Europe's environment chief has admitted that the EU did not foresee the problems raised by its policy to get 10% of Europe's road fuels from plants
Recent reports have warned of rising food prices and rainforest destruction from increased biofuel production.
The EU has promised new guidelines to ensure that its target is not damaging.
EU Environment Commissioner Stavros Dimas said it would be better to miss the target than achieve it by harming the poor or damaging the environment.
A couple of years ago biofuels looked like the perfect get-out-of-jail free card for car manufacturers under pressure to cut carbon emissions.
Instead of just revolutionising car design they could reduce transport pollution overall if drivers used more fuel from plants which would have soaked up CO2 while they were growing.
Since then reports have warned that some biofuels barely cut emissions at all - and others can lead to rainforest destruction, drive up food prices, or prompt rich firms to drive poor people off their land to convert it to fuel crops.
"We have seen that the environmental problems caused by biofuels and also the social problems are bigger than we thought they were. So we have to move very carefully," Mr Dimas told.
"We have to have criteria for sustainability, including social and environmental issues, because there are some benefits from biofuels."
He said the EU would introduce a certification scheme for biofuels and promised a clampdown on biodiesel from palm oil which is leading to forest destruction in Indonesia.
Some analysts doubt that "sustainable" palm oil exists because any palm oil used for fuel simply swells the demand for the product oil on the global market which is mainly governed by food firms.
Mr Dimas said it was vital for the EU's rules to prevent the loss of biodiversity which he described as the other great problem for the planet, along with climate change.
On Monday, the Royal Society, the UK's academy of science, is publishing a major review of biofuels. It is expected to call on the EU to make sure its guidelines guarantee that all biofuels in Europe genuinely save carbon emissions.
In the US the government has just passed a new energy bill mandating a major increase in fuel from corn, which is deemed by some analysts to be useless in combating rising carbon dioxide emissions.