Linear and nonlinear TAR panel unit root analyses for solid biomass energy supply of European countries

Biomass is one of the major sources of renewable energy in the World. This paper aims at observing primary biomass energy supply in some EU countries within periods1971–2009 and 1982–2009. Following related two panel data sets for biomass in EU, this work employs linear models and nonlinear threshold autoregression (TAR) models to test linearity against nonlinearity and nonstationarity against stationarity. If nonlinearity is found, then, the next step is to search transition variable and threshold value of the panel data sets. This paper eventually has the purpose to reveal if EU countries converge in the production of biomass in a linear form or nonlinear form. Findings show that panel of Austria, Denmark, Finland, France and Portugal follows nonlinear process and reaches partial convergence in per million primary solid biomass energy supply. However, the involvement of Belgium, Greece, Norway, Poland and Sweden to the panel yields linearity and divergence. One may suggest policy makers of EU and/or OECD, upon conclusion of this paper, to revise their energy policies to stimulate both production and consumption of biomass energy source.