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BRUSSELS (Reuters) - European Union lawmakers voted on Thursday to lower a key target for using biofuels made from crops in petrol and diesel fuel, responding to fears they do more harm than good in the fight against climate change.
The European Parliament's influential industry committee also approved measures to protect heavy industries such as steel and chemicals from the risk that having to buy carbon emissions permits would make them less competitive than overseas rivals.
The move on biofuels could curb the growth of a market coveted by exporters such as Brazil, Malaysia and Indonesia, as well as European farming nations.
"Parliament puts at risk over 5 billion euros ($7 billion) invested in EU biofuel production capacity and all the employment linked to it," said the European Bioethanol Fuel Association, a body representing biofuel producers.
The executive European Commission has proposed that 10 percent of all road transport fuel come from renewable sources by 2020, without specifying how much of that should be derived from biofuels, renewable electricity or hydrogen.
Environmentalists charge that biofuels made from grains and oil seeds contribute to rising food prices and deforestation.
"Using crops to feed cars... could lead to irreversible loss of wildlife and misery for millions of people in the south," said Friends of the Earth campaigner Adrian Bebb.
The committee endorsed the EU's overall 10 percent target by volume but voted that at least 4 percent should come from electricity or hydrogen from renewable sources, as well as from second-generation biofuels from waste.
That would leave just 6 percent coming from traditional biofuels made from grains and other food stocks.
"Maintaining a binding target for biofuels is a bitter pill to swallow, but the committee has at least strengthened the safeguards against the damaging impact of agri-fuels in this directive," said Luxembourg Green deputy Claude Turmes, who is steering the legislation through parliament.
The committee's decision will likely serve as parliament's position in negotiations with the 27 EU member states later this year or in early 2009 on the final shape of the law.
The panel approved a mid-term goal of 5 percent of road transport fuel from renewable sources by 2015, of which a fifth should be from alternatives to biofuels from food crops.
"That mid-term target could be difficult," said Simo Honkanen of Neste Oil's renewable fuels division. "Biofuels from wood waste will come, but it will take years."
The panel stipulated that biofuels must achieve a reduction of 45 percent in carbon dioxide emissions compared to fossil fuels, rising to 60 percent in 2015 -- levels much more ambitious than those being mulled by EU member states.
It also approved a major review by 2014 to assess how the 2020 target should be achieved in light of technological advances, and whether it was attainable at all.
The committee vote was more important than usual because France, which holds the EU's rotating presidency, is pressing for a quick enactment of the environment legislation.
Paris wants to go to international climate talks in Poznan, Poland in December with proof that it is serious about battling climate change and has passed laws to do so.
An EU survey of 30,000 citizens on Thursday showed nearly two-thirds considered climate change was one of the world's most pressing problems.
The panel also endorsed the EU's overall target of getting 20 percent of its power from renewable sources by 2020, such as wind, waves, tidal currents and the sun.
And it voted to include shipping from 2013 in the EU's flagship Emissions Trading Scheme, a system that makes industry pay for permits to produce CO2.
The European Confederation of Iron and Steel Industries welcomed moves to protect energy intensive industries from becoming uncompetitive due to the costs of the ETS, but said the panel had not gone far enough.
"This could have serious consequences, since we are talking about extra costs for the steel industry of about 50 to 100 billion euros in the period from 2013 to 2020 alone," it said in a statement.
Additional reporting by Gus Trompiz in Paris; Editing by Paul Taylor and Michael Roddy