This paper discusses the oil palm expansion in the State of Pará, located in the Brazilian Amazon. It focuses on land use change aspects put in perspective with the sustainability criteria for biofuels of the European Renewable Energy Directive (RED). The study shows that palm oil production for energy purposes appears very promising in Brazil. In parallel to local targets, the mandatory European biofuel targets represent an important market potential for the country. It seems too early to know whether the export of palm oil biodiesel from Brazil to Europe will be significant or not. However, it is likely that palm oil exports for biodiesel production in Europe occur in the coming years. Although the RED includes some essential conditions for sustainable production of biofuels, we argue that the values imposed for calculating carbon stocks do not reflect diversity of pastureland where oil palm expansion occurs in the Brazilian Amazon. The use of certain land areas authorised within the RED may also represent a significant limit in terms of biodiversity protection. This study provides new insights that may be used to improve life cycle assessment of biodiesel from palm oil in order to avoid unintended policy consequences.