Assessing the benefits of sustainability certification of biofuels: how much are consumers willing to pay?

Abstract

The European Union (EU) considers biofuels as an option to reduce GHG emissions. However, biofuels mandates are controversial because of the concerns regarding unintended environmental, social and economic consequences. EU renewable energy directives introduced some requirements that biofuels should meet to be certified as sustainable. Today almost all the EU’s biofuel consumption intended for transport complies with the EU’s sustainability requirements. This paper investigates social preferences in Spain for sustainable biofuels and, in particular, the willingness to pay (WTP) for sustainable biodiesel. To do that, a choice experiment approach was used with data from a survey conducted in Zaragoza. Results indicate that consumers are willing to pay, a premium of 5% for biodiesel. This premium is slightly lower than the extra-price they are willing to pay for the convenience of finding biodiesel in their usual petrol station (6%). We identified two segments of consumers according to their WTP for the different biodiesel characteristics. One segment was more willing to pay for biodiesel while the other one attached more importance to fuelling convenience and biodiesel availability.

Keywords

• biodiesel
• choice experiment
• preferences
• spain