LONDON, May 2 (Xinhua) -- British parliamentary members urged the government to suspend its biofuel obligations for oil suppliers, as Britain's overproducing biodiesel industry is facing, among others, challenges from the cheap and heavily-subsided U.S. biofuel, Financial Times reported on Friday.

    Britain's biodiesel industry has already undergone a precipitous collapse, hit by cheap foreign imports including subsidized biodiesel from the U.S., and suffers from severe overcapacity.

    Biofuels are vehicle fuels derived from plants, or occasionally animal products, the main alternative to fossil fuels for transport.

    They were until recently considered more "green" than petrol because the plants from which they are made absorb carbon dioxide from the air as they grow.

    Studies show that biofuels produce up to 60 per cent less carbon dioxide than fossil fuels. But the environmental benefits depend on how the biofuels are made -- for instance, if a biofuel plant is powered by electricity generated by burning coal, the biofuels may result in greater emissions than using oil, not less.

    British lawmakers have conceded that they may have to rethink the biofuel policy amid growing concerns about the effect on food prices and the environment.

    They urge more research to be done on the effects of biofuels on food prices and the environment, saying "without standards for sustainability and safeguards to protect carbon sinks we believe policies that encourage demand for first generation biofuels are damaging."

    British biodiesel producers have been shutting factories and leaving production capacity idle, and for that, they blame cheap imports, which have caused outrage among biodiesel producers across the European Union.

    Brussels is considering tougher social and environmental criteria for biodiesel imports that the U.S. and some other big biofuel producers might not be able to meet, in a bid to shut them out of European markets.

    The British MPs repeated their call for the government to suspend the renewable transport fuel obligation, which compels suppliers to include a set proportion of biofuels in their sales.

    The proportion is 2.5 percent this year, and will be raised to five percent in 2010.

    The MPs said the UK had the capacity to produce only 2.5 percent of transport fuels from plants in an environmentally sound manner.

    To meet the five percent target would require between 10 percent and 45 percent of the arable land, they said.

    They rejected ministers' argument that it would be harmful to investors to renege on their biofuels targets.