The debate on biofuels is heating up, with the Commission and the Greens guarding against potential negative impacts such as rainforest depletion in Brazil and increased competition with wood and food production.

In an 'energy and climate change package' put forward on 10 January 2007, the Commission proposed that 10% of all transport fuels in the EU be produced from biofuels by 2020. This is up from the 5.75% target for 2010 laid down in the EU biofuels directive, adopted in 2003.

Biodiesel and ethanol, the most common biofuels in use today, are produced mainly from agricultural crops: sugar cane, soybean rapeseed and corn.

However, these crops are often water intensive and pose a number of environmental problems related to land use and soil degradation.

This is why the Commission favours so-called 'second-generation' biofuels which are more efficient and less problematic from an environmental viewpoint. These are typically made from agricultural residues and 'woody' sources such as straw, timber, woodchips and manure (see Commission public consultation on biofuels). They can be turned into high-value products such as bioplastics and other green materials, using so-called 'green chemistry' processes (see EurActiv LinksDossier on sustainable chemistry).

But these more energy-efficient biofuels are still only at the development stage and require bio-refineries to be built up to process this emerging type of feedstock.

Denmark is at the forefront of this development, with the announcement in June 2006 of construction beginning on what will be Europe's largest biorefinery (€13.4 million plus €26.8m from the government) to produce cellulose ethanol.