On 8 May 2003, the EU adopted Directive 2003/30 EC to promote the use of biofuels and renewable fuels in transport.
The Directive required Member States to set indicative targets by 2003 for a minimum proportion of biofuels to be placed on the market: 2% in 2005 and 5.75% in 2010. Member States should ensure that a minimum proportion of biofuels and other renewable fuels is placed on their markets, and to that effect, shall set national indicative targets.
A reference value for these targets shall be 2 %, calculated on the basis of energy content, of all petrol and diesel for transport purposes placed on their markets by 31 December 2005. For percentages of biofuels, blended in mineral oil derivatives, exceeding the limit value of 5 % of fatty acid methyl ester (FAME) or of 5 % of bioethanol, a specific labelling at the sales points shall be imposed.
As biofuels are more expensive than traditional fuels, the EU also allowed member states to apply a total or partial exemption of taxation for biofuels in the subsequen EU Directive 2003/96 EC.
The biofuels directive requires member states to report annually on measures taken to promote biofuels and quantifiable progress. Every two years, starting from 2006, the Commission will then evaluate progress and, if necessary, respond with new or amended policies.