Europe must act to prevent biofuels from becoming an environmental threat, the EU's trade commissioner has said.
Biofuels can be made from crops like wheat, rapeseed and sugarcane
Demand for "green" fuels could lead to developing nations tearing down rain forests to produce fuel crops, Peter Mandelson warned.
At a conference in Brussels, he also told EU member states they should not view the biofuel boom as a new way to finance the farming sector.
Instead, the EU should look for "cheaper, cleaner" imports, he said.
As part of Europe's pledge to fight climate change, the EU has pushed for a switch to green fuels. To that end, it has set a target of ensuring that biofuels make up 10% of vehicle fuel by 2020.
"Biofuel policy is not ultimately an industrial policy or an agricultural policy - it is an environmental policy, driven above all by the greenest outcomes," Mr Mandelson told an EU biofuels conference in Brussels.
"Europe should be open to accepting that we will import a large part of our biofuel resources.
"We should certainly not contemplate favouring EU production of biofuels with a weak carbon performance if we can import cheaper, cleaner biofuels," he added.
However, his comments could draw the wrath of some EU countries with strong interests in agriculture, such as France.
Oilseed crops in Europe - which are mainly rapeseed - currently receive heavy subsidies, making them cheaper than imported Brazilian ethanol, which is subject to large import tariffs of around 70%.
But the Brazilian fuel, which is made from sugar, releases far less carbon dioxide when it is burned.
"All biofuels are not equal," Mr Mandelson added.
"We must commit to meeting our targets through the use of those biofuels that are most effective in relative terms in reducing global carbon impact."
Mr Mandelson's comments come a day after a joint report by the Organisation for Economic Co-operation and Development (OECD) and the United Nations warned biofuel demand would keep farm commodity prices high over the next decade.
According to the study, ethanol production in the US, which mainly uses domestic corn, is expected to double by 2016.
At the same time in the EU, the amount of oilseeds used for biofuels will jump from 10 milllion tons to 21 million tons.
Meanwhile, in Brazil - currently the world's fastest-growing ethanol producer - biofuel output is set to hit 44 billion litres over the next 10 years, 145% more than in 2006.