Europe needs to take additional steps to bolster biodiesel production rather than focus on ethanol in a bid to support its farmers, says oil major Total.
This would run parallel with efforts by oil refiners to raise European diesel production capacity to meet ever increasing demand for the motor fuel.
Ethanol by contrast is a blending component for gasoline, which is already oversupplied in Europe and is exported in large volumes to the US and other overseas markets.
"We don't need ethanol," Jacques Blondy, head of agricultural development at Total told Reuters on the sidelines of a Brussels refining conference organised by Hart Energy. "Even the production in Europe we don't need; the major question for the European Union is biodiesel."
"The European market definitely is, and for a long time will be, a diesel market," he said.
Biofuels are split between biodiesel, largely made from oil seeds such as rapeseed and blended with diesel, and ethanol, made from sugar beet or cereals such as wheat and then blended with gasoline.
Europe is structurally short of diesel and meets its shortfall with imports mainly from Russia and the Middle East.
At the same time, the region produces a surplus of gasoline that it exports mainly to the US, but also to other major consuming nations like Nigeria and Iran.
"The European Commission is paying a lot of time on ethanol questions," Mr Blondy said. "So far, the policies have been agricultural driven. It has to recognise that if you want to make business with biofuel, the objective of the Commission is not only to be a way to replace the CAP."
The EU's Common Agricultural Policy provides farmers with subsidies that have led to overproduction of cereals such as wheat.
In the UK, one of the few countries in the EU where gasoline is cheaper than diesel, supermarket group Morrisons began selling motor fuel with 85 per cent ethanol content in March.
The move coincided with the first customer deliveries of a General Motors Corp. car able to run on either petrol or 85 per cent ethanol. But outside the UK, opportunities in Europe for ethanol-based motor fuels are less clear. Diesel-powered car sales accounted for almost half Europe's car market at the end of last year, while diesel was forecast to overtake petrol this year as the primary fuel for new passenger vehicles.
Rising diesel demand is forecast to increase Europe's deficit of the product over at least the coming 10 years, boosting the region's need to import.
"Today, it would be a very big change (to switch to gasoline), because more than half of the private customers are running diesel," Mr Blondy said.
Rather, the EU should unify its regulatory system - instead of the current 25 different systems in 25 countries - and guarantee sufficient feedstock supplies for biodiesel production.
"We'd much prefer to have local production, but if there is not enough, we cannot afford to have disruptions," Mr Blondy said. "If we commit to something, we need to do it fully. We need to have security of supply." The EU wants biofuels to make up 5.75 per cent of transport fuels by 2010, though the target is non-binding. It plans to introduce further stricter targets in a renewable energy roadmap it expects to complete by the end of this year, said Luc Werring, head of the new energies unit at the EC's Directorate-General for Energy and Transport.
"We want to make enforcement of the directive a little more binding," Mr Werring said. "Not obligatory, but more obligatory."
Europe lacks sufficient rapeseed capacity to meet even the 5.75-per cent biofuel target, Mr Blondy said.
"If you cover France with rapeseed, which is not achievable for economic reasons, you can only produce two-thirds of the diesel you need," he said. "Probably, we need to import."