HAMBURG, Germany - Ethanol production is easier and less expensive to produce in Europe than the more popular biodiesel, and more European producers are focusing on making bioethanol as a result, Reuters reports. There is more of a demand for any form of diesel, given that ethanol contributes to the supply of regular gasoline.

"From this perspective, biodiesel is complementary to the oil refinery industry in Europe whereas each ton of bioethanol would increase the surplus of gasoline," said Klaus Henschel, chief executive of Biopetrol.

Biodesel comes from vegetable oils, which mostly are imported and more costly than locally produced cereals, which mainly comprise bioethanol. Coceral, a European Union grain-trade lobby group, predicts the EU will make 284 million tons of cereal this year, tenfold more than the total oilseed harvest of 28.3 million.

With this shift in thinking, several big EU biofuel producers are looking at bioethanol as a better future. For example, Abengoa, a Spanish energy firm, construction only one biodiesel plant and four bioethanol plants, with another being built, in Europe.

"Biodiesel is not a strategic business for us," said Javier Salgado, CEO of Abengoa??s biofuels division. That division raked in global revenues of $1.22 billion last year. "You have to import massive amounts of soya oil, palm oil. We think there is a significant Achilles heel in the [biodiesel] industry."

Bioethanol also is now the focus of Ensus, a British biofuel manufacturer, which produces 400 to 450 liters annually. "I think you??re going to see preferential use of bioethanol in Europe because of cost and sustainability," said Alwyn Hughes, CEO of Ensus. "The sustainability risks are greater in biodiesel and as the sustainability rules start to bite in Europe, that??s increasingly going to become an important factor."