* Deal fixes 7 percent limit for biofuels from food crops
* Still needs European Parliamentary approval
* New generation biofuels say they need more incentives
By Barbara Lewis
LUXEMBOURG, June 13 (Reuters) - EU energy ministers agreed a deal on Friday to limit production of biofuels made from food crops, responding to criticism these stoke inflation and do more environmental harm than good.
The ministers’ endorsement of a new compromise overcomes a stalemate hit late last year when European Union governments failed to agree on a proposed 5 percent cap on the use of biofuels based on crops such as maize or rapeseed.
Friday’s deal would set a 7 percent limit on the use of food-based biofuels in transport fuel.
The new deal must now be considered by the newly-elected European Parliament.
“We think this proposal is much better than nothing,” European Energy Commissioner Guenther Oettinger told the Luxembourg meeting of ministers.
“We need to support research and development in advanced biofuels so we can move forward from generation one into generation two and generation three,” he added, referring to more sophisticated biofuels which do not compete with growing crops for food.
The proposed 7 percent limit is part of a goal to get 10 percent of transport fuel from renewable sources by 2020, as part of efforts to curb greenhouse gas emissions and EU dependence on imported oil and gas.
Initially, the European Union backed biofuels as a way to tackle climate change, but research has since shown that making fuel out of crops such as maize displaces other crops, forces the clearing of valuable habitats, and can inflate food prices.
The next generation of advanced biofuels, made from waste or algae for example, does not raise the same problems, but does require more investment.
The compromise supported by ministers on Friday includes a 0.5 percent non-binding target for next-generation biofuels, which environment campaigners say is nowhere near enough to make a difference.
The agreement could mean that the overall goal to get 10 percent of transport fuel from renewable sources by 2020 is missed, analysts say. Currently around 5 percent of EU transport fuel comes from renewable sources.
Food-based bio-refiners, which have invested on the basis of the original 10 percent, say a lower target threatens jobs.
And those trying to develop advanced biofuels say the progress they are making is under threat.
Thomas Nagy, executive vice-president of Novozymes , which makes enzymes used in the production of advanced biofuels, said Friday’s decision enabled “a reboot of the decision-making process”.
However, he said there was a “lack of ambition and absence of incentives to allow the conventional biofuel industry to develop sustainably” and urged the European Parliament, which will resume debate of the draft law later this year, to propose amendments. (Additional reporting by Sybille de la Hamaide in Paris; editing by James Macharia and Jason Neely)