Pacific Forum Statement on Energy at PFD Plenary
Delivered by:
Rt Honourable Helen Clark, MP
Prime Minister of New Zealand

Forum Leaders recognise energy as a key issue for economic growth and we acknowledge that there needs to be continued support, at the highest political level, in regard to addressing regional energy initiatives. However, the challenge for many of our Forum Member countries is to accord the same level of support and commitment to energy at the national level, by effectively integrating it into national planning processes and embracing the principle of equitable access to reliable and affordable energy as a fundamental requirement for achieving national development goals.

In late April of this year a meeting of Pacific Energy Ministers was convened in Rarotonga, Cook Islands. The first meeting of Energy Ministers in sixteen years discussed a broad range of energy issues, challenges and opportunities under the overarching theme of Energy Security for Sustainable Development.

Energy Ministers commended to Forum Leaders the immediate implementation of very concrete, time-bound actions, and these have been reflected upon and endorsed by us. Clearly we accept that energy and economic development need to be integrated and prioritised in both national and regional strategic development plans; we believe that Forum member countries need to have robust national energy policies and strategic work plans to ensure energy initiatives are progressed in line with their national expectations; and, we also endorse the critical importance of implementing appropriate policies and programmes that promote an optimal energy mix, energy efficiency in supply and consumption and sustainable renewable energy. However, perhaps the most important endorsement must be recognition and acknowledgement of the continued high-level support that we must accord the energy agenda if we are to aspire to the guiding principles of the Pacific Plan.

In order to deliver against our energy priorities we will undoubtedly need to look to you, our development and donor partners, to augment the necessary resource support and appropriate technology to achieve these.

So what has prompted us in the Region to identify energy as one of our top, critical priorities requiring our immediate and ongoing attention and action?

In the past oil shocks acted as the trigger. However, alongside of this Forum island countries are now confronted with added issues and challenges relating to security of supply.

As we are all too aware, over the past two years there has been a marked rise in oil prices, with crude oil prices continuing to rise to a record peak of around US$85/bbl in October, which will be reflected in increased product prices.

But what are the real impacts of high oil prices on the economies of our Forum Island members?

� Fuel imports are now triple the value of merchandise exports in Kiribati, Samoa and FSM. In the case of Fiji, the second largest economy in the Pacific Islands Region, for 2006 combined export earnings from three of the country’s major industries, gold, sugar and textiles, only accounted for two-thirds of the country’s total fuel import bill.
� A recent economics study found that for every $10 increase in the price of oil, national incomes for the Federated States of Micronesia and Kiribati reduce by over 4% ad by at least 2% i Tonga, Tuvalu, Palau and the Solomon Islands. The effect is significant since the price of oil has increased by approximately $40 since 2002, which translates into at least 5 years of lost growth for some Pacific island countries.

These very real economic indicators clearly demonstrate the serious impact that increases in the cost of fossil fuels have had and will continue to have on Pacific Island countries. It is obvious that we need to recognise that energy is an imperative for sustainable development and that it has cross-cutting impacts and influence. We fully appreciate that if we are to be effective in addressing this development challenge energy strategies will need to be fully integrated into the national planning, development and economic processes of all Forum Island countries.

In acknowledging the impact of sustained high oil prices in the Pacific, efforts towards implementation of regional cooperation for pooled oil procurement are a priority. To this end Leaders [will, have] considered the work done to date on the regional bulk fuel procurement initiative and [may, have] endorsed the Framework Agreement approach proposed to implement this initiative with a finalised package to be presented to Leaders in 2008 ready for implementation.

At the global level reliable energy availability has been embraced as a Millennium Development Goal. The goal articulates the need for equitable access to reliable and affordable energy as a fundamental requirement to achieving core national development goals such as economic growth, poverty alleviation and improved health and education services. It was also part of a thematic cluster “Energy for Sustainable Development, Industrial Development, Air Pollution / Atmosphere, and Climate Change”, for two recent sessions of the Commission on Sustainable Development (CSDs 14 and 15). However, due to the inextricable relationship between energy and climate CSD 15 was unable to reach a satisfactory conclusion.

Regional and international experiences suggest there is strong correlation between the increased use of energy and national wealth measured in terms of GDP. Experience also suggests that no country has substantially reduced poverty, increased human health conditions or improved access to education in modern times without significantly increasing their use of energy. It is apparent that energy availability, accessibility and security are crucial and core elements of our development agenda.

Our Forum Island countries must address the ever present challenge of energy security and in this regard increasing reliance upon renewable energy, as a substitute for imported fossil fuel, must be fully explored. Outside of being able to address energy security, renewable energy options will also contribute towards global efforts to mitigate against climate change. Other mechanisms that we must consider as we address the challenge of energy security, both regionally and nationally, include implementing appropriate regulatory and pricing policies; and promoting energy efficiency and conservation in both supply and consumption.

Therefore energy and its security are without argument a matter of national development; given the negative impact that higher oil prices have had on Forum island countries and especially those with less diversified economies that are almost completely reliant on oil-based fuels for meeting their energy needs. In order to address this issue it is imperative that countries begin implementing energy efficiency measures and developing renewable energy resources to reduce demand for imported oil-based fuels; and it is imperative that dialogue partners support these efforts wherever possible.