This year, biodiesel production capacity rose to 10.29 million tonnes from 6.07 million tonnes in 2006, but there were risks that it would remain "very largely unemployed and production may start stagnating if not declining already as from this year 2007, if urgent action is not taken", it said.

The increased capacity -- with 185 fully operational plants and another 58 under construction -- has laid the basis for further output growth and for hitting the EU targets for the green fuel use set for 2010 at least two years in advance, EBB said.

"However, in the EU, biodiesel is still strongly hindered by the lack of appropriate markets measures able to create a real market for biodiesel in member states," it said.

EBB has called for Brussels and EU states to adopt laws necessary to create market conditions for biodiesel sales and not stop at introducing mandatory targets "with no practical impact" as was done in Italy, Spain, Poland and many other countries.

The biodiesel blend rate in EN 590 diesel should be quickly doubled to 10 percent and then raised to 15 percent if the EU was to meet the 10 percent target for biofuels share in total car fuel use set for 2020, the industry body said.