EU crafting biofuel rules with eye on environment

BRUSSELS (Reuters) - The European Commission plans new measures to ensure increased use of biofuels reduces greenhouse gas emissions, an EU official said on Thursday.

In March, European Union leaders agreed to set a binding target for biofuels to make up at least 10 percent of petrol and diesel used by vehicles by 2020.

Paul Hodson, a Commission official involved in turning those targets into law, said the EU executive would set up a mechanism to ensure biofuels contribute to the 27-nation bloc's goal to reduce greenhouse gas emissions.

"We want to define a minimum sustainability standard," he told a conference. "We want to say if you don't meet the standards, you're not eligible for state aid and it doesn't count for the biofuel requirements."

He listed three criteria that would likely be included in the legislation when determining whether biofuels were "sustainable".

First, they must have a minimum level of greenhouse gas savings compared with fossil fuels, from production to actual use.

Second, land used to produce biofuels must not be areas such as wetlands that would have normally stored carbon in a natural way if it were not being used to grow crops. Draining a swamp, for example, to create land to grow biofuel crops would be discouraged, he said.

Third, the land used should not be home to a variety of plants or animals, what Hodson called a "high biodiversity quota", which would be displaced or destroyed in order to make room for crop growing.

The legislation will also seek to promote "second generation" biofuels such as wood and straw by giving them more weight when determining whether the EU targets have been met.

The legislative proposal is due in November.

The United States, a major producer of corn-based ethanol, views such criteria as complicated, said Thomas Smitham, an official from the U.S. Mission to the EU in Brussels.

"From the U.S. perspective, we think some of the sustainability criteria -- you're tying yourself in knots over (it)," he said during a panel discussion. "I think it's going to be enormously difficult to figure that out."

The Commission's Hodson said the EU had the capacity to meet its biofuel needs through domestic production but would prefer to allow some imports which he said would help developing countries.