Abstract
This paper investigates the relationship between financial development and bio-energy consumption in the European Union (EU28) countries for the period from 1990 to 2013 through the panel autoregressive distributed lag (ARDL) approach and causality analysis. The empirical results show that financial development shows a significant positive impact, at a 1% statistical level, on bio-energy consumption for the EU28 during the studied period. In developing countries, the financial market indicator affects bio-energy consumption outgrowth positively and significantly at a 1% statistical level. For developed countries, there is a positive influence of financial institutions and financial market indicators on bio-energy consumption growth at the 1% and 10% levels, respectively. The study concludes that there is a significant relationship between the consumption of bio-energy and financial development factors. The study provides recommendations that are useful when formulating policy related to energy consumption and the promotion of bio-energy consumption. Financial development and economic outgrowth show a significant influence on the outgrowth of bio-energy consumption at a 1% statistical level.
Highlights
In 2014, the European Union (EU-28) countries supported and funded two main projects to promote the bio-energy industry in the EU economy
The results show that there is a significant relationship between energy consumption, economic growth, foreign direct investment (FDI) and financial development proxies [15]
The current paper focuses on the period from 1990 and 2013 to investigate whether financial development indicators can play a main role in achieving the scheduled national renewable energy action plan (NREAP) 2020 and 2030 objectives of bioenergy consumption in the EU region
Summary
In 2014, the European Union (EU-28) countries supported and funded two main projects to promote the bio-energy industry in the EU economy. The EU-28 granted $1.3 billion to 19 sustainable energy and environmental pollution mitigation initiatives [1]. The EU announced the start of a modern European cooperative agreement on bio-based industries (BBI), which is set to invest $4.2 billion into the bio-economy to encourage financing and investment, and promote a greener market with high competition. The plan is that the raw materials are extracted, processed, or manufactured within Europe. The funding will support 19 sustainable energy enterprises, and additional future investment will be sourced from the revenue. Six bio-energy enterprises gained subsidies under the second allocation of funding in the EU
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