World Bulletin/News Desk
The European Commission announced a major shift in biofuel policy on Monday, saying it plans to limit crop-based biofuels to 5 percent of transport fuel, after campaigners said existing rules take food out of people's mouths.
Record high global grain prices have intensified calls for changes in EU and U.S. biofuel policies, criticised for snatching away land that should be used for food.
EU Climate Commissioner Connie Hedegaard and Energy Commissioner Guenther Oettinger confirmed in a joint statement on Monday they wanted to cap the use of crop-based fuel.
"It is wrong to believe that we are pushing food-based biofuels," the commissioners said.
"In our upcoming proposal for new legislation, we do exactly the contrary: we limit them to the current consumption level, that is 5 percent up to 2020."
Reuters reported last week the European Commission would seek to impose a limit on the use of crop-based biofuels of 5 percent as part of a target to raise the share of renewable fuel in the transport mix to 10 percent by 2020.
The draft proposals, which are expected to be published in October, will need the approval of EU governments and lawmakers to become law.
"The Commission's message for post-2020 is that our clear preference is biofuels produced from non-food feedstocks, like waste or agricultural residues such as straw," Monday's statement from the commissioners said.
"These new types of biofuels are not in competition with food, nor do they require additional land. We are pushing biofuels that help us cutting substantial CO2-emissions, do not compete with food and are sustainable and green at the same time."
With the 10 percent target looking very difficult, energy ministers meeting informally on Monday in Cyprus, holder of the EU presidency, debated how biofuels could be developed sustainably.
Speaking on the sidelines of the meeting, Oettinger said increasing the use of biofuels depended on developing a new generation of sources. These second-generation biofuels are much more costly than those made from crops such as rapeseed and wheat.
"I think we agree that a higher figure for that mixture of biofuel beyond 5 percent can only be achieved from a second generation source, not from crops but agricultural waste and leftovers instead of from food crops," he told reporters.
The EU's biofuel goal to source 10 percent of road transport from renewable sources by the end of the decade is part of an overall aim to increase use of renewable sources and limit carbon emissions.
It also has a goal to draw 20 percent of the total energy mix from green energy.
Oettinger said the bloc was on track for the 20 percent goal by 2020, but subsidies were an issue and he urged a more harmonised EU approach.
"A major disadvantage has been that in some member states, often budgetary consolidation has led to abrupt changes," he said. "This is the opposite of protecting people's confidence so they can safely plan, and it frightens off investors."
Too much subsidy was as bad as sudden changes, and subsidies will have to dwindle as technology becomes more competitive, he said.
"What we have seen is that there has been too much support actually in some cases, more has been done to encourage than necessary, leading to free-rider effects," Oettinger said. (Editing by Rex Merrifield and Hugh Lawson)
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.