(BRUSSELS) - A European biodiesel lobby called for an EU investigation Friday into subsidised exports of US biodiesel, which it said were undermining the industry in Europe.

The European Biodiesel Board said the European market was being flooded with US exports of a 99-percent biodiesel blend, which can receive a subsidy of 300 dollars (192 euros) per tonne.

On top of the US aid, exports of the so-called B99 blend are also eligible for a subsidy in Europe as well.

The lobby said the subsidies were squeezing European producers' profit margins, "putting most of them out of business" and leaving capacity idle.

"In view of the critical circumstances prevailing on the EU biodiesel market, the EU biodiesel industry is urging the European Commission to initiate an anti-dumping and anti-subsidy investigation, with a view to impose as soon as possible countervailing measures against US 'B99' exports," it said.

The commission must examine the request before it can decide on opening an investigation, which would be necessary before any WTO action could be pursued.

Biodiesel is produced from vegetable oils or fats -- including used cooking oils -- with properties similar to petrol-based diesel.

The use of biofuels has come under growing attack recently in both the United States and Europe, where they have been blamed for helping to drive food prices to record highs by using up farmland that could be used for food crops.

As a result, the European Union has faced growing pressure to reconsider a target for biofuels to make up 10 percent of all vehicle fuels in the 27-nation bloc by 2020.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.