Renewable energy trade in Europe : Efficient use of biofuels by C

The purpose of this study is to examine the factors affecting the trade flow on forestry products within the European Union. A gravity model is used to estimate the factors affecting the trade flow. The study uses a panel data set with observations of two forestry commodities between 28 EU member countries over the years 2005 to 2014. The commodities are Wood chips and particles (HS4401) and Industrial roundwood (HS4403). The parameters are estimated with fixed effects, the result shows for HS4401 that exporting countries GDP affect the trade flow positively (0.64) and the importing countries GDP affect positively as well (0.36). For HS4403 the exporting countries GDP affect the trade flow negatively (-0.69) and the importing countries GDP affect positively (0.80). With the estimated parameters a forecast of HS4401 over the years 2015 to 2020 is made, the forecast shows an increase in the trade flow by 29.3%. This suggests an improved efficiency in reaching the EU climate and energy targets. That is, the trade in biofuels is expected to increase due to economic growth, which in turn works towards achieving the renewable and CO2 emission targets in Europe.