EU Energy Commissioner Günther Oettinger said the delay would only damage the European Union in its efforts to reduce dependence on imported oil and gas and curb greenhouse gas emissions.
"If we delay and postpone, the winners will be OPEC and Russia," he said.
Last year in response to warnings about food price inflation and unintended consequences on the environment, the European Commission, the EU's executive, proposed to cap the bloc's use of crop-based biofuels at 5%.
That compares with an existing goal to get 10 percent of transport fuel from renewable sources by 2020, an amount that would be almost entirely derived from food-based fuels.
Lawmakers in the European Parliament backed a slightly higher cap than the Commission proposed of 6%, stirring opposition from the biofuels industry.
The industry has invested on the basis of the original 10% goal and accuses the Commission of a U-turn that it says will force plant closures and cost jobs.
EU energy ministers debated a new compromise of 7% put forward by Lithuania, holder of the EU presidency. To encourage the transition to advanced biofuels, it also proposed allowing member states to set up a national sub-target within the 10% transport target for renewables.
But member states were deeply divided.
Some, such as Poland and Hungary, argued a 7% cap was too low, while Denmark and Belgium, for instance, said it was too high.
Others said it should be accepted on pragmatic grounds. "There are some good victories for the environment compared to the current directive," said Ed Davey, Britain's energy and climate change secretary.
Danish Minister for Climate, Energy and Buildings Martin Lidegaard wanted more. He called for a sub-target to spur new generation biofuels made from algae and waste, a cap of 5% on crop-based biofuels in line with the Commission proposal, and accounting of factors such as indirect land use change (ILUC) as soon as there was "a solid, scientific basis".
ILUC refers to the displacement effect biofuels can cause as land is cleared for extra food crops, sometimes negating the aim of curbing emissions because it removes trees that serve as carbon sinks.
Greece, which takes over the EU presidency in January, will take up the biofuels dossier. However, the changeover of EU institutions next year, with parliamentary elections in May and the expiry of the current Commission in October, means a final deal is unlikely before 2015.
For different reasons, seven member states ended up rejecting the proposed compromise package – Belgium, Denmark, Luxembourg, Hungary, Italy, The Netherlands and Poland.
While energy and biofuel firms oppose a lower limit on first generation biofuel, food companies are strong supporters.
"The proposed 5% cap by the European Commission would have been a significant step towards phasing out the use of food for fuel," said a letter to the 28 EU energy ministers from Paul Polman, chief executive officer of Unilever plc, and Peter Brabeck-Letmathe, chairman of the board at Nestle S.A..