-scale companies that do not have the capacity to for their own research and development. RIRDC’s funding comes from industry levies and the matching support from government appropriations (Productivity Commission 2011). Its key function is to work with industry in research and development to achieve a more profitable and sustainable rural sector (RIRDC 2012). Therefore, the key beneficiaries of RIRDC investment are the industry sectors. RIRDC has three major research investment fields; animal industries, plant industries and rural people and issues. Biofuel research is included in the rural people and issues category.

ARENA

The Australian Renewable Energy Agency (ARENA) was established on 1 July 2012 as an independent funding agency under the Australian Renewable Energy Agency Act 2011. ARENA has its own board and advisory panel to plan and decide investment and collaborative activities. Its funding leads to the development of renewable-energy industrial development in Australia. Initially, ARENA has about AUD3 billion in funding to invest in renewable energy projects. Among its portfolio are projects at different stages in the innovation chain, including the early research stage in the laboratory, the market demonstration stage and the commercialisation stage.

With funding from the Australian Government, ARENA’s tasks are to fund renewable energy projects, to support research and development and to support activities to capture and share knowledge (ARENA 2014). It supports research in many energy forms including solar, ocean and wave, geothermal, wind and bioenergy.

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Appendix 2 Discussion Guide

Understanding Policy Drivers and Evidence-based Policy-making in Australia and China: the Biofuel Experience

Introduction

x Thank you for participating. x Self-introduction: My name is Bo Dong. I am a PhD student from UNSW Canberra. I am doing a comparative research on the drivers and impacts of biofuel research investment policy between Commonwealth of Australia and People’s Republic of China. x Purpose: To analyse the drivers of government’s intervention in biofuel and its investments in biofuel research, and then to assess the impacts of the selected biofuel research investment programs to see how these research inform biofuel policy-making in both Australia and China. Through the comparison analysis between Australia and China, the experience and lessons can be learnt from each other on how to make better biofuel research investments and how to make research assist biofuel policy-making better. x Our discussion will be confidential and anonymous. Audio-taping is for research purpose only and to help me. I will not be writing every word down. I would only use your name or directly quote material with your permission or in a way that your privacy is protected. If necessary, it can be turned off.

x This interview will take about an hour. There is no right or wrong answer. It is your views that are the most important things.

1. What are the drivers for the government to intervene biofuel? And when not to act?

1. I am interested in your experience with biofuel. Please tell me about it? (Make records of “when”, “where”, “why”, “role”, “contribution”)

2. At that time, what was the situation for biofuel? 3. After all these years, what differences have you noticed in the biofuel or biofuel policy situation? 4. What do you think are the drivers for those changes?

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([PROBE x 3], ask twice, and third times. “Well, anything else?” or “Was there any other reasons that you think could cause the changes?”) (If necessary explain that policy drivers are the reasons that make policymakers/government decide it is necessary to change existing policy or make new policy) 5. From my reading of the literature, the drivers of biofuel policies can be categorized like this (show the cards). For Australia/China, which ones do you think are the most important policy drivers? (Sorting and ranking task – take notes or photo) I have been thinking that some drivers are aiming to solve/release the problems (pushing drivers) and some are aiming to achieve better situation (desire to change) – do you think that we can sort these into push and desire drivers? Which of them do you think were aiming to solve/release the problems (pushing drivers); Which of them were aiming to achieve better situation (desire to change)?

6. Some people believe that instead of giving biofuel industry support or subsidies the market should be left to decide the cheapest and cleanest answer while researching alternative energies. Getting an appropriate policy is hard, I’d like to know your views on what relationship should exist between "policy" and "market" when talking about Australia's (or China’s) biofuel development? And what should that mixture be?

7. (Yes, now I know policy is important for biofuel development. OR yes, now I know that an appropriate mixture of policy intervention and market mechanism is the key for biofuel development in Australia/China) Then, under what kind of circumstances, do you think the Australian government (or Chinese Government) should make a new policy to improve the current situation for biofuel? And under what circumstance do you think the government should decide to maintain the status quo? The answers to question6 and question7 might be very short or very long.

Fishing question—need to give them a try.

2. What are the drivers for government to do investments in biofuel research?

8. People say biofuel policies are “evidence-based”. Do you think so? Could you give me some examples?

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If not, what are the main bases for the biofuel policy-making? If sometimes, what else factors do the policymakers consider? And among all the factors they considered, how much does the scientific evidence weigh? If yes, then the following questions will be asked. 9. What role do you think scientific evidence plays in the policy-making process? Instrumental use(using research directly to seek answers for policy solutions) or conceptual use(using research findings in the form of ideas that influence the policy framing, agenda setting, policy development, intervention and evaluation.) (During these questions, pay attention to the models they may mention)

10. Based on your experience, how does scientific evidence help in each stage of the new policy-making process? (Show the picture of the policy cycle as a stimulant to the conversation)

11. In your work, via what means do you usually get the scientific evidence to assist you with the policy-making? Could you give me some examples? Conferences, seminars, forums, journal papers, or investment in specific research programs, research agencies like CSIRO, and ABARE, etc.

And which way do you find is the most efficient one to get the information? And which is the second most efficient way?

12. Now could you talk about one example of a biofuel policy your agency made? (Policy Y)

13. What changes were expected with Policy Y? At that time, what are the main issues did you think were very important ones to deal with? Could you please name the top 3?

14. What kinds of information/knowledge did you think was most important to know when making Policy Y? 15. And how was that information or knowledge gathered? Did the agency do research investments? Was there any assessment report or other documents made for this biofuel research investment program? And could I get a copy? (If yes then ask about this investment Program X; If no, then ask about other paths of getting information.) 16. What type of research investment was done in Program X? Was it economic, social or environmental research?

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17. How much money was invested in Program X? What was the approximate proportion of the whole research budget Program X took? Compared to the research investment programs in your department at that period/in that financial year? (Get values if possible – more reliable than %)

3. What are the matches and gaps between policymakers’ initial expectations and the outputs of the research programs?

18. How many of the outputs matched with the initial expectations of the research investment? Or how many of the outputs provide the information that needed to be known before the investment went ahead in the Program X? And what were they? 19. Do you think the outputs were satisfactory?

If yes, then what makes them work so well? If not, what are the gaps and why there are the gaps between the initial expectation and the outputs?

20. Which conclusions were new to you? 21. Which outputs from Program X were the turning points for new Policy Y’s policy-making?

22. How long did the Program X take to get the outputs of the research? And did they meet the Policy Y’s needs or agenda?

4. What are the impacts of the biofuel research and development investment programs˛How well do they inform the relative policy-making process?

23. About the satisfying/matching outputs or research needs and outputs mentioned above, how were they adopted in Policy Y's policy-making process? How did the outputs of the research (Program X) inform the policy’s (Policy Y) policy-making process?

24. Do you think Program X was a successful investment? Or in your opinion would it be right to say it was a right decision to do in the first place judging from the angle of "how well the research informs policy-making"? 25. If Program X did not informed Policy Y so well, in what aspect did the outputs miss the initial expectations? What do you think caused these mismatches? Which one was the most important factor? And what could have been done differently?

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And which one was the second most important one? 26. Do you know of any standards to say whether one research investment is successful or not? Could you list some principles or the successful examples that you think of a successful research investment from the angle of "how well did a research investment inform new policy-making"? 27. Did the program X consider a counterfactual--to say did it consider what would or could happen if the program investment did not occur?

5. How can the models in the invested research be improved with the gaps found between the drivers of biofuel research investment and the research outputs?

28. What models did the research Program X use? 29. Could you describe the models briefly? 30. And do you think the models were sufficient

(Consider probe to understand ‘sufficient’ reasoning – How did that idea of the model being “sufficient”?)

6. What are the similarities and differences between Australia and China in the questions we have discussed and what parts can be improved through the comparative analysis for both countries?

31. For China’s/Australia’s biofuel policies, what do you think could be their drivers? Which aspect do you think they might value the most? 32. Have you considered China’s/Australia’s biofuel investment? What differences might be there between Australia’s research investment types and China’s? What suggestions or recommendations would you like to give for China’s/Australia’s biofuel research investment? (Prepare short answers about what China’s/Australia’s biofuel research investment situation is like and offer to send more detailed description later.) 33. Have you considered China’s/Australia’s biofuel policy-making? What differences might be there between Australia’s policy-making process and China’s? (Prepare short answers about what China’s/Australia’s biofuel policy-making process is like and offer to send more detailed description later.) 34. Do you think China’s/Australia’s biofuel policy-making adopts appropriate amount of scientific evidence or models to support their biofuel policies? What

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recommendation would you like to give for China’s/Australia’s biofuel policy- making? 35. Could you please give some recommendations about how to let research assist policy-making better for both Australia and China?

7. Questionnaire

This questionnaire (hand over hard copy or web address) is a follow-up / summary of our discussion. It may include some questions besides our discussion. The questionnaire will be essential to know more about your opinions and show clear research results to the readers of my thesis. It won’t take long and it will be a great help to me finishing my research on time. Thank you very much.

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Appendix 3 Questionnaire

Understanding Policy Drivers and Evidence-based Policy-making in Australia and China: the Biofuel Experience

This survey is about biofuel policy-making and biofuel research investment and it

will be used in a PhD research project by a student (Bo Dong,

[email protected]) of the University of New South Wales, Canberra.

You have been invited to participate in this study because your job is related to

biofuel policy-making and biofuel research investment. This survey will be

conducted with your consent. Your cooperation is important to the study. The

data collected from the survey will be kept securely and confidentially and only

accessed by the researchers involved in this study. At all times in the research

process your privacy will be well protected. Any data collected will be used for a

PhD thesis and other scholarly journal publications.

It will only take several minutes to complete this questionnaire. Please mark the

option(s) in proper operation(s) that correspond(s) to your appropriate level.

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Q1. What are the important drivers of biofuel policies in your country?

If you have other options to specify, please list them first. Afterwards please rank the top 5 drivers that you think, with "1" meaning the strongest driver.

Drivers Choosing and Ranking

(strongest=1)

National energy security

global oil price

dependence on oil imports

Local energy self-sufficiency

Diversity in energy sources

National Food security

Jet/ airplane fuel consumption

Carbon emission reduction

Using Marginal land

Local air pollution

Income generation for farmers

Employment for farmers

New markets for feedstocks

Develop local economy

Replace nonrenewable/fossil fuel

Food affordability for the poor

Others (specify and rank)

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2. The following statements are about biofuel policies and their development in your country. Please rank your response to each statement.

Strongly Strongly Agree Neutral Disagree agree disagree Your country needs to use more L1 renewable energy to reduce fossil fuel consumption. Biofuel is a desirable choice among all kinds of renewable energy to L2 reduce fossil fuel consumption in your country. There will be a great future for biofuel L3 development and adoption in your country. The Government should not intervene L4 in biofuel development. In your country, biofuel’s development needs the L5 government to lead it with very clear policy direction. Government should not give subsidies L6 for 1st generation biofuel in your country. 2nd and 3rd generation biofuel should get more support (both L7 economically and technically) from government.

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3. The following statements are about the relationship between biofuel research investment and biofuel policy-making. Please rank your response.

Strongly Strongly Agree Neutral Disagree agree disagree Biofuel policy-making in your country L8 should be evidenced-based. Biofuel policymakers in your country L9 are willing to find research evidence to assist their policy-making process. Biofuel policy makers in your country are capable of finding scientific L10 evidence to assist their policy- making process. In your country, biofuel research investment is the most efficient way L11 to get relevant information and knowledge for the policy-making. In your country, biofuel policymakers L12 use the results of research directly as answers for policy problems. Biofuel policy is always based on L13 certain results of research investment projects in your country. Before agencies make a biofuel research investment, they knew L14 clearly what information was needed. There will be more biofuel research L15 investment from the Government in the future. Biofuel policymakers can always get L16 very helpful advice or evidence from research in your country. In your country, biofuel policymakers use the results of research in the L17 form of knowledge that shape ideas which can influence policy-making process.

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Q4. What are the important factors in policy-making process in your country?

If you have other factors to specify, please list them first. Afterwards please rank all of them, with “1” meaning the most prior factor that policymakers should consider.

Factors might be considered by policymakers when making biofuel policies Ranking Outcomes of the scientific research Public opinions Peers’ opinions Political concerns between different parties Minister or secretaries’ views Industry representatives International organization’s research publications (like UN FAO) NGO statements and sources Others (specify and rank)

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Q5. Biofuel policymakers get information through the following means or channels.

If you have other options to specify, please list them first. Afterwards please

Please choose the most frequently used 5 ones in your work and then rank them, and then rank them, with “1” meaning the most frequently used/efficient means to get information.

Please choose the most frequently used 5 Means or channels to receive information ones in your work and then rank them.

Peers

Hearings

Books

Conferences Seminars Forums Peers reviewed journal papers Newspapers Universities researchers Research investment programs Public research agencies Computer models Web searches Others (specify and rank)

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Q6. Please rank the types of knowledge that policymakers expect to know the best from biofuel research.

If you have other options to specify please add them.

Afterwards please choose the 5 most important ones and rank them, with “1” meaning the most important aspect of knowledge that policymakers value and expect to know from the results of research programs.

Please choose 5 most important Policymakers’ initial expectations of ones from all these factors and knowledge about biofuel from research then rank them Technology feasibility of the new generation biofuel production in a commercial scale. The impacts from biofuel on your country’s

national energy security Consequences about your country’s social

equity out of the biofuel development Biofuel development’s influence in your Social aspects country’s food security Other social aspects (please describe)

Impacts on carbon emission in your

country from biofuel adopting Biofuel’s impact on your country’s land use Biofuel’s impact on your country’s water

resource system Biofuel’s impact on ecosystems in your

country The influences on biodiversity caused by Environmental biofuel production aspects Other environmental impact assessment

(please describe)

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Returns of the investment in biofuel

industries in your country Outcomes of the subsidies on biofuel

industry The impacts on feedstock producers’

Economic income in your country aspects Market potential of biofuel product in your country.(demand side; for specific kind of biofuel and district) Biofuel production capacity in your country (supply side; for specific kind of biofuel and district) Benefit from biofuel international trade for

your country Impacts with the employment opportunity

for farmers Economic Compliance of biofuel support with World

aspects Trade Organization rules Other economic aspects of knowledge

(please describe)

Cost benefit analysis Integrated Social economic and

environmental assessment Regulatory assessment Integrated Environmental impact assessments methods of Patent assessment assessment Strategic Impact assessment Other methods (please describe)

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7. The following statements are about the relationship between policymaker's initial expectations and the outcomes of the research programs. Please rank your response

Strongly Strongly Agree Neutral Disagree agree disagree The reason why the outputs hadn’t match well with policymakers’ initial expectations is that the policymakers L18 didn’t make themselves very clear with their expectations about the knowledge they want to know. The reason why the outputs hadn’t match well with policymakers initial expectations is that the researchers L19 didn’t use the clear, brief and useful/actionable language in research outputs when they show them to policymakers. Policymakers are willing to use models L20 to assist their decision making. There are some very comprehensive L21 models used by researchers and accepted by policymakers. Research outputs always match L22 policymakers’ initial expectation of the research investment. There are always results from the research investment programs that L23 can drive the need for policy changes in your country. There are some very useful models that L24 are used by policy makers.

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Q8. Different types of models are shown below. If you have other options to specify, please list them first. Afterwards please choose the models that you prefer to use when modeling biofuel issues.

Types of models Please tick your choice(s) an embodied energy model of the economy (OzEcco) Life Cycle Analysis (LCA) Computable General Equilibrium (CGE) models Partial-Equilibrium (PE) models Others (specify and choose)

9. The following statements are about evaluating the impact of biofuel research investment programs. Please rank your response

Strongly Strongly Agree Neutral Disagree agree disagree Biofuel policies are exactly based on L25 the available research results in your country. There are standards that can be used L26 to evaluate whether biofuel research investment is successful. There are models that can be used to evaluate how well one biofuel L27 research project has informed policy-making. Policymakers can control the direction L28 of the biofuel research investment in your country. Biofuel policy-making cannot be L29 convincing without adopting research outputs in your country. Biofuel policies based on research L30 results are more appropriate, effective and efficient.

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Q10. Please rank the most important reasons that cause mismatches between biofuel policymakers’ initial expectations and the outputs of the biofuel research.

If you have other options to specify, please list them first. Afterwards please rank the top 5, with “1” meaning the most important reason that causes the biofuel policymakers cannot get the information they want after they did the biofuel research investment.

Reasons why biofuel policymakers can’t get the Please choose the top 5 right information from biofuel research and then rank them investments Policymakers are unable to access research. Policymakers chose the wrong projects. Policymakers chose the wrong research team to do the project. The outputs themselves from the research were wrong. Policymakers invest in the research project at the wrong time. Policymakers didn’t provide the right context/background knowledge to the researchers. Biofuel policymakers didn’t make the expectation of knowledge needs clear enough to researchers. Biofuel researchers didn’t understand the exact points of what policymakers’ wanted. The researchers didn’t supply the outputs of the biofuel research in a way that matched the political language. The outputs of the biofuel research was supplied in a wrong time (missing the deadline, submit in the time that biofuel is not on the policy agenda, etc).

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11. Recommendations

From our discussion, so far I have learnt more about biofuel research investment and biofuel policy-making in your country and those examples that you shared are useful.

I am keen to learn about more biofuel related policies and biofuel research investments-could you recommend some other policies and research programs?

I am keen to talk to other people - could you recommend other people or agencies I should contact?

I am also keen to read more to understand these issues – what would you recommend?

Contacts in biofuel field:

Biofuel research investment programs:

Biofuel documents/reports:

Biofuel policies in your country:

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Appendix 4 Consent Form

THE UNIVERSITY OF NEW SOUTH WALES

PARTICIPANT INFORMATION STATEMENT AND CONSENT FORM

Approval No. A-13-39

Understanding Policy Drivers and Evidence-based Policy-making in Australia and China: the Biofuel Experience

You are invited to participate in a comparative study of the drivers and impacts of biofuel research investment policies in Australia and China. We hope to learn the similarities and differences of the drivers and impacts of biofuel research investment policies in these countries so as to identify the experience and lessons which the two countries can learn from each other. You were selected as a possible participant in this study because you and your work has a close relation with biofuel research and biofuel policy-making. If you decide to participate, the interview or survey will be conducted at your convenience. The interview will take about one hour. Any information that is obtained in connection with this study and that can be identified with you will remain confidential and will be disclosed only with your permission, except as required by law. If you give us your permission by signing this document, we plan to publish the results in a PhD thesis and academic publications. In any publication, information will be provided in such a way that you cannot be identified. Information provided in confidence by accident may become public or influence decisions. You will have this risk explained before we start so that you can be aware of this issue. With your permission interviews will be recorded and the limited use of those recordings will be explained. You will see sections of an interview and if necessary, the information included in publications will be provided to check. We cannot or do not guarantee or promise that you will receive any benefits from this study. However, it is possible that this study will give insights to a deep understanding of the drivers of biofuel research policy and research. Meanwhile, the comparative study between Australia and China will provide recommendations for both countries. No remuneration can be provided by us, but no economic cost will be caused on you because of participation. What we expect is your time to talk with us, and we will appreciate your time and help. This is a PhD research project of Miss Bo Dong (0061 416 007 385/ 0086 159 5323 2260, [email protected] ) and the research supervisor is A/Prof Stuart Pearson (02 6268 8305 or [email protected]), both of who are happy to discuss any questions. Complaints may be directed to Dr Stephen Coleman; Convenor, Human Research Ethics Advisory Panel, UNSW@ADFA, CANBERRA 2600 (phone (02) 6268-8812, fax (02) 6268-8899, email [email protected]). Any complaint you make will be investigated promptly and you will be informed of the outcome. We will provide a copy of related results of the study to research participants. Participants will be given the opportunity to have an executive summary or the full thesis/publication in digital form.

309

Your decision whether or not to participate will not prejudice your future relations with the University of New South Wales. If you decide to participate, you are free to withdraw your consent and to discontinue participation at any time without prejudice. If you have any questions, please feel free to ask us. If you have any additional questions later, Miss Bo Dong (0061 416 007 385/0086 159 5323 2260 or [email protected]) will be happy to answer them. You will be given a copy of this form to keep.

Yours Sincerely, Bo Dong

You are making a decision whether or not to participate. Your signature indicates that, having read the information provided above, you have decided to participate.

…………………………………………………… .…………………………………………………….

Signature of Research Participant Signature of Witness

.…………………………………………………….

Name of Witness

REVOCATION OF CONSENT

Understanding Policy Drivers and Evidence-based Policy-making in Australia and China: the Biofuel Experience

I hereby wish to WITHDRAW my consent to participate in the research proposal described above and understand that such withdrawal WILL NOT jeopardise any treatment or my relationship with The University of New South Wales

…………………………………………………… .…………………………………………………….

Signature Date

The section for Revocation of Consent should be forwarded to Miss Bo Dong (mailing address: Building 22, School of PEMS, UNSW@ADFA, Northcott Drive, Canberra, ACT, 2600, mobile: 0061 416 007 385/0086 159 5323 2260, email address: [email protected]).

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Appendix 5 Major results of well-recognised biofuel research in Australia

ABARES (2003) Biofuel Taskforce (2005) O'Connell & RIRDC (2007) L.K.E (2011)

Under the 350 ML Target scenario, GHG emissions are estimated to be There would be some GHG 268,000 tonnes lower in 2010 emission benefits, of the order When used in an E10 blend, Biomass sources for the 2nd generation (about 0.3 per cent of transport of $7 million a year, which could greenhouse gases (compared to biofuels offer the potential to GHG GHG emissions). vary greatly depending on plant unleaded petrol) are lower by significantly lower life-cycle GHG emissions Total costs in 2010 (in terms of lost design and feedstock. 1.7 % (from wheat) to 5.1 % (C- emissions compared to non- GDP) are estimated to be between However, there is cheaper way to molasses using co-generation). renewable alternatives. $265 to $277 a tonne CO2 reduce CO2. equivalent (in 2003 dollars).

The benefits of biofuels in terms of 2nd generation biofuels could reduce the Theoretically, biofuels have improving energy security are dependence on these fuels, Energy supplied upper limits of 11–22 % minimal. 350 ML of biofuels potentially mitigating risks to supply of Australia’s current petrol represents only 1.1% of Australia’s Australia’s fuel security in the usage. total motor vehicle fuel demand. medium to long term.

Regional employment impacts of Some 648 direct and indirect jobs biofuels production are commonly regionally (Queensland and overstated and are difficult to Hundreds of jobs are underway due Considerable job creation and new NSW); The cost of these jobs (in predict as they will be plant and to the ethanol plants; potential economic activity in rural and Regional 2004–05 dollars) would be location specific. opportunities exist in woody regional areas would be an economy $182,000 p.a. in government The cost of each direct job created is perennials, mosaic farming and important benefit from 2nd expenditure in 2009–10, or from $164,000 to $172,000 for sugar industry. generation biofuels. $139,000 p.a. in economic each direct and indirect job created costs. in biofuels and related industries. (continue on next page)

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ABARES (2003) Biofuel Taskforce (2005) O'Connell & RIRDC (2007) L.K.E (2011)

There is prima facie evidence that there may be potential for Replacing low sulphur diesel with Savings in health costs of meeting a significant reductions in fine- biodiesel brings significant Health biofuel target are estimated to be particle emissions from the use health benefit. benefits $3.3 million in 2010 (in 2003 of E10 in place of neat petrol, The benefits of ethanol, particularly dollars). emphasising that considerable in an E10 blend, are less clear. uncertainty remains.

Australia’s abundance of flat land and

sunlight and a climate suitable for Other land, water and biodiversity growing dedicated energy crops, impacts, from the production, Australia could become a global Land use distribution and use of 350 ML of Land and water impacts will depend leader in second-generation change biofuels are not significant, on the scale of the Industry. biofuels. provided wastes are disposed of However, require transformative land appropriately. use change and significant

investment.

The 2nd generation biofuels can avoid negative impacts on world food Competition with food producers prices, since they are based on for crops has thus far not been a biomass sources, including waste significant issue for Australia’s streams (agriculture, forestry, Food price few ethanol producers — as household and industrial) and current production is dedicated energy crops including predominantly based on waste algae that do not typically compete starch and C-molasses. with food.

(continue on next page)

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ABARES (2003) Biofuel Taskforce (2005) O'Connell & RIRDC (2007) L.K.E (2011) An assisted biofuels industry may increase grain prices at a cost to some domestic livestock A growing ethanol industry (that Competitio industries, which are heavily Higher costs for industries competing utilises grain) will affect the n with dependent on these feedstocks. for the same inputs, such as the supply of feed-grain for livestock In the longer term, The fuel livestock feed industry. livestock, particularly in drought industries ethanol industry will then be years. placed on a more even footing in its ability to bid for grain against the livestock industry. Driven by the biofuels excise Assisting the biofuels industry to meet advantage, at around $90 a 350 ML target is estimated to million in 2009–10 reducing to Cost reduce GDP by between $71 and $72 million a year (2004–05 $74 million in 2010 (in 2003 dollars) in the long term (post dollars). 2015). Modifying ethanol-blend labelling The costs of implementing a policy of to gain more customers’ Sustainability is a critical issue for The formation of an 2nd generation assisting the Australian biofuels acceptance. the biofuels industry —there is biofuel industry will rely on industry to meet a 350 ML biofuels Information on vehicle/fuel no point in replacing one Government willingness to meet target are estimated to exceed the compatibility could be provided unsustainable system with some of the early stage challenges. benefits. Recommen- to consumers in a more another. Government should adjust emphasis Ethanol produced from molasses and dation accurate and user-friendly way. Current biofuel has not reached a as knowledge grows and the most cereal grains and biodiesel Interrelated commercial risks that ‘main game’ (10–20 % of prospective ABF technologies and produced from tallow or oilseeds are impeding the 350 ML target transport fuels) and has not feedstocks emerge in the medium all require substantial and ongoing by preventing an operating been produced in a sustainable term; and the private sectors should government assistance to be mainstream market for fuel manner. take the lead in the long term. viable. ethanol blends.

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