OSLO (Reuters) - Green schemes to fight climate change by producing more bio-fuels could actually worsen a little-known type of air pollution and cause almost 1,400 premature deaths a year in Europe by 2020, a study showed on Sunday.

The report said trees grown to produce wood fuel - seen as a cleaner alternative to oil and coal - released a chemical into the air that, when mixed with other pollutants, could also reduce farmers' crop yields.

"Growing biofuels is thought to be a good thing because it reduces the amount of carbon dioxide in the atmosphere," said Nick Hewitt, who worked on the study with colleagues from England's Lancaster University.

"What we're saying is 'yes, that's great, but biofuels could also have a detrimental effect on air quality'," he added.

The report, in the journal Nature Climate Change, looked into the impact of a European Union scheme to slow climate change by producing more biofuels.

Hewitt told Reuters there would be a similar impact wherever biofuels were produced in large quantities in areas suffering air pollution, including the United States and China.

Poplar, willow or eucalyptus trees, all used as fast-growing sources of renewable wood fuel, emit high levels of the chemical isoprene as they grow, the study said. Isoprene forms toxic ozone when mixed with other air pollutants in sunlight.

"Large-scale production of biofuels in Europe would have small but significant effects on human mortality and crop yields," said Hewitt.

"As far as we know, no one has looked at the air quality of growing biofuel crops before," he added.

The report estimated that ozone from wood-based energy to meet the European Union's 2020 goal would cause nearly 1,400 premature deaths a year, costing society $7.1 billion.

The European plan would also would reduce the annual value of wheat and maize production by $1.5 billion since ozone impairs crop growth, the study added.

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Siting new biofuel plantations far away from polluted population centres would help limit ozone formation, the study suggested. Genetic engineering might be used to reduce isoprene emissions, it said.

Ozone can cause lung problems and is blamed for killing about 22,000 people a year in Europe. Overall air pollution, mainly from fossil fuels, causes about 500,000 premature deaths in Europe a year, according to the European Environment Agency.

Sunday's study did not compare the potential damage caused by biofuels to the impact on human health from producing coal, oil or natural gas as part of policies to slow global warming. "We're not in a position to make that comparison," Hewitt said.

He noted that the main reason to shift to biofuels was to cut emissions of carbon dioxide, mainly from fossil fuels, that U.N. studies project will become ever more damaging this century.

The United Nations' World Health Organization estimates global warming has caused more than 140,000 deaths annually worldwide since the 1970s.

The biggest impact was recorded in developing nations where the floods, droughts and other disasters blamed on climate change left millions suffering from diarrhea, malnutrition, malaria and dengue fever.

Burning biofuels is viewed as neutral for climate change because plants soak up carbon when they grow and release it when they burn or rot. Fossil fuels, on the other hand, add carbon to the atmosphere from underground stores millions of years old.

Biofuels are often blamed for causing food price spikes by competing for cropland. Responding to such criticisms, the European Commission said last year it aimed to limit crop-based biofuels - such as from maize or sugar - to five percent of transport fuels.