* Biomass use in EU rising, imports set to increase
* Commission draft law seeks to tighten accounting rules
* Carbon neutrality questionable-environmentalists
BRUSSELS, Aug 8 (Reuters) - The woody core of EU climate strategy, biomass, has won its place because the bloc deems it carbon neutral, an assumption that hides fatal flaws in its credentials, critics say.
Increasingly, the EU relies on biomass - covering anything from olive stones to old blackcurrant bushes - to generate heat and power.
For the purposes of the EU Emissions Trading Scheme, biomass used as fuel is counted as carbon neutral. The underlying assumption is its emissions are offset by the planting of a new tree. Felled wood, until burnt, is a carbon store.
The reality is much more complicated, say environmentalists, who are concerned creative accounting is belying the true state of the world's forests, while EU climate goals slip from grasp.
"You're assuming the whole world has started reducing emissions from its own use and is improving its land management and that's a total fantasy," Pieter de Pous, policy director at the European Environmental Bureau, said.
Demand for biomass, most commonly in the form of wood pellets that can easily be transported, has leapt since the EU in 2007 set its 2020 climate goals, which include cutting carbon emissions by 20 percent and increasing the share of renewables in the energy mix to 20 percent.
National renewable energy action plans drawn up by EU states show around 50 percent of green fuel will come from biomass.
Officially, the EU is meeting its carbon cutting and renewable goals. The first danger is that shipping wood pellets and then burning them adds to, rather than lowers emissions.
"The point to remember is that the smoke that directly comes out of the chimney burning biomass pollutes the same as the emissions from coal," Robbie Blake, biofuels campaigner at Friends of the Earth, said.
Another consequence, the wood industry says, is that the demand for wood pellets is distorting the market.
The European Panel Federation, which represents makers of wood board, says costs for its raw materials have been driven up, while use of wood for biomass is subsidised under policies to encourage renewables.
It wants the carbon life-cycle of wood to be taken into account and more wood to be used in construction and furniture, where it acts as a carbon store until it is recycled for firewood at the end of its life.
The body quotes an industry estimate that a 4 percent rise in Europe's use of wood as a material, rather than a fuel, would sequester an extra 150 million tonnes of CO2 per year.
A CARBON STORE CUPBOARD?
Whether treating furniture as a carbon store can help to save the planet is a moot point if it is shipped from countries where it is not accounted for at the point of harvesting.
Beyond the EU rules, the United Nations' Kyoto framework does not cover all nations. The United States never ratified the 1997 Kyoto pact, while Canada and Russia have said they will not set new Kyoto targets.
These countries are likely to be the leading suppliers of wood, especially Russia, home to a fifth of all forests.
"One way or another, an awful lot of emissions from forests look like being completely overlooked," John Lanchbery, principal climate change advisor for the Royal Society for the Protection of the Birds, said.
He cautiously welcomed European Commission proposals to tighten its accounting, published earlier this year and up for further debate in the final quarter.
Although they do not close every loophole, they go further than U.N. rules because they aim to map the carbon consequences of changes to agricultural as well as to forestry land.
But they do not set any targets for emissions or change the ETS assumption biomass-use for power is carbon-neutral.
Efforts to over-rule that would be likely to meet stiff resistance from the most wooded EU nations, as well as the big utilities, which would be required to offset far more emissions through the Emissions Trading Scheme.
The Commission said it is "looking into the possibility of sustainability criteria", although it doesn't have a precise time-line yet. (Additional reporting by Stephanie Ebbs, editing by William Hardy)