The European Commission proposed on Friday expanding subsidies for biofuel crops to encourage the production of renewable energy.

Under the proposal, the energy crop aid scheme introduced in 2004 will cover all the European Union (EU) member states. Previously eight countries were excluded.

As a result, the maximum area which can benefit from the aid will be expanded to 2 million hectares from 1.5 million at present.

In addition, the commission proposed allowing the member states to grant national aid of up to 50 percent of the costs of establishing multiannual crops on areas on which an application for the energy crop aid has been made.

Eight countries, which joined the EU in 2004, are going to be allowed to continue with a separate aid scheme until 2010 instead of 2008, said the commission.

The countries affected are the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia.

The farming of energy crops has become economically viable as oil prices climb, said a commission spokesman on Friday.

The EU is heavily dependent on external energy supply. Dependence in the transport sector exceeded 80 percent in 2004, much higher than the United States, China and India, according to figures of Finland's Neste Oil, a leader in biofuel research.

"With the oil price where it is now, our calculations are that it is now economically viable to do this and we are increasingly seeing people turning to this as an alternative source of energy," said commission agriculture spokesman Michael Mann.

Currently, the majority of the EU member states encourage the use of biofuels in transport by tax incentives. But by 2008, most countries would introduce obligatory measures.

The EU introduced a 45-euro per hectare aid for energy crops in 2004 to provide an incentive for farmers to grow the raw materials for biofuels.

Between 1.2 million and 1.3 million hectares of biofuel crops are being subsidized in 2006, according to the commission.

Source: Xinhua