EU report signals U-turn on biofuels target

BRUSSELS (Reuters) - The European Union appears to be backtracking on its biofuels policy with a new impact assessment showing that more than 5.6 percent of biofuel in road fuels can damage the environment.

EU leaders agreed in 2008 that 10 percent of transport fuels should come from renewable sources by 2020 -- mostly biofuels as electric cars and railways would still be in their infancy.

But environmentalists slammed the target, saying the goal would indirectly affect the way land is used around the world, forcing up food prices and encouraging deforestation.

The EU's most comprehensive biofuels modeling exercise yet was made public on Thursday, but is based on having just 5.6 percent of biofuel in road fuels.

"Indirect land use change effects do indeed offset part of the emission benefits, but are not a threat at the currently estimated volume of 5.6 percent of road transport fuels required," a European Commission statement said.

Experts say the 10 percent figure was shaved to 5.6 percent partly by exaggerating the contribution of electric cars in 2020.

"The 5.6 percent figure is not based on an honest reflection of reality, or else the Commission is preparing to backtrack on its target," one EU official said.

The report said that if the amount of biofuels were raised above 5.6 percent, "there is a real risk that indirect land use change could undermine the environmental viability of biofuels."

(Reporting by Pete Harrison, editing by Dale Hudson)