1.1. Bioenergy Industry Profile
Bioenergy intensity is a measure used in macroeconomics level individually as an indicator representing the relation between the available bioenergy for final consumption and gross domestic product (GDP). Bioenergy intensity is one of the most significant indicators for monitoring the performance of European continental countries (ECC) to achieve the ambition of the national renewable energy action plan (NREAP) objectives by the end of 2030. If the country’s economy becomes extra efficient in its use of bioenergy outputs and the related GDP stay persistence, then the rate of the bioenergy intensity index will fall accordingly. The bioenergy intensity can provide the ECC with information that can be used to consistently track changes in ECC bioenergy intensity over time for the entire economy, as well as for specific end-use products (bioheat, biocool, biofuel, and bioelectricity) and end-use sectors (transportation, industrial, residential, and commercial).
In 2015, the European Bioenergy Outlook and European Biomass Association’s key findings referred to the primary energy production from traditional sources in the European Union (EU) decreasing from 941 million tonnes of oil equivalent (Mtoe) in 2000 to 789 million tonnes of oil equivalent (Mtoe) by the end of 2013. However, the energy outputs from renewable and sustainable sources increased by 100% from 97 million tonnes of oil equivalent (Mtoe) to 192 million tonnes of oil equivalent (Mtoe) in 2000 and 2013 respectively [
1]. This demonstrates that renewable energy outputs are the most significant primary energy source, even more important than energy outputs from conventional resources such as coal, gas, and oil. As per the European Bioenergy Outlook in 2015, countries with the highest primary energy production from renewable and sustainable sources in the EU are Germany, Italy, and France, with the volume of 33 Mtoe, 23 Mtoe, and 23 Mtoe, respectively.
In spite of the reduction in total primary energy production in the EU, energy consumption increased continuously and steadily during the last several decades, which led European countries to depend mainly on energy imports to fill up the shortage of energy supply. On the one hand, European countries’ total available energy for final consumption reached 1.666 Mtoe in 2013. Moreover, the overall gross elementary energy generation of fuel combination, fossil oil available for final consumption is still the most significant energy provenance with an estimated 33.4%, the natural invader with 23.2%, solid fossil fuels 17.2%, nuclear fusion 13.6%, and renewable energy with 11.8%. The share of bioenergy primary production is more than 65% of Europe’s energy from green and environmentally friendly sources. The growth and development of all green and friendly energy sources together in the past five years were as significant as the development and growth of the bioenergy industry in absolute terms with an estimated 6.2 Mtoe per year.
The bioenergy industry is by far the main contributor in renewable energy sources in Europe. Bioenergy outputs provide 123 Mtoe to the primary energy generation which is roughly equal to the primary energy production from natural gas and higher than the primary energy production from oil. However, the bioenergy industry and all other renewable energy industries must be developed and growing continuously. European countries have committed to reducing CO2 emissions with 2 °C targets through enhancing the consumption of energy from renewable and sustainable sources. EU countries import fossil fuels worth more than 1 billion euro per day, which represents an estimated 4% of EU countries’ annual GDP. The dependency of European countries on the bioenergy industry will not only prevent the depletion of energy resources, but will provide a strong position from a geopolitical perspective, and support the GDP’s decline.
The bioenergy industry is the primary source of available renewable energy for final consumption, accounting for 61.2% in European countries. Also, it is a significant index to scale the performance in meeting the ambitions of the national renewable energy action plan (NREAP) goals by the end of 2020. In 2014, the European commission (EC) announced the NREAP’s new targets for European countries by the end of 2030. The scheduled NREAP targets to be achieved in 2030 can play a significant role in developing European countries’ economic systems, energy industry competitiveness, security, and sustainability as follows: lowering greenhouse gas (GHG) emissions by 40% in comparison to 1990, increase the consumption of renewable energy sources by 27%, reducing the production of energy from conventional sources by 27%, and raising efficiency and energy savings by 27% [
1].
Based on a prior study [
1], European countries depend on the bioenergy industry significantly to meet the NREAP targets by 31 December 2020. However, the share of bioenergy in the gross available renewable energy for final consumption represent 91.4%, 89.2%, and 86.9% in Estonia, Poland, Hungary, and Lithuania, respectively. The highest contribution rate of natural biomass sources of available bioenergy for final consumption in 2013 was found to be 31.9%, 31.8%, and 31.6% in Latvia, Finland, and Sweden, respectively. In 2013, bioenergy available for final consumption was 105.1 Mtoe, which represents almost double the amount of bioenergy available for final consumption in 2000. An estimated 74.6% of the available biomass crops were used in the bioenergy industry to generate heat outputs of 78.4 Mtoe, bioelectricity products of 13.5 Mtoe, and biofuel outcomes of 13.1 Mtoe. The most significant share of biomass crops utilized in the bioenergy industry to produce bioheat output to the residential market was 53% and 25.5% in the industry.
The improvement of bioenergy intensity can be achieved through lowering GHG emissions, reducing energy dependency from traditional sources, creating green economic activity, and increasing the rate of employment in Europe. The same study shows that employment requirements in the bioelectricity industry in European countries is three to six folds higher than the employment requirement to produce electricity from traditional energy sources. However, the required employment in the bioenergy industry is higher in comparison to different conventional energy and renewable energy sources due to the extra stages in the generation cycle. In 2013, the bioenergy industry added economic strength in rural areas throughout European countries. Based on the European biomass association statistical report, the figure representing created employment opportunities in the bioenergy industry amounted to 494,550 jobs (64% with solid biomass, 20% with biofuels, 13% with biogas and 3% with waste) in 2013, and the economic added value was estimated at 56 billion euro.
The problem with this study is that bioenergy industry production has a shortage of industrialized fuel supply chains and continued scepticism over whether bioenergy is a sustainable source of energy, namely due to the low rate of bioenergy industry growth. However, so far, the bioenergy industry has not registered significant mass in the European energy combination. Moreover, bioenergy production has no output on minimizing unit costs, and is almost uncompetitive economically with other renewable energy outputs such as solar and wind energies in European energy markets. Following various renewable energy industries in European countries, bioenergy has dealt with serious problems because of the low price of coal imports, low CO2 amounts in the emissions mitigation system, and the regulatory and economic reaction against renewable energy policies such as substantial reductions in government aids. It is fair to question the economic variables of the intensity of bio-energy output in European Continental members, as European countries plan to increase their renewable energy applications to meet the NREAP’s by 31 December 2020.
This research gap leads to the primary questions of the study: Does the ECC region have the proper intensity to provide for the demand in its bio-energy output to achieve the 2030 goal? What are the macroeconomic and microeconomic factors of the intensity of bio-energy output? The current paper aims to investigate the intensity of bio-energy output and the determinants of bio-energy intensity in the ECC. The importance of this study is to define the intensity and pertaining factors, which would impact bio-energy output in the ECC. Moreover, this research assesses the macroeconomic and microeconomic variables of the intensity of bio-energy output in the ECC to detect factors that minimise the intensity of bio-energy outputs and discover how the intensity of bio-energy outputs may shorten bio-energy consumption required to meet the NREAP 2030 goal.
This study may contribute to early empirical bio-energy research by (1) applying various assessors with different validation tests to evaluate the data, (2) checking the intensity of bio-energy outputs between 2005 and 2013, (3) investigating the economic determinants of the intensity of the bioenergy industry in ECC countries. The findings reveal the correlation among economic variables and the intensity of bio-energy outputs in ECC countries between 2005 and 2013. Furthermore, the study’s empirical findings report more profound analysis outcomes, which depend on whether the country is developing or developed (
Table 1).
1.2. The Study Motivation
The reasoning behind this study is that the bioenergy industry shows one of the most capital (physical) efficient transitions from conventional energy sources such as coal to renewable and sustainable energy sources. In 2011, European countries produced more than 850 thousand Gigawatt-hours of power electricity from a solid fossil fuel including coal and lignite, which accounted for 25% of total energy production [
2]. Minimizing the share of coal-fired output generation is an essential part of any decarburization plan. Biomass co-firing and coal-to-biomass are two primary strategies that show the capability to utilize the available coal factories to produce bioenergy products. This can help European countries save billions and produce competitive output in the energy markets, which does not apply to any other renewable and sustainable energy sources.
A significant transformation from traditional energy sources to green and friendly sources is happening due to various factors, such as implicating the shortage of conventional fossil fuel’s domestic supply to meet the local demand of traditional fossil fuel and mitigate the emission of greenhouse gases. Moreover, the production of conventional energy from fossil fuel sources is struggling to meet domestic energy demands from conventional sources in ECC countries. Earlier studies [
3,
4] state that the bioenergy industry is commonly identified as the most hopeful source of renewable energy that has great potential to substitute traditional energy outputs in energy markets. This will help ECC countries to cover the quickly increasing domestic demand for energy stimulated by dramatic economic and population growth, particularly in developing countries in the ECC.
Other studies [
5,
6,
7] related to the growth of the biomass and bioenergy industry have been recently carried out. However, they have concluded that the bioenergy industry’s technical restrictions and limitations are considered to be two of the most significant strategies that have the potential to lead economic growth and development. Previous studies [
8,
9,
10] concluded that the improvement of the supply chain determinants of the biomass and bioenergy industry has great potential for good green economic productivity, functionality, and growth associated with friendly and efficient ecological productivity. This study can investigate the intensity issue and related economic determinants based on two studies [
11,
12] that established an econometric technique to identify the economic variables that impact intensity of bio-energy industry in European region.
The structure of this study will constitute five main sections: 1. Introduction, 2. Literature Review, 3. Materials and Methods, 4. Results, and 5. Conclusion.