This study examines the four options being considered by the European Commission for dealing with indirect land use change (ILUC) arising from the use of biofuels under the Renewable Energy Directive. An alternative approach is developed that would encourage producers and growers to undertake practices that mitigate ILUC. This study identifies a range of ILUC mitigation practices and recommends a market mechanism to encourage such activities through the use of a carbon credit scheme. This study demonstrates that there are a range of activities that, through incentives, could be proactively encouraged to prevent or reduce the risks of ILUC occurring in the first place.