EU seen meeting renewable fuel targets with blends

HAMBURG (Reuters) - The European Union is likely to achieve its target of generating 10 percent of transport fuels from renewable sources by 2020 by blending biofuels with fossil fuels, a leading EU researcher said.

Most blending is likely to use first-generation biofuels produced with food crops, said Giovanni De Santi, director of the Energy Institute at the European Union Commission's Joint Research Center.

The EU plans to source 10 percent of transport fuels from renewable sources by 2020 to combat global warming.

All EU countries must now prepare plans to show how they plan to reach green energy targets.

Second generation biofuels produced from a wide range of non-food crops from wood to grass and algae are not likely to make a significant contribution to biofuel production for another ten years, De Santi told Reuters at the European Biomass Conference in Hamburg on Thursday.

"Of the 10 percent target about 80 to 90 percent will probably be biofuels and the majority of this will be achieved with blending," he said.

EU states were likely to start imposing or increasing compulsory blending of biofuels in fossil fuels at oil refineries to achieve this target, he said.

"Blending is quite easy to introduce and would not mean very much upheaval," he said.

The majority of blending would still need to be done using first generation biofuels produced from food and animal feed crops, he said.

Steen Riisgaard, CEO of Danish company Novozymes A/S, said commercial production of second generation bioethanol fuel is imminent and that political factors were key to achieving rapid commercial production.

Novozymes aims to begin large scale deliveries of the enzymes needed for second generation bioethanol from biomass next year.

De Santi expected the first major commercial output of second generation bioethanol to take place in the U.S. from 2011.

With second generation biofuel plants often needing investment of around 100 million euros, investors must be confident of a market for their products, he said.

The EU needed to make the political decision to provide this market for second generation fuels, possibly by production quotas for second generation output, he added.

(Reporting by Michael Hogan; Editing by Peter Blackburn)