"There has been a major acceleration in biodiesel," Philippe Tillous-Borde, president of Diester Industrie, by far the country's biggest producer, told Reuters.

"But we would still be two years behind schedule," he said, adding that biodiesel represented only 1.2 percent of total diesel consumption in France at the end of last year.

Biofuels include so-called diester, mainly made from rapeseed, and ethanol, derived from sugar beet, wheat or maize, which is then blended with fuel.

France began producing diester in 1993 and output was set to reach 900,000 tonnes by the end of 2007, up from less than 400,000 in 2004.

By 2007 it would take up around a third of France's rapeseed output, Tillous-Borde said.

NEW PLANT PROJECTS

To try and make up for the lost time, French Prime Minister Jean-Pierre Raffarin in September declared biofuels a national priority and called for a trebling of production by 2007.

The goverment will tender for four new plants in the coming months and has promised to grant an annual tax rebate on an additional 800,000 tonnes of green fuels.

Diester Industrie, which sells half its output to French oil giant Total, intends to obtain half that volume.

"It would be balanced -- even nice -- for us to take only half of the total quota," he said.

France currently produces 500,000 tonnes of biodiesel, five times as much as ethanol.

To lift the country's output, Tillous-Borde said he planned to double production in the Venette, near the northern town of Compiegne, to 200,000 tonnes and build a new plant in central France, initially to produce 160,000 tonnes.

"There are three possible sites. It will likely be close to the source of the Seine," he said.

Diester Industrie was also in talks with US food giant Cargill to set up a plant near the port of Saint-Nazaire that would produce 120,000 tonnes of biodiesel a year, he said.

PRICE SUPPORT

As one hectare of rapeseed can produce around 1.5 tonne of biofuel, a rise in biodiesel output to 900,000 tonnes would use up to 650,000 hectares of rapeseed, which would continue to support rapeseed prices, Tillous-Borde said.

"To use between one third and a half of the total rapeseed output seems reasonnable and realistic," he said, adding that the oilseed area devoted to biofuels would likely rise to one million hectares by 2012, representing half the total.

French rapeseed prices have fallen this season due to huge global supplies, but the drop would have been more severe had there been less biofuel demand, Tillous-Borde said.

"We stabilised the European market," he said, athough that meant a slump in exports within and outside the European Union.