"We are preparing new legislation to allow pure biodiesel and a mix of 20 percent - I believe it will enter into force in June," Zbigniew Kamienski, deputy director at the economy ministry's energy department, told Reuters.

"I am convinced that the production of biofuels will jump. This year we want 1.5 percent of all motor fuel to be biofuels, up from 0.5 percent last year," he said.

"The dynamics should be similar in the years ahead so that we can comfortably meet the goals set by the European Union."

The EU has set a non-binding target of a 5.75 percent share for biofuels by 2010. Assuming diesel fuel use at some 7 million tonnes a year, biodiesel production would have to rise to at least 400,000 tonnes to reach the EU goals, experts say.

Biodfuels extracted from crops such as rapeseed, sugar and maize are used to power vehicles and seen as a way to limit the emissions that contribute to global warming.

The EU produced 2.4 million tonnes of biofuels in 2004, including 0.5 million tonnes of bio-ethanol and 1.9 million tonnes of biodiesel.

EXPANDING BUSINESS

In Poland many farms are interested in shifting to rapeseed production and companies willing to invest in biofuels are seeking long-term suppliers.

Investment in new biodiesel plants is estimated at up to 1 billion zlotys ($306 million).

"There are seven or eight firms which are likely to complete their investment by end-2007," said Tomasz Panczyszyn, head of Polish Biofuels Chamber. "When the refineries start working, our production capacity may rise by 570,000 tonnes."

To fully use the increased capacity, Poland's rapeseed output would have to nearly double by the end of next year - a target some say is very tough to achieve.

"We can increase biodiesel production to 400,000-500,000 tonnes by 2010, this is realistic," said Ewa Rosiak, analyst from the Polish Institute for Agricultural Economics.

Rapeseed producers also sound optimistic.

"Rapeseed is in vogue - prices have already inched up and they will rise in the years ahead," said Mariusz Olejnik, head of the Polish Rapeseed Producers Union.

"There is interest from farmers and investors, so there will be no problem to boost the sown area to meet demand for biofuel production," he said.

Rapeseed in Poland is trading at 850 zlotys per tonne, up from 830 zlotys at the end of 2005, partly due to seasonal factors.