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European business urges EU to review biofuels policy

Europe’s top business lobby has reinforced calls on the European Union to reconsider its target for the use of biofuels which are increasingly blamed for pushing up food prices globally.

BusinessEurope, which groups 20 million European firms, made the call on the eve of an EU summit in Brussels which is due to discuss high food and oil prices as well as some elements of the bloc’s plans to fight climate change. “BusinessEurope considers the current high food prices give additional weight to its call for the EU to reconsider the 10% target for biofuels in transport,” BusinessEurope President Ernest-Antoine Seilliere said in a letter to EU president Slovenia distributed to media on Wednesday.

EU leaders have agreed that renewable energy sources, such as ethanol, should make up 10% of road transport fuels by 2020 as part of the bloc’s program to lower carbon dioxide emissions, blamed for global warming. But the plan has been attacked by some scientists and politicians who say growing production of biofuels is curbing food supply at a time of soaring prices which triggered protests and riots in some poor countries.

Critics say fuels derived from crops compete with food from farmland and helped to push up food prices. Some doubts about biofuels are emerging among the EU’s 27 governments with Italy the first member state to question the 10% target this month. Some other nations want to make the binding nature of the target conditional on strict standards. These could include rules on the environmental and social impact of existing crop-based fuels and tying the target to the commercial availability of second-generation biofuels derived from plant waste, algae and other non-food materials.

Separately, the EU is investigating whether soaring imports of biodiesel from the United States are breaking global trade rules because of subsidies involved, raising the prospect of punitive import tariffs for US imports.

In its letter, BusinessEurope renewed pressure on EU leaders not to force energy-intensive companies to buy carbon dioxide emissions permits from 2013, rather than receive them for free as is the case now, unless there is a global deal on the issue. European industries say they could lose out to competitors in countries that have less strict rules -- ranging from the United States to China -- without a global deal. (Reuters)