The European Union should fight climate change with a broad-based carbon tax rather than by setting precise targets for the use of biofuels and renewable energy, according to a team of British economists.

Europe Economics, a London-based consultancy, argues that biofuel targets amount to "a form of state support for an environmentally and -economically harmful activity designed to consolidate existing price support mechanisms for vested interest groups, most notably farmers".

On Wednesday, Stavros Dimas, European environment commissioner, will present a plan for tackling climate change that aims to cut EU greenhouse gas emissions by 20 per cent of their 1990 levels by 2020. The Commission's proposal that biofuels should account for 10 per cent of road transport fuels has been questioned in many quarters, including by the Joint Research Centre, the Commission's in-house science institute.

The economists say the target would lead to annual subsidies to the biofuels industry of €11bn ($16bn, £8.2bn) and possibly as much as €23bn by 2020. This compares with the €40bn spent each year on the EU's Common Agricultural Policy.

"It is clear that a European biofuel industry cannot be viable without political support by means of tariffs and very high levels of subsidy," the economists say.

The study was commissioned by Open Europe, a UK think-tank campaigning for a loosely structured, economically liberal EU.

The economists recommend that governments should introduce tax breaks for energy-efficient products, a step already being considered in Britain and France. The EU could play its part by cutting import duties.

The EU imposes a 66 per cent tariff on low-energy lightbulbs from China, Pakistan, the Philippines and Vietnam, partly - the report suggests - because of lobbying by Osram, the manufacturer owned by Siemens.

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