The European Union will impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, draft EU legislation seen by Reuters showed. The draft rules, which will need the approval of EU governments and lawmakers, represent a major shift in Europe's much-criticized biofuel policy and a tacit admission by policymakers that the EU's 2020 biofuel target was flawed from the outset.
The plans also include a promise to end all public subsidies for crop-based biofuels after the current legislation expires in 2020, effectively ensuring the decline of a European sector now estimated to be worth 17 billion euros ($21.7 billion) a year.
"The (European) Commission is of the view that in the period after 2020, biofuels should only be subsidized if they lead to substantial greenhouse gas savings... and are not produced from crops used for food and feed," the draft said.
A Commission spokeswoman said the EU executive would not comment on the details of leaked proposals.
The policy u-turn comes after EU scientific studies cast doubt on the emissions savings from by crop-based fuels, and following a poor harvest in key grain growing regions that pushed up prices and revived fears of food shortages.
Under the proposals, the use of biofuels made from crops such as rapeseed and wheat would be limited to 5 percent of total energy consumption in the EU transport sector in 2020.
Crop-based fuel consumption currently accounts for about 4.5 percent of total EU transport fuel demand, according to the latest national figures for 2011, ensuring that there will be little room to increase current production volumes.