The European Union (EU) will impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, draft EU legislation seen by Reuters showed.

The plans, which will need the approval of EU governments and lawmakers, also include a promise to remove all public subsidies for biofuels produced from crops such as rapeseed, wheat, and sugar, after the current EU legislation expires in 2020.

"The (European) Commission is of the view that in the period after 2020, biofuels should only be subsidised if they lead to substantial greenhouse gas savings... and are not produced from crops used for food and feed," the draft said. (Reporting by Charlie Dunmore; editing by Rex Merrifield)