The European Union is being urged to take action to stop a biofuel trading scam that exploits U.S. agricultural subsidies and undermines the fight against global warming.

Up to 10% of biofuel exports from the U.S. to Europe are believed to be part of the rogue scheme reaping big profits for agricultural trading firms.

The "splash and dash" scam involves shipping biodiesel from Europe to the U.S. where a dash of fuel is added, allowing traders to claim 11 pence a liter of U.S. subsidy for the entire cargo. It is then shipped back and sold below domestic prices, undercutting Europe's biofuel industry.

The trade is not illegal, but flouts the spirit of producing green fuel by transporting it needlessly across the Atlantic at a time when campaigners are voicing concern about emissions from global shipping.