THE Government is set to consult with the fleet industry on new targets for biofuel use throughout Europe that could see tens of thousands of fleet vehicles running on the fuel within the next two years.

The European Union (EU) Directive sets key targets for biofuel use by 2005, stating that 2% of fuel use should be biodiesel by 2005, rising to 5.75% by 2010.

Experts suggest that to meet these targets, about 10% of arable farmland in England would need to be converted to growing crops for the fuel.

Biodiesel is an alternative fuel created from renewable resources, such as certain crops, and there are already several fleets in the UK trialling it. The environmental benefits of such fuels are about the same as introducing wind power to replace fossil-fuel power stations, experts claim.

The Government is currently considering its future support for different types of alternative fuels, ranging from liquefied petroleum gas (LPG) to biodiesel.

The influential Institute for Public Policy Research, in a document entitled 'Tomorrow's Low Carbon Cars' has recommended that from 2004, the Government should gradually abandon its fuel duty reduction for LPG, which currently costs it £50 million a year.

Instead, it argues, biodiesel should be given more support through tax breaks because of its greater environmental benefits, a statement welcomed by biodiesel producers. The stance has been backed by farming minister Lord Whitty.

In the House of Commons, Transport Minister David Jamieson said: 'The Directive must be implemented in full by December 31, 2004 but the European Commission has asked member states in advance of this to submit targets for biofuel use in 2005 by July 2004.

'We will be consulting stakeholders on possible UK targets early in 2004, before deciding UK targets.'

Campaigners for the LPG industry argued last week that the Government must continue to support gaseous fuels, as it released research showing LPG produces lower far lower levels of carbon dioxide, oxides of nitrogen and particulates than petrol or diesel-engined equivalents.

The Government is expected to announce its future policy on alternative fuels as part of the pre-Budget statement, due to take place in November.