The impact of biofuel consumption on CO2 emissions: A panel data analysis for seven selected G20 countries

Abstract

Internationally, biofuel energy as a renewable energy source has been increasingly appreciated by various industries. The benefits of biofuel energy for environmental protection and global climate change cannot be denied. Hence, this paper examines the nexus among economic growth, biofuel consumption, urbanization rate, and CO2 emissions in seven selected Group of Twenty countries (G20) over 2001–2017. The results of fully modified ordinary least squares suggest that the environmental Kuznets curve (EKC) exists between economic growth and CO2 emissions, and the impact of biofuel consumption and the urbanization rate on CO2 emissions is negative and positive, respectively. The purpose of this paper is to investigate the nexus among economic growth, biofuel consumption, urbanization rate, and CO2 emissions. The significance of this paper is to add biofuel consumption as a new variable for a panel of seven selected Group of Twenty (G20) countries covering 2001–2017. In addition, this study put urbanization into the current environmental Kuznets curve model to validate that urbanization can increase CO2 emissions. Developing the biofuel industry can not only diminish fossil fuel energy consumption but also offer huge potential to reduce CO2 emissions.