London (Platts)--14Jan2008

The European Commission said Monday its long-awaited proposal to tighten
controls on biofuels will introduce "strict" sustainability criteria set to
outlaw the use of renewable fuels which fail to benefit the climate.

"The proposal is going to include very strict environmental criteria that
have to be fulfilled for these biofuels to be used in the European market," EC
spokesman Ferran Tarradellas Espuny told reporters in Brussels.

"Biofuels are going to have to have net balance of saving CO2 emissions,
... they are not going to damage rain forests, and a long list of other
criteria... so they can be produced in a sustainable way," he said.

The new criteria would therefore apply both to biofuels grown within
Europe and those imported from other nations. The EU currently imports the
majority of its biofuels requirements.

Due to be adopted by the European Commission on January 23, the update to
the EU's biofuels directive will form part of a package of measures on climate
change and renewable energy.

In March, European Union leaders endorsed a landmark deal Friday setting
a 20% binding target for renewable energy, including biofuels, in the EU's
energy mix by 2020.

Key to the goal is a binding minimum 10% target on all member states for
biofuels' share of EU gasoline and diesel demand by 2020. The 10% target is
seen as ambitious, however, because it is nearly double the EU's existing
non-binding target of 5.75% by 2010, a goal that the region is already
expected to miss.

Environmental groups have also criticized the target as failing to
differentiate between the lifecycle CO2 performance and sustainability of
biofuels, allowing large-scale imports of palm oil from Indonesia or CO2
neutral wheat-based ethanol from the US.

Tarradellas said the commission plans to confirm the 10% target
penetration target for 2020 despite concerns that the sustainability criteria
would force the EU to lower its hopes of boosting biofuels use.

"If they don't meet the sustainability criteria, they can't be used in
the European Market, and we confirm the 10% target. It's not either or, you
will have to comply with both of them," Tarradellas said.


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