On the economic determinants of biofuel consumption: an empirical analysis for OECD countries

Abstract

This paper explores the determinants of biofuel energy consumption for 12 OECD countries over the period 2002-2012. While a growing literature has examined the determinants of aggregate renewable energy consumption, studies on the drivers of disaggregated renewable energy consumption are scarce. Thus, this study fills the gap by focusing on biofuel energy consumption for OECD countries. Results reveals that biofuel energy consumption depends on real income, CO2 emissions, oil prices and biofuel prices, however, impact of income and CO2 emissions is more pronounced than that of biofuel and oil prices. Moreover, results depict that carbon emissions affect is negative on biofuel consumption and granger causes without feedback, suggesting that biofuels are not able to mitigate carbon emissions. Based on results, it is suggested to stimulate the development and deployment of advanced biofuels.