As an integral part of the ‘bio-economy’ and as a source of renewable energy, biofuels have the potential to greatly enhance the safety of our energy, economic soundness, and the quality of our environment. Based, on the above concern, this study specifies the objectives to explore the impact of biofuels on economic expansion in EU countries. More particularly, this study specifies five objectives that is (i) to examine the empirical impact of biofuel production on economic expansion in the EU, (ii) to investigate biofuel consumption's empirical impact on EU economic expansion, (iii) to explore the relative importance of the impact of biofuel production on biofuel consumption in the EU, (iv) to investigate the causal relationship between biofuel variables and economic growth, and (v) to investigate impact of bio-economy on financial development, and vice versa. This study uses annual panel data for the experiments over the period 2001 to 2019. Particularly, considering the data availability in the European Union zone, this study selects Austria, Belgium, Germany, Spain, Finland, Italy, France, Netherlands, Portugal, and Sweden as the study sample countries. In experimental methods, this study considers both unit root test and panel cointegrated test output. Considering the output of the panel co-integrated test, this study considers the experiment of the cointegrated panel regression, more particularly Panel Fully Modified Least Squares (FMOLS) and later compares the result with another panel cointegrated model, Panel Dynamic Least Squares (DOLS) models. This study finds several findings (i) biofuel production has significant impact on economic expansion in the EU, (ii) biofuel consumption has significant impact on economic expansion in the EU, (iii) the impact of biofuel production on economic growth is relatively greater than that of biofuel consumption, (iv) GDP causes both the production of biofuels and the consumption of biofuels, (v) biofuel consumption have positively significant impact on financial development, similarly, financial development also positively impacts on biofuel consumption. The implication of this study is that the findings of this research provide policymakers with a chance to emphasize the development of biofuels considering the economic growth perspective.