European Union Directive 2003/30/EC gives three grounds on which to promote the use of biofuels:

• reducing dependence on energy imports,
• curbing greenhouse gas emissions, and
• creating new markets for agricultural products.
  
  Biofuels help meet these three objectives to varying degrees.

Biofuels are currently manufactured using one of two main processes:

• using ethanol directly or converted into ethyl tertiary butyl ether (ETBE) for gasoline-fueled vehicles,
• using vegetable oils processed into fatty acid methyl esters (FAME) for diesel-powered vehicles.

Ethanol process

Bioethanol is derived from the fermentation of sugars from cereals or sugar-producing plants. In the European Union, bioethanol can be blended with gasoline in a proportion of up to 5%, subject to compliance with the EN 228 standard. Such low concentrations require special precautions to carefully limit water content and prevent separation of the ethanol and gasoline phases of the blend. These constraints translate to major handicaps in terms of logistics. A suitable gasoline base must be used to conform to specifications, especially concerning volatility.

In the European Union, ETBE is synthesized from bioethanol and isobutylene, which is preferred to direct blending of ethanol. ETBE can be blended with gasoline in a proportion of up to 15% without creating safety or logistics problems.

  E85 is a blend containing a high concentration of ethanol: up to 85% ethanol and 15% gasoline. Disadvantages related to a low ethanol content, such as volatility, are eliminated or significantly reduced. However, due to the low energy content and high corrosive effect of ethanol, only specially equipped vehicles, known as Flexible Fuel (or flexfuel) Vehicles (FFV) can use this fuel. Unlike gasoline-powered vehicles, FFVs can run on E85, gasoline or any blend of the two.

Flexfuel vehicles made their debut in the European Union in 2003, with Sweden leading the way. In 2006, there were more than 30,000 FFVs, accounting for 0.75% of vehicles on the road, and about 350 service stations marketing E85. France is fast-tracking the introduction of both flexfuel vehicles and E85 fuel, which are scheduled to be rolled out in 2007.

Although Brazil is often cited as a benchmark for biofuel development, the environment is significantly different from in Europe:

• Most passenger cars run on gasoline, rather than diesel, as is the case in the European Union.
• Brazil’s vehicles have been tailored to run on ethanol,
  - either at a fixed proportion of 20 to 25%
  - or, in FFVs, at a variable proportion of 20 to 100%.
  With a blend rate of over 20%, the main disadvantages of a low ethanol content are eliminated.
• Lastly, ethanol is inexpensive, costing less than €350 per cubic meter.

                       
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FAME or biodiesel is an ester obtained by reacting methanol with a vegetable oil. It can be blended with diesel fuel in a proportion of up to 5% and distributed in service stations without any particular user notifications. It can be blended with diesel fuel in a proportion of up to 30% for captive fleets. In the European Union, most biodiesel is made from rapeseed oil, but sunflower, palm and soybean oils are also used.

                      
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