The debate over biofuels risks dragging on, despite EU energy ministers reaching an agreement on the controversial crop-based fuels last week.

EU energy ministers agreed to a 7% cap on the fuels for use in transport, higher than the 5% originally recommended by the European Commission.

The proposal will now go to the European Parliament for a second reading, likely to take place in the Autumn, after the institutional renewal.

The EU legislature agreed last year to a 6% cap on the so-called “first generation” biofuels, which include fuels from maize, palm and rapeseed.

Poland, France, Spain, Hungary, Czech Republic, Estonia, Romania and Slovakia issued a statement on the day of the energy Council (13 June), saying that the 7% cap was at its “lowest acceptable level”, effectively ruling out negotiations with Parliament over the proposed law.

The raised cap was greeted as a victory by the biofuels industry. Rob Vierhout, the secretary general of ePure, the European renewable ethanol industry association, said in a statement, “The political agreement reached by member states on the ILUC file is welcome progress and should pave the way towards a stable policy framework that will restore investor confidence in the sustainable biofuels market.”

The industry claims that biofuels can reduce the EU’s energy dependence and greenhouse gas emissions.

However, environmental campaigners question the sustainability of the multi-billion euro industry. “Today’s deal on biofuels is a brazen assault on common sense. In a starving world, phasing out the use of food for fuel is the only sensible thing to do,” said Marc-Olivier Herman, a biofuels analyst at Oxfam.

A report by the international charity has claimed that crop-based fuels could push up the price of some foods by up to 36% by 2020. Oxfam has also been concerned by claims of land grabs in developing countries producing the monocrops for biofuels, such as Indonesia, and the fuels' estimated poor performance in reducing greenhouse gas emissions.

In a phenomenon known as indirect land-use change (ILUC), analysts have shown that some crop-based fuels may release more CO2 emissions than fossil fuels such as coal, due to displaced agricultural production and the destruction of carbon ‘sinks’, such as peatlands.

Ministers have disputed the impact of EU biofuels mandates on the developing world, saying that member states can meet demand without displacing production. The text agreed by energy ministers includes the reporting of ILUC emissions, but not their accounting in EU fuel quality targets.

A Council statement said that the aim of the proposed rules was to "start a transition to biofuels that deliver substantial greenhouse gas savings".

Copa-Cogeca, the European farmers and agri-cooperatives association, said the cap on first generation fuels could undermine the push for so-called “advanced biofuels”, which are considered more sustainable.

The Council text includes a 0.5% target for advanced biofuels, such as lignocellulosic biomass and agricultural residues, in the EU’s 10% target for renewable energy for 2020.

“The commercial development of advanced biofuels is driven by first generation European biofuel producers and often plays a fundamental role in how they produce biofuels. Removing support for them will have a severe impact on the commercial development of advanced biofuels,” said Pekka Pesonen, Copa-Cogeca’s secretary-general.