Casual observers might consider it a setback for proponents of ethanol and biodiesel now that Europe is planning to ban biofuels made from crops grown on high-value conservation lands. But the truth is, shunning biofuels produced on wetlands, grasslands, and deforested land is good for both critics and supporters. Overall, it’s even good for the biofuel industry because it might restore some faith in their product, which has been attacked from all corners in recent months. The main problem with Europe’s new law, in fact, may be that it is not stringent enough.

A ban on some biofuels is good because there’s a natural tendency to take advantage of a bull market. As with any crop, when demand grows, farmers will expand production onto new territory, whether it’s the sloping, erosion-prone “back forty,” a parcel of nearby forest, or a patch of wetlands. The rising demand for grains and oilseeds for food, livestock feed, and now biofuels is encouraging farmers across the world to expand their cropland as much as the law and the market tolerate.

In South America, soybean farmers and ranchers are encroaching on the Amazon, and palm oil plantations are continuing an alarming expansion across large swaths of virgin forests and peatlands in Southeast Asia. There are double benefits for local actors to clear forested land now, because the timber is valuable and so is the new cropland. Even though much of the logging and land conversion is done illegally, governments seldom have enough enforcement muscle to stop such profitable businesses.

But it’s not just about the growers. Consumers are probably the most important part of today’s raging biofuels market. People are interested in biofuels because they want to do something good for the planet—and if they realize that some of these fuels are linked to alarming social and environmental practices, the demand will dry up as they stop buying biofuel blends at the pump and pressure their governments to reverse biofuel mandates.

The only way forward for the market is to keep working on sustainability standards and accurate life-cycle measurements of the greenhouse gas impacts of a given biofuel. Like jeans and sports shoes, each gallon of fuel needs a tag that promises it was not produced in the equivalent of a biofuels sweatshop. Without regulation and transparency from field to tank, the industry simply cannot live up to its promise of a cleaner, better future.

The benefits of biofuels can be many: reducing dependence on oil, keeping money and jobs in the local economy, and reducing greenhouse gas emissions and other pollutants, to name a few. But not all biofuels are created equal, and their benefits in fact vary wildly depending on the feedstock, how it is grown and harvested, where it is grown, and how it is processed.

Making ethanol from corn doused with chemical fertilizers is much less efficient than making it from corn grown in a no-till rotation and fertilized organically with a cover crop. In the United States, biodiesel produced from soybeans grown locally is much more efficient and climate friendly than corn ethanol, and more so if the beans are grown in a no-till system.

Meanwhile, ethanol from sugar cane grown in Brazil has far higher energy and climate benefits on average than either of these two options. But if the sugar cane is grown on a converted grassland, irrigated heavily, or treated with lots of inorganic fertilizer and pesticides, it starts losing its environmental benefits. Worse, if it is grown on a plantation where the laborers work in terrible conditions for a pittance, its social benefits leak away too.

Next-generation biofuel crops that can be produced with little water or fertilizer on dry or easily erodable soils, and that actually improve degraded soils, may have far superior benefits to even the best sugarcane ethanol. But if these second-generation fuels—derived mainly from quick-growing grasses and trees—are not produced with the goal of maximizing social and environmental benefits, they will have no more value than the dirtiest corn ethanol.

If the biofuels market (and related laws) recognize these differences, there will be an incentive to produce better biofuels. If not, then there’s no reason for a producer not to convert more land and throw more chemicals and water at the crop to make it grow, even on totally unsuitable land. The more guidance growers and importers have, and the more they know that someone is paying attention to their growing practices, the less environmental and social abuse there will be. These rules are pretty much universal, and don’t just apply to biofuels—but also to clothes, electronics, toys, and perhaps most interestingly, your food.

Bioenergy expert Dr. Jeremy Woods of London’s Imperial College noted recently that less than 1 percent of the market for palm oil is for biodiesel (while 99 percent is produced for food, cosmetics, and industrial uses). So a ban on palm oil for fuel alone is not going to stop deforestation. The good news is, you can check out the ingredients of the products you buy and put down that tub of margarine, package of cookies, candy bar, or bottle of shampoo if you see forest-unfriendly contents like palm oil inside.

This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund.