On Friday, energy ministers meeting in Brussels failed to support measures backed by the European Parliament and Commission to curb the amount of first generation biofuels used for transportation in the EU.

Members of the EU Council failed to support compromise measures, including a 7 percent cap on biofuel production from agricultural crops, which critics suggest contribute to food price volatility and are in some cases more polluting than fossil fuels. Member State governments were divided over whether the proposed cap was too low or too high.

The EU Commission had initially proposed a 5 percent cap on the controversial fuels, and plans to include emissions from indirect land use change as a consequence of growing crops used to make biofuels as a factor in calculating the crops' overall footprint. The Parliament slightly increased the Commission's proposed cap in voting earlier this year. However, critics in the biofuel industry have said that these moves risk undermining the EU's own targets of sourcing ten percent of transport fuel from renewable sources by 2020.

Biofuel industry players, who invested in first generation fuels claim that the EU restrictions on certain fuels will lead to massive job losses and reduce Europe's domestic fuel production, though opponents of the first generation fuels want support to be channelled towards second generation biofuels, made from waste or algae. These more modern biofuels have no conflict with food production, but the technology remains in its infancy and commercialising the new fuels will require greater commitment.

The compromise proposals had been put forward by current EU president Lithuania, though Lithuania's presidency ends this month. The Netherlands, Belgium, Denmark, Italy and Luxembourg all refused to back the Lithuanian deal, arguing it would not do enough to reduce the environmental and social harm of EU demand for biofuels. Poland and Hungary also blocked a compromise; the governments of these states oppose biofuel reform, and were backed by those seeking a higher threshold including the Spain and Romanian ministers.

Farmers' union Copa Cogeca welcomed the continued indecision – which means measures governing biofuel production are not now likely to be set in place until 2015 at the earliest. Copa-Cogeca Secretary-General Pekka Pesonen commented, "Biofuels offer many advantages in terms of reducing greenhouse gas emissions in transport, energy dependency, providing employment in EU rural areas. Farmers and industry invested a lot of money in the sector after the EU institutions agreed in 2006 to ensure that 10 per cent of transport fuels come from renewable energy sources by 2020."

Pesonen also claimed that, if passed, the compromise proposals would have threatened the EU's energy and climate change targets, thousands of jobs in rural areas, and animal feed supplies, as some domestically produced feeds can be made from by-products of the biofuel manufacturing process.  

Greens, on the other hand, reacted strongly to the Council's failure to reach an agreement. Ahead of Thursday's Council meeting, a coalition of wildlife, transport and anti-poverty organisations warned that, "If left unchanged, current policy will lead to higher instead of lower greenhouse gas emissions compared to fossil fuels, will destroy forests and damage biodiversity, will push small scale farmers off their land and threaten the food security of the world’s poorest people."

The coalition continued, "Under pressure from the industrial and farming lobby, EU ministers have seriously weakened the Commission’s initial proposal. The Lithuanian presidency’s draft compromise that will be put for a vote on Thursday is a negation of environmental priorities and the right of people to food security."

The environmentalists argued that a cap of 7 percent on biofuel production would amount to a 50 percent increase compared to today's consumption levels; the coalition claimed that this extra biofuel production would displace the equivalent of enough food to feed 69 million people every year.

Reacting to the lack of agreement on Monday, Friends of the Earth spokesperson Robbie Blake said, "The reckless use of food crops to fuel our cars is a disgrace and should be phased out. Any delay in correcting this failing biofuels policy is bad for the environment and the world's poor.

"Too many ministers have willfully turned a blind eye to the evidence, which shows biofuels are contributing to food price rises, land grabbing and higher carbon emissions. Today's failure to set limits on food for fuel means biofuels will continue to be sold in the EU and receive billions of euros of taxpayers' money. Too many countries have done the bidding of biofuels industry lobbyists, and it's the world's poor and the environment that will pay the price, until real reforms are agreed."