Drivers and Obstacles to Biofuel: A Dynamic Panel Data Approach to Selected European Union Countries

In recent years, increases in fossil fuel consumption, along with associated resource limitations, high prices, and growing concern about climate change, have led to initiatives in favor of expanding renewable energy use. This study addresses several issues. Firstly, we review drivers and obstacles that the biofuel industry faces. Secondly, the current state of the biofuel industry with emphasis on the EU is investigated. Thirdly, the paper quantifies the factors that foster or harm biofuel use by applying dynamic panel econometric techniques (panel GMM). Economic activity (GDP), high fuel prices, greenhouse gas emissions and to a weaker extent some political characteristics are the main drivers. Our findings suggest that biofuel production will experience substantial growth, especially within developed economies primarily due to their environmental and national energy security concerns. (Author's abstract)