August 1, 2007

EU seen to divert 18 percent of grain output for biofuels by 2020

The European Union is expected to use 18 percent of corn and soft wheat for biofuel by 2020, according to a European Commission report issued Tuesday (July 31).

EU leaders in March have settled biofuels to make up at least 10 percent of petrol and diesel used by vehicles by 2020. According to a report, under a 10 percent minimum obligation, about 59 million tonnes of cereals, or about 18 percent of domestic use, would be used as first -- and including straw, also as second -- generation feed stock.

A predicted increase yield by one percent a year would hike current EU cereals output by 38 million tonnes by 2020. An extra two million hectares of set-aside land could also be sown to cereals, bringing in a further 14 million tonnes, it said.

Biofuel from straw and wood-based cellulose would account for around a third of the EU's domestic biofuel production by 2020.

However, first generation biofuels coming from wheat, corn, sugar or vegetable oils could threaten environment as it requires energy-intensive inputs like fertiliser which makes it difficult to cut the emissions of gases contributing to climate change.

Second generation biofuels would use non-food products, such as straw and waste lumber, be more energy efficient, require less land, offers more carbon dioxide reduction and greater energy security. However, production has mostly been experimental.

Many questions remain over the biofuels targets, not least the likely level of EU imports from key suppliers like Brazil, Indonesia and Malaysia. Changes to import tariffs will play a role, as will price trends on EU cereals markets up to 2020.

The Commission report, compiled by the EU executive's agriculture department, said imports could end up accounting for around 20 percent of the bloc's overall biofuels production.

The report concludes that the "10 percent incorporation rate ... over this long period until 2020 together with newly available technologies assures a sustainable path in providing the EU with renewable transport fuels without disrupting domestic and world markets."