Biofuel is any fuel that is derived from biomass - recently living organisms or their metabolic byproducts, such as manure from cows. It is a renewable energy source, unlike other natural resources such as petroleum, coal, and nuclear fuels.

In the European Union (EU), transport is responsible for an estimated 21% of all greenhouse gas emissions that are contributing to global warming and this percentage is rising. In order to meet sustainability goals, in particular the reduction of greenhouse gas emissions agreed under the Kyoto Protocol, it is therefore essential to find ways of reducing emissions from transport. In light of this objective, along with diversifying fuel supply sources and developing long-term replacements for fossil oil, the European Commission proposed targets for biofuels in transport fuel by 2020 among the member states. This binding is a part of long-term energy package, which includes an overall binding 20% target for renewable energy. Under this, each member state will have to establish National Action Plans for their specific objectives and sectoral targets.

Biofuels have been produced on an industrial scale in the Europe since the 1990s but production significantly accelerated starting in the early 2000s, largely in response to rising petroleum prices and favorable legislation passed by EU institutions and Member States. Biofuels have been promoted as part of the EU strategy to encourage renewable energy and their production and use has expanded rapidly. Although EU measures have applied equally, most of the time, to biodiesel and ethanol, biodiesel production has developed at a faster rate. Biodiesel accounts for 80% of European biofuels production and ethanol for the remaining 20%. European Union is by far the biggest producer of biodiesel in the world and the reason for the big share of biodiesel is that the majority of the cars in the EU are diesel cars, and as such there is a diesel deficit. The most important feedstock for EU biodiesel is rapeseed.

Despite producing a significant portion of global biodiesel and increasing production of
biofuel for transport, the EU faces a number of significant challenges in the coming years. Most important is the limited availability of land to cultivate biodiesel input crops such as rapeseed, although Ukraine’s EU accession could help alleviate this constraint. A further challenge is that even with the use of the most advanced production technologies, biofuels produced in the EU are not cost competitive with fossil fuels at current oil price levels. New input crops and production methods could make biofuels more competitive.

This report European Biofuels Market examines the developing market for biofuels in Europe.


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Pages: 117
Publication Date: June 2009
Publisher: Energy Business Reports