Biofuels could provide a major income for Britain's arable farmers - but success will depend on the level of government support.
The independent Cereal Industry Review, published yesterday, also pressed for the grains industry to promote alternative fuel sources.
"Without doubt, biofuels will be a key priority area for grains and oilseeds and it's important to acknowledge the development of the new markets that there will be," Mark Ireland, a member of the UK farmers' union and review panel, told Reuters.
Currently the UK trails the rest of Europe in the production of biofuels, producing just 10,000 tonnes last year - compared with 100,000 tonnes for France and Germany combined.
In June the EU asked the UK to respond to a proposed directive on biofuel use. This would require that member states set a target on biofuel usage, intitially at two per cent, but rising to 5.75 per cent by 2010. However, poor co-ordination between the Treasury (finance) and agriculture ministries has delayed a response.
According to industry estimates, 700,000 tonnes of biofuel is required to hit the two per cent target.
The review advises the use of more cereals and oilseeds for non-food purposes. Currently less than 0.1 per cent of transport fuel sales are made using biofuels.
The Cereal Industry Review was commisioned by the Home Grown Cereals Authority (HGCA), the country's chief grain marketing body ®