A crop area the size of the USA would be needed to biofuel all the world's cars and alternatives, such as electricity, exist for them, it added.
Instead, it said the EU should fund research into using plant-based fuel for aviation to help cut emissions.
Policy Exchange has previously said the government should spend its £550m annual biofuel subsidies on halting the destruction of rainforests and peatland, which remove carbon dioxide from the atmosphere.
Now the centre-right think tank says the EU should switch policy to subsidising development of biofuels for aviation because planes cannot run on other sources of energy.
Policy Exchange claims using biofuels is the only way in the foreseeable future to meet people's desire to travel without escalating emissions of greenhouse gases.
Airlines should be mandated to blend biofuel with kerosene in increasing quantities from 2020, it believes.
By this time new generation crop-based fuels should have been developed which do not compete with food crops.
Richard Dyer, Friends of the Earth's transport campaigner, said the report was right that it was important to cut flights "if we are to stand a chance of preventing catastrophic climate change".
"But replacing aviation fuel with biofuels will take us further down a blind alley as these so-called green fuels are already increasing the climate-changing emissions that our cars, buses and lorries are producing," he said.
Wednesday 22nd July, 2009
Green skies thinking: Promoting the development and commercialisation of sustainable bio-jet fuels
Written by Ben Caldecott
Our report recommends the wide-scale deployment of sustainable bio-jet fuels which would result in emission reductions worth £37.41 billion in the UK between 2020 and 2050, as well as making a significant contribution to meeting the UK's 2050 emission reduction target. We also set out how the UK can become a world leader in this important suite of technologies.
Green Skies Thinking recommends the setting of achievable and enforceable targets for replacing standard kerosene jet fuel with bio-jet fuel from 2020, through the implementation of an EU-wide Sustainable Bio-jet Fuel Blending Mandate. This would result in reductions of greenhouse gas emissions from the UK and EU aviation sectors of 15% in 2020 and 60% in 2050 relative to current predictions.
<In the introduction, they admit aviation is a threat to climate security, but solve the problem by switching to biofuels:
"Aviation currently accounts for a relatively small proportion of total greenhouse gas (GHG) emissions: 6% of UK, 4% of European Union (EU 27) and 2% of global. This is likely to change however. Projections show that global demand for aviation will grow at 5% annually for at least the next 15 years. Growth will occur in both mature markets and across less developed markets – most notably China. Consequently, if growth in aviation emissions is left unchecked, by 2050 emissions from aviation are estimated to account for 15-20% of global GHG emissions.">
Full report at: