Keynote speech on Biofuels by EU Commission President Barroso

Honoured guests,
Ladies and gentlemen,

I sometimes have the impression that many people view biofuels as a recent breakthrough created by cutting-edge technologies. The reality, as most of you know, is that biofuels have a long and distinguished pedigree.

Nicolaus Otto, the 19th century German inventor of the internal combustion engine, expected it to run on ethanol. When Rudolf Diesel wanted to demonstrate his new diesel engine at the 1900 Paris World Fair, he used peanut oil.

In fact Diesel was a great believer in the democratic virtues of biofuel. In 1912, with unusual foresight, he said: 'The use of vegetable oils for engine fuels may seem insignificant today, but such oils may become, in the course of time, as important as petroleum and the coal-tar products of the present time.'

So why are biofuels back at the top of political agendas around the world? What has caused this new interest in old technology?

The answer is simple: energy security and climate change.

Our energy landscape has transformed out of all recognition in recent years. Global energy demand is increasing - by around 60% by 2030, according to the International Energy Agency, if we do not act.

These pressures are felt particularly keenly in the European Union, which is already the largest importer and second largest consumer of energy in the world. We are currently dependent on external sources for 50% of our energy needs. This could rise to 70% by 2030.

At the same time, our climate is changing. According to the Intergovernmental Panel on Climate Change, the global temperature rose by 0.7°C in the 20th century. Recent IPCC estimates tell us that, without action on climate change, temperatures could rise by as much as 4.7°C by the end of this century.

The two are closely linked, as energy emissions represent three quarters of greenhouse gas emissions.

And this is where biofuels come in.

Properly managed, biofuels have the potential to offer important benefits: they can reinforce the EU's security of supply through diversification of energy sources, and they are one of the few practical ways - alongside more efficient vehicles and hybrids - to significantly reduce greenhouse gas emission in transport.

This is important, because the transport sector is already responsible for nearly one third of CO2 emissions in the EU, and those emissions are growing faster than in any other sector. This sector is also unique in that it is almost wholly dependent on oil.

The EU is currently importing more than 80% of its oil needs and this is set to increase. Oil prices remain high, fluctuating around $70 per barrel - more than double the price in 2003. In addition, oil reserves are held by a restricted number of countries, few of which are noted for their stability.

Beyond this, biofuels also provide important opportunities for industrial development, innovation and high quality jobs - important factors as we move towards the knowledge economy of the future.

Given these facts, it should come as no surprise that biofuels figure prominently in the new common energy policy we are forging for the European Union. Among other things, we have introduced targets of 20% renewables in the EU's energy mix and 10% biofuels in vehicle fuel by 2020.

Having said this, one must note that hydrocarbons are likely to remain the mainstay of our energy consumption into the medium term and power generation will still require conventional and other alternative energy sources.

Nonetheless, biofuels offer us an option that is full of promise, but which also presents many challenges. The EU is determined to ensure that biofuels are developed in ways that protect our planet - not in ways that create new risks.

Our aim must be to develop an EU biofuels policy which meets our objectives on security of supply and climate change, while ensuring sustainable development. What we must not do is pursue a policy which simply shifts environmental problems from one sector to another, or from one continent to another.

Reading recent press coverage, one could be forgiven for thinking that biofuels cause more problems than they solve. My hope is that this conference will debate all the pros and cons, without fear or favouritism, while sticking to concrete facts and avoiding populist myths.

We are all aware that - in some cases - biofuels can be produced in ways that do not deliver greenhouse gas savings. Equally - again, in some cases - biofuels can be produced in ways which cause environmental problems in terms of soil protection, water management, biodiversity, air protection, and the world's forests.

But that doesn't change the fact that it is possible to manage biofuel development in ways that reap the potential benefits, without engendering new problems.

The European Commission will lead international efforts to ensure the sustainable production and consumption of biofuels. This means setting up a rigorous sustainability mechanism to underpin a new market for these products.

Let's work towards globally agreed sustainability criteria to open up a credible and sustainable international market. Any such international mechanism can only be the result of a transparent and frank dialogue with all trading partners - and today's conference is an important first step towards that.

The Commission is already actively working on the definition of an EU scheme, designed to encourage the use of sustainably produced biofuels and discourage damaging production.

Such a mechanism will of course respect multilateral rules and the EU's commitments to its partners. Let me assure you that it will be designed to avoid any discrimination between domestic production and imports. It will not be a barrier to trade, or distort competition.

After all, although we in the EU are technically capable of achieving our 10% biofuel target through domestic production, imports will be necessary if we are to hit that target in an efficient, sustainable and competitive way. That means, domestic producers and third countries will benefit from this growing market.

But managing the growing production and consumption of biofuels is not enough. We need to invest now in technologies to improve their production and use. That is why the European Commission will give a high priority to research in these areas, particularly second generation biofuels, industrial biotechnology, and biorefineries. A comprehensive research, development and deployment strategy will be necessary to develop a new generation of biofuels with better yields, better commercial viability and better environmental performance.

Ladies and gentlemen,

European biofuel production started only recently, but it is now increasing. Biofuels provide a growing new market for EU agricultural produce - especially now that reforms to the Common Agricultural Policy are giving farmers the freedom to produce according to market requirements rather than subsidy constraints. In Europe as elsewhere, cultivation of raw materials for biofuels helps to strengthen and diversify rural economies.

The worldwide biofuels market should be seen as a new opportunity for developing countries too. We are determined that this new market should not only serve the interests of the car-owning rich, but also the interests of the world's poorer nations.

It is true that as the price of staple foods increases, there is a potential impact on food security for the world's poor. But this should be offset by the benefits of improving terms of agricultural trade, which provide developing countries with an opportunity to produce more.

So we should help developing countries to expand the production and use of sustainably produced biofuels, and to adopt appropriate policies for their own long-term benefit.

In the EU, biofuels' market share has doubled over the past two years. But that still only means it reaches an estimated 1.8% of vehicle fuel. This demonstrates the scale of the challenge ahead if we are to achieve our 10% target by 2020. We need to create favourable conditions not just in the motor industry, but in several sectors of the EU's economy - including agriculture and refining. These will have to go hand-in-hand with intensified efforts in biofuel research.

We are working now on the first blueprint for the creation of an internal biofuel market in the EU. A legislative proposal will be put forward by the European Commission before the end of this year. This proposal will also serve as a basis for fostering relations with our external partners, in particular for pursuing discussions on the creation of an international biofuel market. Convergence of technical standards will play an important part in this.

The recently established partnership between the EU and Brazil is an example of the kind of partnership we want to build with others in this growth area.

I am delighted that President Lula can be with us today to mark this important initiative. He will certainly mention the forthcoming creation of an International Biofuel Forum, to which the European Commission has committed itself alongside Brazil. This forum will provide us with a useful platform for pursuing discussions that start today.

With this in mind, it only remains for me to wish you a fruitful exchange of experience and ideas. I look forward to your contribution.

Thank you.

| Arriba |

• EU biofuel policy must be driven by "greenest outcomes" (5/7/2007)
• Credible and serious choices about biofuels - Speech by EU Commissioner Dimas (5/7/2007)
• International Conference on Biofuels - Opening Speech by EU Commissioner Ferrero-Waldner  (5/7/2007)