The European Union signalled on Thursday it was ready to ramp up imports of
biofuels from countries such as Brazil but warned producers it expected
strict environmental standards to be met. The 27-nation EU set itself a
target in March for biofuels to make up at least 10 percent of vehicle fuels
by 2020 as part of efforts to reduce carbon emissions and fight climate
change.

But critics say growing crops for fuel may contribute to destruction of
rainforests and raise food prices. Some European farmers hope Brussels will
favour locally produced biofuels as a new money-spinner for them.

But several top officials at a biofuels conference stressed the EU had to be
open to imports if they meet EU standards. "Europe should be open to
accepting that we will import a large part of our biofuel resources," Trade
Commissioner Peter Mandelson said. "We cannot contemplate, in my view,
favouring EU production of biofuels with a weak carbon performance if we can
import cheaper, cleaner biofuels."

European Commission President Jose Manuel Barroso said the EU would push for
sustainable biofuels output and consumption. "This means setting up a
rigorous sustainability mechanism to underpin a new market for these
products," he said.

Brazilian President Luiz Inacio Lula da Silva said his country is now
working on a certification plan for its huge biofuels industry based on
environmental and labour standards and he urged rich countries not to use
them as new barriers. "We cannot send out contradictory signals. The same
governments concerned about sustainable development and cutting greenhouse
gases cannot put up problems for biofuels becoming international
commodities," he told the same conference.

TARIFFS, FARMERS
Brazilian biofuel faces EU import tariffs of about 70 percent, trade
officials say. Mandelson and EU Energy Commissioner Andris Piebalgs
indicated a willingness to cut tariffs if imports are truly green. "For me,
there is no need for protective tariffs as long as the biofuels are
sustainable," Piebalgs told Reuters.

Such comments are likely to raise eyebrows in EU countries with strong farm
interests, chief among them France. Its new President Nicolas Sarkozy has
repeatedly criticised Brussels for being too focused on open markets.

EU farmers group COPA-COGECA said biofuels from countries such as Brazil
came at the cost of rainforest destruction and exploitation of workers,
claims denied by Brazil. "Mandelson must get his facts right on biofuels.
You can only call for biofuel imports from low-cost producers on
environmental grounds if you completely close your eyes to the economic
realities in these countries," the group said.

EU biofuels producers also say imports of bio-diesel from the United States
and Argentina are unfairly subsidised. Sweden, in the EU's free-market camp,
wants no biofuel import tariffs at all. "It simply does not seem consistent
to me to make import of ethanol more expensive at a time when we are trying
to expand the use," Trade Minister Sten Tolgfors said.

An EU sustainability mechanism is expected to be a part of new biofuels
legislation Brussels will propose later this year. The rules are likely to
stipulate that only sources that meet sustainability standards, such as more
efficient second-generation biofuels, will be eligible for tax exemptions
and will count towards the EU's 10 percent target.
(By Jeff Mason and William Schomberg, Planet Ark, 06/07/2007)