Member state ministers on the EU Energy Council reached a long-awaited agreement on the use of controversial crop-based biofuels and the concept of indirect land use change today.

Meeting in Brussels, ministers reached key biofuels policy agreements after a stalemate of almost two years. Environmentalists are concerned that deadlocked negotiations have allowed a misguided, environmentally damaging policy to overrun, whilst industry has been critical of "investment-blocking policy paralysis in the low carbon fuels sector," preventing moves to make biofuels more sustainable, resulting from the debates between EU legislators.

Responding to concerns that EU support for crop-based biofuels has led to food price volatility and environmental pollution, the council voted to introduce a 7 percent cap on first generation biofuels in EU transport fuel. Last year, ministers failed to agree on proposals to cap the proportion of crop-based fuel at 5 percent.

Industry groups have said the decision will seriously impede efforts to source 10 percent of EU transport fuel from renewable sources by 2020. However, an increasing weight of evidence shows that producing fuel from agricultural crops displaces food production, leading fresh land to be cleared to reduce the deficit. Once this side-effect, known as Indirect Land-Use Change (or ILUC) is factored into carbon accounting, many plant-based biofuels appear to be just as environmentally damaging as their fossil equivalents.

However, trade groups have contested the concept of ILUC, which even its supporters admit remains in its infancy, and have opposed EU plans to introduce ILUC reporting for crop-based fuels. Ministers agreed that ILUC emissions should be reported on by the Commission.

Support for second generation biofuels

In an effort to drive research and investment into second generation biofuels, produced from industrial and agricultural by-products or algae, which do not have to compete with food growing, ministers supported a target of 0.5 percent of transport fuel coming from these sources by the end of the decade, though this target is not binding.

Although companies that invested in conventional fuels based on the EU’s initial ten percent targets claim that the decision to introduce a cap has threatened their investment, and have in turn threatened that the new limits could lead to job losses, environmentalists point out that the compromise 7 percent cap still amounts to an increase of 50 percent on current biofuel production levels (4.7 percent), which are already having an effect on food price volatility.

They also claim that, contrary to the EU's aims of boosting domestic energy production, a higher biofuel threshold could in fact grow Europe's reliance on biofuel crops grown elsewhere. Europe's 'land footprint' – the dependency on food and other goods produced outside its borders – is already the largest of any global region.

Commenting on the outcome of today's vote, Robbie Blake, biofuels campaigner for Friends of the Earth Europe said, "Europe's thirst for biofuels is causing people around the world to go hungry, rainforests to be cleared, and global warming to accelerate. This decision to limit their use is welcome but too little and very late. We need to phase out this reckless use of food for fuel completely."

The Council deal struck on Friday will now go before the EU parliament.