"Most of the cereals used would be soft wheat and maize, the rest would fall mainly on barley," it said.

Projected yield increases of around one percent a year would raise current EU cereals output by 38 million tonnes by 2020. An extra two million hectares of set-aside land could also be sown to cereals, bringing in a further 14 million tonnes, it said.

Second generation biofuel production would account for around a third of the EU's domestic biofuel production by 2020 largely by incorporating the straw and wood-based cellulosic material into production, the report said.

First generation biofuels usually come from food crops such as wheat, maize, sugar or vegetable oils. They require energy-intensive inputs like fertiliser, which make it difficult to cut the emissions of gases contributing to climate change.

Second generation biofuels would use non-food products, such as straw and waste lumber, be more energy efficient, require less land, offer more CO2 reduction and greater energy security. But so far, their production has been mostly experimental.

Many questions remain over the biofuels targets, not least the likely level of EU imports from key suppliers like Brazil, Indonesia and Malaysia. Changes to import tariffs will play a role, as will price trends on EU cereals markets up to 2020.

The Commission report, compiled by the EU executive's agriculture department, said imports could end up accounting for around 20 percent of the bloc's overall biofuels production.

"The 10 percent incorporation rate ... over this long period until 2020 together with newly available technologies assures a sustainable path in providing the EU with renewable transport fuels without disrupting domestic and world markets," it said.