A year-long European Union investigation into biofuels has concluded that their green credentials might be partly compromised by indirect side-effects, which should be tackled, EU officials said.
The multi-billion-dollar industry fears barriers will be further raised against unsustainable biofuels from food, but the long-awaited European Commission report, due next week, will stop short of proposing any new actions.
Instead, it will recommend six months more of studies.
The report follows a one-year internal battle among experts within the Commission, which has thrown into doubt EU plans to create a $17-billion-a-year market for biofuels from producers such as France, Germany, Brazil, Malaysia and Indonesia.
Investment in European biofuels has slowed to a halt due to doubts over the sector's green credentials and the challenging investment climate.
Recent uncertainty over investments has largely been caused by a new concept known as "indirect land-use change".
In essence, that means that if you take a field of grain and switch the crop to biofuel, somebody, somewhere, will go hungry unless those missing tonnes of grain are grown elsewhere.
The crops to make up the shortfall could come from anywhere, and economics often dictate that will be in tropical zones, encouraging farmers to hack out new land from fertile forests.