Financial Development and Bioenergy Consumption in the EU28 Region: Evidence from Panel Auto-Regressive Distributed Lag Bound Approach

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. releases and does not pertain to access and supply of green energy. The approach handles the result of trouble but does not deal with the source of the problem. The plan to decrease consumption of conventional energy and to switch to renewable green energy fixes the cause of troubles and leads to reductions in CO 2 emissions.According to the AEBIOM (European Biomass Association) analyses in 2010, there are various obstacles to overcome in future bio-energy development related to regulations, legislation, and lobbying from energy companies. In 2010, AEBIOM highlighted multiple problems. One is converting the 300 Mtoe (million tonnes of oil equivalent) that the EU consumes to bio-energy by 2030. There is also concern about the disparity in access to renewable energy within the EU and how to effectively manage large-scale production. New financial development programs for the implementation of renewable energy allocated $11.5 billion to co-fund public projects that aim to amend the energy practices in housing and tertiary sectors from traditional energy to bio-energy [4].Bio-energy outputs could be one of the leading solutions to avoid the European carbon emission tax and energy poverty [5]. Around 40% of the energy in the EU is consumed residentially or by the service industry, primarily in heating and cooling applications. Currently, about 90% of this heat consumption is sourced through conventional energy. Later, once the output cost of traditional energy products increases, this can lead to issues of energy shortages. There will no doubt be a lengthy period until the switch from fossil fuels to renewable energy is fully made [6]. The primary issue for the quick development of bio-energy products is the shortage of capital input and the lengthy payback period. This issue is further impacted by the inefficient use of EU funds u...

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