EU biofuels policy - raising the question of WTO compatibility

Governments intervene in the energy sector using a variety of measures to pursue a range of objectives, from security of supply and energy efficiency to environmental protection. Recent concerns about the impact of fossil fuels on climate change have resulted in the increasing promotion of biofuels as an alternative to oil. While worries exist with regard to the environmental impact of biofuel production in ecologically sensitive areas, it has been argued that with an effective regulatory framework to promote sustainable production, biofuels could provide a mechanism to provide energy security in an environmentally positive way. The interest of the European Union (EU) in the promotion of biofuels production is a relatively recent phenomenon and it is now the world's largest producer of biodiesel and the fourth largest producer of bioethanol. At its most basic level, the promotion of biofuels as an alternative to fossil fuels is part of a wider EU effort to support the use of renewable energy. The promotion of renewable energy is traceable to a number of goals, a central one of which is ensuring security of energy supply. Other policy goals supported by the promotion of renewable energies include reducing greenhouse gas emissions associated with climate change, decreasing dependence upon imported oil, the promotion of technological development as well as regional and rural development and employment.