The plan, detailed in a set of two draft EU regulations on verification and monitoring of greenhouse gases, comes amid an ongoing controversy over the potential negative effects of biofuels on the environment.
It also comes amid growing concern that Europe's cap-and-trade scheme for airlines could trigger a full-scale commercial war with the US and China, which are opposed to the airline charge.
The draft legislation gives European industries details on how they should report about greenhouse gases covered by the EU's flagship emissions trading scheme (EU-ETS).
Among those is a requirement for airlines to list "the amount of biomass used as a fuel," broken down on a yearly basis. The airlines' biofuel consumption should come "as an annex to the annual emission report," the draft reads.
The two draft texts still need approval by EU member states and the European Parliament before they become law.
Isaac Valero Ladron, European Commission spokesperson for climate change issues, told EurActiv that the aim is to provide incentives for airlines to use more biofuels, assuming that those have "a zero-emissions factor".
"Under the EU ETS we provide a financial incentive for the use of biofuels in aviation, as use of biofuels has a zero-emissions factor, which means that no allowances need to be surrendered," Ladron told EurActiv in e-mailed comments.
"This means the biofuels have a subsidy equivalent to the prevailing carbon price," he explained, describing the scheme as "a cost-effective incentive as the subsidy for biofuels is equivalent to the cost of reducing emissions in other sectors."
Carbon reduction pledge
Airlines see biofuels as a crucial part of their commitment to achieving "carbon-neutral growth" by 2020. The International Air Transport Association (IATA) has set a target of ramping up biofuels use to 10% of all consumption by 2017, saying that they have the potential to reduce the industry's carbon footprint by up to 80%.
For US planemaker Boeing, biofuels will be essential to achieving the airline's pledge for carbon-neutral growth.
"Without biofuels, we cannot get there. It is a vital contribution," Antonio De Palmas, Boeing's president for EU and NATO relations, said in a 2011 interview with EurActiv.
Land use issue still not resolved
The Commission indicates that the European aviation carbon-reduction scheme will only account biofuels that respect the EU-certified sustainability schemes.
"Sustainable biofuels are fuels which achieve higher greenhouse gas savings compared to the average fossil fuel, and are not be cultivated on the land with high biodiversity value or on the peatland which has a high carbon stock," Ladron said.
However, green activists warned there was no guarantee that biofuels used in planes will not contribute to so-called Indirect Land Use Change (ILUC) – a process whereby displaced human activity caused by converting forests and grasslands to biofuels production results in additional CO2 emissions.
"It's good that the sustainability criteria have been extended to cover the ETS, but as long as ILUC is not included there is no guarantee of actual emissions reductions," said Dudley Curtis, from Transport & Environment, a green NGO.
Ladron acknowledged this shortcoming in the EU's biofuels policy, telling EurActiv that "discussions ILUC are still going on" within the European Commission.
The EU executive has postponed several times its proposal on ILUC, which is now expected in the spring.