"Eventually, we plan to have several plants in Europe , starting with the Netherlands. We see the market gaining speed after it took a long time to start," Bemer said.

"We aim at a good share of the northwest European market -- the Netherlands, Belgium, Germany, the UK," he said.

Ethanol, produced mainly from sugar, is the world's most widely used "green" alternative to fossil fuels with an annual production of around 38 million tonnes, analysts say.

Ethanol is blended with fuel and used in vehicles without a need to convert the engine.

In Europe, biodiesel produced from rapeseed oil is the most popular "green fuel". High crude oil prices and use of diesel cars have made biodiesel even more attractive in the EU, where tax incentives have already stimulated green fuel production.

Bemer said he expected Nedalco to make an investment decision to build its first ethanol plant in the Netherlands in the next few months, once the Dutch government published the details of a plan to introduce compulsory blending from 2007.

He did not give other details but said that Nedalco, a leading producer of ethyl alcohol in Europe, was considering a plant of at least 100,000-200,000 tonnes annual capacity.

The Dutch government plans to make blending of diesel and petrol with a 2 percent content of biodiesel or ethanol obligatory from Jan. 1, 2007. The new rule will replace existing tax breaks, which will be abolished.

MANDATORY BLENDING

Bemer said the Europe Union should introduce mandatory blending of biofuels for all member states to allow the industry to grow and compete in the world market.

"Getting rid of all national programmes and making blending obligatory all over the EU would be a good option. The current system makes the market fragmented ... and we won't be able to compete globally," he said.

The EU wants biofuels to have a 5.75 percent share of the 25-nation bloc's petrol and diesel market by 2010 but does not have a unified policy how to achieve that. Some countries give tax breaks, others have decided to go for obligatory blending.

Bemer said that countries which offer tax incentives are usually protective of domestic biofuel producers and thus close their market for foreigners.

Developing non-food alternatives to be used as raw material to produce bioethanol is also among Nedalco's priorities, he said. Alternatives are needed to address fears that biofuels can put a squeeze on food needs and damage biodiversity.

Nedalco had developed a new fermentation process, using modified yeasts capable of converting all kind of cellulose, including straw and wood waste, into alcohol.