Assessing the power of biofuels and green technology innovation on the environment: The LCC perspective

The global concerns over the climate crisis have led countries to reconsider their energy options, directing the focus of policymakers toward clean energy sources that can support a transition to a more sustainable future. Herein, biofuel energy, with its clean characteristics, has become a vital alternative to fossil fuels, paving the way for a sustainable environment. In this context, this study explores the impact of biofuel consumption and green technology (GT) innovation on the load capacity factor. To this end, the study applies the regularized common correlated estimation to panel data from the top five biofuel consumer countries over the period 2002–2021. The empirical outcomes reveal that (i) the load capacity curve (LCC) hypothesis is invalid; (ii) biofuels are essential elements of a sustainable energy system that ensure better access to eco-friendly energy and contribute to environmental quality; and (iii) innovation in GTs contributes to environmental quality. In light of the findings, the study reveals the essential role of biofuels and GT innovation on the path toward a greener future, and policymakers should consider the power of these factors in formulating environmental policies.