Evaluating the profit efficiency of bioenergy industry and its determinants in EU28 region

Abstract

Purpose The purpose of this study is to evaluate the profit efficiency of bioenergy industry and its determinants in EU28 region roadmaps for the transition towards energy efficiency which is increasingly perceived by stakeholders, researchers and the public as a pathway to bring dependency on fossil resources to a significant reduction. Many studies overlooked the importance of profit efficiency as a factor for bioenergy industry business improvement. More so, external environmental variables can play a key role in achieving profit efficiency in the industry. Design/methodology/approach This paper seeks to answer the questions on the following: (1) the profit efficiency level using the data envelopment analysis (DEA) approach in the EU28 region during the period between 1990 and 2018; and (2) to explore the impacts of external environmental variables on the profit efficiency level using panel regression model in the EU28 region during the period between 1990 and 2018. Findings Results revealed that gross domestic product, size of biomass and investment are essential for the development of the bioenergy industry and positively influence on profit efficiency level. The increase in temperature change decreased the profit efficiency level during 1990–2018. Research limitations/implications For those profit-inefficient bioenergy industries in countries such as Cyprus and Ireland, participation in innovative programs, expanding a knowledge-based economic system and implementation of support policy for bioenergy technologies, by investing in biomass sources that are suitable for their respective renewable energy development will enhance specialization, resource efficiency and improved profitability can be expected in future. Originality/value Unlike other previous studies, this study investigated the profit efficiency by applying the DEA statistical method. Moreover, the authors have applied a second regression analysis to estimate the impacts of macroeconomic and microeconomic variables on the profit efficiency level. This study has focused on the EU28 region, including both developed and developing countries, to compare the level of profit efficiency levels in the selected sample. The authors have applied data panel analysis for the period from 1990 to 2018. No previous study has applied the methods, samples and periods as those used in this study. Therefore, this study contributes significantly to the bioenergy industry specifically and the renewable energy industry in general and to the associated extant research.