Study of the financial instruments to support the market introduction of advanced biofuels and renewable fuels in the EU
Rosero Abad, S.A.
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This paper aims to gather the insights of experts in the field of Advanced biofuels and, based on their input, explore the mechanisms available for biofuels that could be effective in introducing advanced biofuels in the market. The paper will start by providing a small overview of the financial mechanisms that can be used for the market introduction of advanced biofuels. A Technology Specific Innovation Systems approach will be used to carry out a dynamic analysis of advanced biofuel’s technological development by mapping the actors, networks, and institutions where development is lobbied and where actions for change are promoted. Hekkert’s seven functions of innovation systems will be used to describe and explain technological change and diffusion. The role of these functions in the development of advanced biofuels will be observed and possibilities of learning by exchange will be underpinned. A cross-case study will be carried out, analyzing the functions in four countries: Sweden, Austria, France and Finland. In the seven functions, Sweden had a better performance than the other three countries overviewed. National efforts and public finance support at national level were significant in setting the direction of change in the innovation system. The analysis of function 5, Market Formation, indicates that the Swedish taxation scheme has the most lessons to learn from: it was introduced in a way that allowed adaptation and avoided secondary effects as carbon leakages. Finland and France have had similar approaches, but they have combined taxes with a quota system since an earlier stage. This shows the options and opportunities for other countries who do not want to introduce high taxation mechanisms. Lessons from Austria point to the fact that taxes should be set at a level high enough so that consumption by neighboring countries and consequent increase in CO2 emissions could be avoided.