The EU's flip flopping on its proposed biofuel targets is undermining investment in the infrastructure that might be required to support the industry as sustainable second and third-generation fuels emerge.

That is the warning from shipping consultancy Lloyd's Register, which predicted that the world fleet might not be able to cope with demand for biofuel tankers unless 400 more vessels are built.

According to Guardian reports, Richard Sadler, chief executive of the company, said, "if second and third-generation technologies are successful, current projections of demand would see the world fleet unable to cope with the logistics demand."

Currently, biodiesel must be carried on special chemical carriers. However, Sadler warned that shipping firms are struggling to expand the fleet in readiness for a projected increase in demand because of mixed signals from the EU and the UK government over whether binding targets for biofuel consumption will be retained. "There is so much uncertainty that it makes it very difficult for a shipowner to invest in a sector with so much political risk," he said.

The European Commission had planned to introduce a target for 10 per cent of transport fuel to come from reneweable sources by 2020, but following growing concerns that demand for biofuels is leading to food shortages officials in Brussels have revealed they are considering dropping the targets.

The warnings come as the biofuel sector faced another week of criticism from political leaders. Earlier this week, Bolivian president Evo Morales and president Alan Garcia of Peru became the latest leaders to directly link increased demand for biofuel with food shortages, while Gordon Brown said the UK should be "more selective in our support for biofuels".

UK energy minister Malcolm Wicks went further still in an interview with the Financial Times, claiming that "it would be ridiculous if we fill up our cars with five to 10 per cent biofuels if the consequences are that somewhere else in the world people are not being fed… We need to have a second look [at the EU's biofuels target]".

In related news, biofuel specialist Choren last week opened the world's first commercial production plant for converting biomass into a synthetic diesel fuel.

The company, which is part owned by Shell and car giants Daimler and Volkswagen, said the German plant would produce a high-performance fuel called BTL from non-food biomass, such as waste wood and forest residues. It claimed that the use of wood-based materials means that a litre of BTL will need less than a third of the land needed for a litre of biodiesel made from rapeseed.

The plant is now expected to begin production within 12 months and produce 18m litres of fuel per year. The fuel is predicted to reduce carbon emissions by 90 per cent compared to conventional diesel.

Choren chief executive Tom Blades said the company was now working on plans for a second, larger plant that would represent the world's first industrial-scale BTL plant.