Peter Mandelson, European Union trade commissioner has warned Europe to act to prevent biofuels from becoming an environmental threat as the demand for "green" fuels could lead to developing nations tearing down rain forests to produce fuel crops.

At a conference in Brussels, he also told EU member states they should not view the biofuel boom as a new way to finance the farming sector. Biofuels can be made from crops like wheat, rapeseed and sugarcane.

Instead, Mandelson wants the EU to look for "cheaper, cleaner" imports as part of Europe''s pledge to fight climate change and its emphasis on switching to green fuels. It has set a target of ensuring that biofuels make up 10 per cent of vehicle fuel by 2020.

Mandelson told the conference at Brussels, "Biofuel policy is not ultimately an industrial policy or an agricultural policy. It is an environmental policy, driven above all by the greenest outcomes. Europe should be open to accepting that we will import a large part of our biofuel resources.

"We should certainly not contemplate favouring EU production of biofuels with a weak carbon performance if we can import cheaper, cleaner biofuels," he added.

Europe''s oilseed crops, mainly rapeseed, currently receive heavy subsidies, making them cheaper than imported Brazilian ethanol, which is made from sugar and releases far less carbon dioxide when burned. Yet the EU has put a hefty 70-per cent import tariff on Brazilian ethanol thus defeating its own commitment containing global warming.

Mandelson emphasised, "All biofuels are not equal. We must commit to meeting our targets through the use of those biofuels that are most effective in relative terms in reducing global carbon impact."

Mandelson''s comments come a day after a joint report by the Organisation for Economic Co-operation and Development (OECD) and the United Nations warned biofuel demand would keep farm commodity prices high over the next decade.

According to the study, ethanol production in the US, which mainly uses domestic corn, is expected to double by 2016.

At the same time in the EU, the amount of oilseeds used for biofuels will jump from 10 milllion tons to 21 million tons.

Meanwhile, in Brazil, the world''s fastest-growing ethanol producer, biofuel output is set grow 145 per cent of its 2006 production to reach 44 billion litres over the next 10 years.