Biofuels are already impacting on world food prices, but other factors such as the drought in the southern hemisphere are also playing a part, a leading expert in the area said yesterday.
Speaking at the Institute of European Affairs in Dublin, Prof Peter Hazell also said that the development of the biofuels sector and accompanying high food prices could have long-term benefits by stimulating agriculture in poorer countries such as those in Africa.
But he warned that the biggest issue for these developing countries is the trade-off between food and fuel.
Such countries could also experience food shortages, in particular should the worldwide price of maize and wheat continue its upward trend.
As a result, Africa is likely to lose out without significant new investment in agricultural growth, he said.
In this context, he singled out Irish Aid as being among the few donors that still invest in African agricultural development. Prof Hazell, who was speaking in a personal capacity, is currently visiting professor at the Centre for Environmental Policy at Imperial College, London. He is a former economist with the World Bank.
In a wide-ranging presentation and discussion, he said that other than ethanol from sugar cane, most biofuels are still more costly than oil today.
They also do not contribute much to reducing carbon emissions, and there are still cheaper ways of doing this.
There are a number of constraints relating to "first-generation" bioenergy technologies, he said, but the development of "second-generation" technologies would be different.
Technology may well transform the current situation within 10 to 15 years, and there is a need for investment in future technology options, rather than investing in additional first-generation technologies.
Prof Hazell said that among the policy instruments which governments could use for the development of bioenergy were tax rebates on biofuels and trade protection.
By intervening in bioenergy markets, governments can help to overcome high set-up costs and co-ordination problems until sufficient scale has been achieved in production, distribution and end uses.
But while it could also help to overcome vested interests in existing technologies, he warned against the creation of new vested interests.
He also pointed out that bioenergy already accounts for 14 per cent of total world energy use, including 70 per cent of African energy use but only 2-3 per cent in industrial countries.
However, the use of biofuels for transport remains small, at 40 per cent of transport fuel in Brazil but only 3-5 per cent in the US and the EU.
By 2010, the EU plans to have doubled the share of renewable energy in its primary energy consumption to 12 per cent, while biofuels will increase to 5.75 per cent of total transport fuels, he noted.
The US also plans to more than double its current 2 per cent share for biofuels, but this may accelerate, while China and India have launched new bioenergy industries, he added.
In a separate presentation, Fintan Conway, of the Irish Farmers Association, said farmers can have a "pivotal role" to play in the development of the biofuels sector. He said this was dependent on it being economically viable, and highlighted the need for government support. "Farmers are no different to any other business. We will respond to market signals," he said.
There was a need for farming to move further up the value chain when it came to the development of the sector, he said.