Biofuels, Energy and Agriculture: Powering towards world food security

Thanks very much, Neil, for that generous introduction. Dr Joachim Von Braun, distinguished guests and ladies and gentlemen.

Neil, when he was introducing me, read out a little of my curriculum vitae and says I was a Doctor of Civil Law. I can't let that pass because it always embarrasses me a little bit this. You forgot to mention that I'm also a Doctor of Philosophy but the point I'd make to you is that I'm neither a lawyer nor a philosopher. They are honorary doctorates and it is very important I correct the record there, particularly before such an august audience, in case you think I'm trying to get away with something.

In any case, thank you yet again for inviting me to open the annual Crawford Fund conference. I've opened this conference on quite a number of occasions now over the years and I've enjoyed doing so. I much respect the work of the Crawford Fund, which has been well led and well organised over quite some years.

You have chosen this year a very demanding but, I think we'd all agree, a very timely subject and I'm sure that the conference will be especially interesting in many respects. I wish I could be here to hear what so many of you have to say, who are experts in these areas. But obviously, other things demand my time. Not only is it a demanding and timely subject, but it is a subject the public, I think, more generally are very interested in.

Global economic growth, I think we'd all agree - despite what's been happening in some financial markets recently - global economic growth is still at very healthy levels.

In Australia, as you know, it has been rapid - over three per cent per year in recent years and it has been better than that, economic growth, in many - in fact a large number - of developing countries.

The World Bank estimates developing country growth at 7.2 per cent in 2004, 6.6 per cent in 2005, and last year 7.0 per cent.

It is just worth reminding ourselves that India experienced growth of 8.7 per cent in 2006, and China a stunning 10.4 per cent in the same year and the expectation is that it could be a little higher this year. Cambodia and Laos - countries that are generally thought to be struggling, you imagine them that way - have been growing in excess of seven per cent in recent years. Indonesia and the Philippines are growing at close to six per cent.

So what comes with economic growth is a decline in poverty and poverty levels are also falling. The proportion of people in the world living on $1 a day or less fell from 28 per cent in 1990 to 20 per cent in 2003. There were 470 million people living on $1 a day or less in East Asia in 1990. That dropped by about half to 213 million in 2003 and the World Bank predicts that with continued economic growth there will be only - it sounds a big number I suppose - but there will only be 51 million people in this category of severe poverty in East Asia by 2015.

I think that is actually a stunning achievement and when you look at the reporting of the global economy and the discussion about the issues that the world faces and is addressing, dealing with or failing to, you very seldom hear the happy story of the decline in poverty in East Asia.

Population increases in developing countries, of course, are quite significant. It is estimated that they will increase from four billion to over eight billion people by 2050. Now that will quite clearly, with the higher rates of economic growth and decline in poverty and the increase in population, place a lot of demand on current energy sources.

Poverty reduction requires energy and, not surprisingly, demand for global energy is expected to rise by over half from 2005 to 2030. Much of the demand will come from APEC countries.

Of the 6.3 billion people on the planet today, 1.6 billion of them do not have access to basic energy sources. In the coming decades we can expect economies to take greater advantage of renewable energies and nuclear power. Coal and gas will also continue to play a vital role in powering development, which is why the Government is placing so much emphasis on supporting the development of lower emission technologies for coal and gas, particularly clean coal technology.

Global use of oil presents a different challenge given its importance for transport. Australia, like the rest of the world, relies heavily on petroleum-based fuels to meet its transport energy needs. Although this reliance will continue well into the future, fluctuating oil prices and concerns about supply have led to a fresh interest in alternative fuels. I think another factor, by the way, that's lead to a fresh interest in alternative fuels is a concern of over reliance on imports from one particular, or predominantly one particular, part of the world - the Middle East - which of course has issues with stability.

With recent oil price increases, some developing countries now spend up to six times more on fuel than they do on health. Others spend twice as much on fuel as they do on poverty reduction and elsewhere the foreign exchange used to import fuel can be up to five times that gained from debt relief.

Pacific Island countries are the most vulnerable to oil price increases. If oil rises by just $10 a barrel, some face a loss of up to 14 per cent of gross national income.

The global challenge is to power economic development in a way that is reliable, secure and meets those critical clean development objectives of lowering greenhouse gas emissions and reducing air pollution.

Between 1970 and 2004, global greenhouse gas emissions increased 70 per cent, from approximately 29 to 49 billion tonnes. Most of these emissions come from burning fossil fuels - coal, oil and natural gas - to produce energy, the vital energy which powers the societies in which we live. We know we have to reduce greenhouse gas emissions.

Australia's energy policy centres on energy security, energy sustainability and energy prosperity. We set the world's first renewable energy target, we lead the world in the development of clean coal and carbon capture and storage technologies and we have announced and implemented many domestic policies.

We have committed more than $700 million to promote renewable energy and invested $500 million in the Low Emissions Technology Development Fund. This has leveraged over $3 billion in private sector investment and will continue to support the development of clean energy technologies.

And earlier this month in Queensland, finance ministers from APEC members agreed that their economies need to expand the use and transfer of new, more efficient technologies that favour lower carbon emissions.

But we have to get this right. We can't dive headfirst into adopting new technologies without fully understanding the implications.

With uncertainty over oil availability and cost, and the negative impacts on climate change, there is a need to diversify energy sources. Biofuels have become an attractive proposition. They offer the prospect of domestic energy generation and a reliable, renewable source of fuel. They have the potential to reduce greenhouse gas emissions, to generate new industries, employment prospects and incomes.

Many countries are putting in place measures to stimulate biofuel production for domestic and international markets. The challenge is to increase biofuel supply while ensuring that biofuels are developed in a clean, sustainable and competitive fashion.

Developing countries are already launching biofuel programs based on agricultural feedstock - sugar and grains for ethanol and rapeseed and soyabean for biodiesel. And low-cost biofuel crops like sugar cane and palm oil grow in abundance in many developing countries in the tropics.

Biofuels in the right place under the right circumstances could be the answer for many communities.

For instance in Solomon Islands, AusAID supports the development of two small processing units where virgin coconut oil can be mixed with diesel and be used in generators. There is no need for any mechanical modifications and the fuel can also be used as a kerosene substitute in lanterns.

But nothing is simple or straightforward. There are tough choices to be made about the approaches to sources of energy.

Perhaps the greatest challenge of the current generation of biofuels is that they compete for the same land that is used for food production. At the moment this competition is mild. But food security could be compromised if food crops are pushed out to make way for biofuel crops.

The UN Food and Agriculture Organisation estimates there are already 854 million undernourished people in the world. Most are in developing countries and most are in rural areas and there is a great deal of international work underway to improve food security.

For instance, East Timor traditionally has a wet season, a dry season and a hungry season, when there is simply not enough food to go around. ACIAR - The Australian Centre for International Agricultural Research - and other institutions are working with the Government of East Timor on the Seeds of Life program to introduce higher yielding varieties of rice, maize, cassava, sweet potato and peanuts. This will increase domestic food production and reduce vulnerability during the hungry season. This work will become all the more important if, as some predict, the biofuel revolution increases the cost of imported food staples.

Net food importing countries, such as East Timor, could be seriously affected by any global move towards growing crops for biofuels instead of basic food.

Where agricultural producers receive higher incomes from biofuel crops, the downside could be an increase in the price of food and of feedstock needed to feed animals. There is also a real danger that land with high conservation and carbon sequestration value, such as rainforests, could be turned over to monocropping for biofuels or that peatlands could be converted to large scale oil palm plantations.

Both of these outcomes would result not only in loss of crucial habitat, but also in higher greenhouse gas emissions from deforestation. This could perversely do far more damage to the environment and our climate than using petrol.

Deforestation in developing countries is already responsible for one-fifth of global greenhouse gas emissions. About half of these emissions come from Asia. With energy demand set to soar in these countries, we have to work collectively for international action on climate change.

We want something better than the flawed Kyoto Protocol which does not cover the fastest growing source of emissions in large developing countries, and does not attract the support of the world's largest emitter, the United States of America.

We have built up an international strategy that recognises different country circumstances, that brings together industry and government to improve energy efficiency, that encourages action from APEC members, that better manages forests, and that is finding practical ways of responding, in general terms, to climate change.

The Government believes that there is not one, single answer to the world's energy problems.

Tomorrow I am going to launch the aid program's environment strategy which will guide activities that directly target environment challenges, including climate change.

We know we have to reduce greenhouse gas emissions and we know that our energy has to be cleaner and sustainable.

Biofuels will certainly contribute to the mix of energy sources. For some communities they might be the answer to their energy problems but for others the growing of crops for biofuels could lead to further impoverishment.

As in all things, a balance needs to be struck between economic development, environmental impacts including greenhouse gas emissions, and the livelihoods of local communities.

Australia is investing heavily, as you know, in poverty reduction. In a few years the aid budget will reach $4 billion - it is already $3 billion. We are carefully targeting our funding so that it helps accelerate economic growth, fosters effective states, increases people's knowledge and skills and promotes regional stability and prosperity. Each in its own way depends on countries having access to reliable and affordable sources of energy.

There is a lot of research and discussion underway in our region into the agricultural and ecological impacts of biofuels. I am sure your deliberations today will add a great deal to this important debate and I said at the beginning, I'm sorry I won't hear it all because I'd very much enjoy doing so.

So again, thank you very much, Neil and ladies and gentlemen, for having me along here today to open your conference. I look forward to hearing its conclusions.

Thank you.