Pushed towards biofuel

French Prime Minister Dominique de Villepin ordered that at least 15% of all state vehicles purchased this year run on a mix of ethanol and conventional fuel, the government said on Monday.

The share will be raised to 30% of all new vehicles in 2008, it said in a statement, adding that the regulation had been published on Sunday in the official journal.

"This would amount to 1,500 flex-fuel vehicles this year and 3000 per year from 2008," a government source told Reuters.

The new vehicles should run on E85, a fuel comprising 85% ethanol, a biofuel derived from sugar beet or cereals.

France wants biofuel to account for 5.75% of all vehicle fuel sales by 2008, 7% by 2010 and 10% in 2020 - above EU targets.

The government decided last year that E85 biofuel would receive tax breaks leading to a retail price of around €80 cents per litre, cheaper than petrol which retails in France at just over one euro a litre.

The government also said it had passed a measure to promote the installation of E85 pumps in gas stations.

In September, when the measure was announced, Finance Minister Thierry Breton said that at least 500 pumps of E85 would be installed in main French cities and in motorway service stations by September 2007.

France has a network of 13 000 fuel pumps.

In the light of surging demand for green biofuels globally, most car makers, including French Renault <RENA.PA> and PSA <PEUP.PA>, provide biofuel-friendly engines.

France's biofuel production is mainly biodiesel, largely made from rapeseed and then blended with conventional diesel. Some 75% of French cars run on diesel and this is expected to grow in the coming years.

Agriculture minister Dominique Bussereau has said France possesses the agricultural capacity to supply ethanol without resorting to imports or jeopardising food supplies.