11/05/06 SEVILLE, Spain ( Reuters) - Shortages of suitable nationally grown crops could slow European moves to replace contaminating transport fuel with clean-burning, plant-based alternatives, industry sources said at a conference on Wednesday.

About half the EU's members have already adopted the European Commission target of replacing 5.75 percent of transport fuel with biofuel alternatives by 2010.
In many countries regular gasoline and diesel are already being blended at up to 5 percent with bioethanol and biodiesel respectively to reduce carbon dioxide emissions.

Ludz Wilkening, managing director of German alcohol producer KWST KG said the 5 percent ceiling was roughly what available cropland could support now.

"We have nearly reached maximum production of rapeseed now. After that we have to import, but that is not the idea of officials," he told a World Biofuels conference in the southern Spanish city of Seville.

The EU, like the United States, is looking not only to cut emissions of climate changing CO2 by switching to biofuels, but also to diversify its energy sources and reduce its dependence on mineral oil for both cost and energy security reasons.

Another reason for encouraging biofuels -- typically with tax breaks -- is supposedly to support EU agriculture. How that happens in practice and whether in future there will be limits on imports of raw materials for biofuels is not yet clear.

"Feedstock availability is clearly an issue which, as we grow more refining capacity in Europe, we are going to have to deal with," said Peter Sweatman of consultancy Climate Change Capital.


POLICY LAG

Enrique Jimenez Larrea of Spain's energy agency IDAE said agricultural policy was lagging behind.

"We cannot develop a policy with biofuels without a parallel development of domestic sources of raw materials," he said, adding that there should be a quota to ensure biofuels contained at least a certain amount of locally-grown crop was used in fuel production.

Dozens of new biodiesel projects are under way in Spain. Some plan to import soy or palm oil as raw material and others have yet to decide.

Other countries are also expanding their production and France aims to be using 7 percent biofuel for transport by 2010.

Existing subsidies for farmers to grow wheat on set-aside land should help provide grain for ethanol, but biodiesel ideally needs to be made mainly from rapeseed oil.

"Although it might be nice to see the whole of Europe covered with yellow flowers, it will be tough to grow much more oilseed than we are growing today," said Jacques Blondy, head of refining and marketing and agricultural development at French oil major Total

"We cannot achieve such ambitious goals without having other feedstocks. Probably we'll need to import some of those feedstocks."