Biofuels in Spain: Market penetration analysis and competitiveness in the automotive fuel market

For several years the European Union (E.U.) has been promoting the use of biofuels due to their potential benefits such as the reduction of dependence on foreign energy imports (the raw materials can be produced within the E.U.), the more stable fossil fuel prices (they can replace fossil fuels on the market), the greenhouse gas (GHG) reduction (biofuels’ raw materials fix CO2 from the atmosphere) and the fact that they can represent an additional source of income for the primary sector (biofuels’ raw materials are vegetables that can be grown and harvested). Despite the public aids (direct and indirect), biofuels are not competitive with fossil fuels at present, but it is possible that in the future the environment conditions change and biofuels might become competitive. It is difficult to assess whether this will happen or not, but it is possible to make an assessment of a future situation. This article presents two analyses with one objective: to determine if biofuels might become competitive in the future. The first analysis examines the dependencies of two quotations which have a strong relationship with fuels: the crude oil quotation and the CO2 bond quotation. The analysis of these relationships may help to forecast the future competitiveness of biofuels. For instance, biofuels’ future competitiveness will be higher if their raw material costs are not related to crude oil quotations or if they are related in a negative way (the higher the crude oil quotations the lower the raw material biofuels’ cost). The second analysis focuses on the market penetration of biofuels in the Spanish market. There are data related to biofuels monthly consumption in Spain since 2007 and it is possible to know if biofuels are gaining market quota since the