Biofuel research and development technologies: a Load Capacity Curve analysis for European sustainable development

Abstract

In the face of accelerating climate change and resource depletion, the sustainability of biofuels has become an important research focus in environmental economics. While previous studies have extensively examined the role of biofuel consumption in reducing CO₂ emissions, the environmental effectiveness of biofuel-specific investments in research and development (R&D) remains largely unexplored. This study fills this gap by empirically assessing the impact of biofuel-related R&D expenditures on the Load Capacity Factor (LCF). Using annual panel data for ten European countries over the period 2009–2023, the analysis rigorously tests the Load Capacity Curve (LCC) hypothesis, which postulates a non-linear, U-shaped relationship between economic growth and ecological balance. The study makes a novel theoretical contribution by integrating biofuel innovations into the LCC framework. Three second-generation panel estimators are used to ensure robust conclusions in the presence of cross-sectional dependence (CSD). The results consistently confirm the LCC hypothesis and reveal that biofuel R&D expenditures have a positive effect on LCF improvement. Furthermore, the estimated turning points indicate heterogeneous ecological transitions across countries, emphasizing the role of income levels and technological capacity in shaping sustainability pathways. By linking the biofuel innovation literature to the LCC framework, this study provides new insights for policymakers seeking to align renewable energy development and technological innovation with the Sustainable Development Goal 7 (SDG-7) targets. The findings highlight the necessity of targeted biofuel R&D strategies to enhance biocapacity, reduce ecological pressure, and guide European economies towards a more resilient and sustainable future.