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Sweden Biofuels Annual Report 2008
The USDA FAS GAIN Report shows that Sweden is among the leading countries worldwide in the utilization of renewable resources for energy production and is firmly in the forefront with regard to biofuel utilization within the transport sector as well. This is due in large part to measures taken by the Government of Sweden to promote the utilization of biofuels and other renewable fuels, mainly through tax incentives.
SECTION I. DOMESTIC POLICY ENVIRONMENT
The Government of Sweden (GOS) has established a long-term energy policy aimed at supplying domestic needs solely from renewable energy sources. Increasing energy efficiency and renewable energy sources are high priorities for Sweden, which already obtains 28% of its energy supply from renewable sources.
Environment taxes, fees and other policy measures have been introduced in order to achieve the objectives set out in the government’s ambitious energy and climate policy. The Swedish Government is investing SEK 420 million in energy efficiency measures in 2008-2010. These measures will be implemented in policies related to environment, forestry, agriculture and energy in areas such as climate research, pilot projects for second-generation bio-fuels, wind power, sustainable yield of bio-energy in agriculture and forestry etc. In addition, the Government is providing a further SEK 1 billion in the field of climate and energy policy for the same period of 2008-2010.
Although Sweden has a strategy for reducing national emissions of greenhouse gases, Sweden’s efforts in the climate change negotiations are largely channeled through the European Commission. Sweden has been a driving force in EU decisions for ambitious climate targets and was one of the leading member-countries in bringing about an agreement to cut greenhouse gas emissions by at least 20% from 1990 levels by 2020. Sweden wants to set an example that it is possible to link economic growth with proactive climate policies. In Sweden, emissions of greenhouse gases have decreased by almost 9% between 1990 and 2006 while the GDP increased by 44% during the same time. A key reason for this is believed to be the introduction of the carbon dioxide tax in 1991.
In January 2008, the European Commission presented a new climate and energy package. According to the new EU climate target proposal, Sweden is to reduce carbon dioxide emissions by 17 percent and increase the use of renewable energy sources to 49% by 2020, using 2005 as a base year. Negotiations have begun in the EU, and the decision should be made in the beginning of 2009. Sweden will play an active role in persuading the world’s countries to agree on a new climate treaty by 2009 at the latest. Sweden will hold the Presidency of the EU in the second half of 2009 when the new global climate agreement beyond 2012 will be finalized and thus, Sweden will have an important role to play in fighting climate change and leading negotiations to a successful conclusion.
The share of renewable energy sources in the Swedish energy system has increased rapidly during the past decade, from 18% of the total energy supply in 1970 to 28% today. Biomass accounts for the greater part of the increase. Despite rising industrial output, the use of oil has fallen from more than 70% of the total energy supply in 1970 to around 30% in 2006. Electricity production in Sweden is basically fossil-free and comes mainly from hydro power and nuclear power.
| Supply and Use of Energy in Sweden 1970 and 2006, TWh | ||
|---|---|---|
| 1970 | 2006 | |
| Nuclear power | 0 | 194 (33%) |
| Crude oil and oil products | 350 | 201 (31%) |
| Biofuels incl. peat | 43 | 116 (17%) |
| Hydro power | 41 | 62 (11%) |
| Coal and coke | 18 | 28 (4%) |
| Natural gas, gasworks gas | 0 | 11 (1.5%) |
| Heat pumps | 0 | 6 (1%) |
| Wind power | 0 | 1 (0.15%) |
| Import-Export electricity | 4 | -6 |
| Total energy supplied | 456 | 623 |
In the transport sector, Sweden is ahead of most other European countries. Sweden was one of the few countries that met the goal of the European Commission’s biofuel directive, which instructed member countries to replace 2% of all gasoline and diesel with biofuels by the end of 2005.
Adapting transport to climate concerns is one of the main challenges facing Sweden. Although sales of green cars continue to set new records in Sweden (every third new car now is a green car) and the carbon dioxide emission for new cars is falling quickly, the transport sector still accounts for a large share of national emissions. The government is working for a transport sector that has a decreasing impact on the climate by developing taxes, regulations and economic instruments that favor environment-friendly choices. As an example, the Swedish Government increased the carbon dioxide tax by SEK 0.06 per kg carbon dioxide from January 1, 2008.
EU Directive 2003/30/EC requires that 5.75% of energy used for transportation in 2010 shall be from biofuels. The EU has also set a new target for 2020; by then 10% shall be biofuels in all fuel use. In order to reach these goals, Sweden is working actively in the EU for an increase of low-level blends of ethanol to 10% in gasoline. Sweden sees the EU directive that permits a maximum of 5% blend a major obstacle to the continued rapid introduction of biofuels. In Sweden, all traditional gasoline contains 5% ethanol.
A. Policies for Supporting and/or use of Bio-Fuels
In Sweden, the promotion of biofuels is a component of the government’s strategy of longterm sustainable development, including the promotion of renewable energy sources and a more environment-friendly transport sector.
Sweden promotes the use of ethanol and biodiesel through tax relief. There are no energy taxes for ethanol or biodiesel. Without tax relief, these fuels would be unable to compete with conventional gasoline and diesel at today’s production costs.
| Swedish Energy Taxes 2008, SEK | ||||||
|---|---|---|---|---|---|---|
| Energy Source |
Energy Tax |
Carbon Dioxide Tax |
Sulfur Tax |
Tot.Carbon Dioxide and Energy Tax |
VAT | Total |
| Conventional Gas (SEK/liter) |
2.95 | 2.34 | 0 | 5.29 | 1.23 | 6.61 |
| Diesel Oil (SEK/liter) |
1.23 | 2.88 | 0 | 4.11 | 0.47 | 4.58 |
| Ethanol/RME | 0 | 0 | 0 | 0 | 0 | 0 |
| SEK 1 equals about US$ 0.17 | ||||||
In addition to the tax incentives, there are a number of different policy instruments currently used in Sweden for promoting the use of biofuels and environment-friendly cars, for example:
- Access to environment-friendly fuels throughout the country. Since April 2006, all major fuel stations in Sweden are required to sell at least one type of biofuel.
- The Swedish government has introduced a cash bonus of SEK 10,000 (USD 1,665) to private individuals who buy a new “green” car. The program is scheduled to run from April 1, 2007 until December 31, 2009.
- Free parking for green cars.
- As of August 2007, there is a permanent congestion charge in Stockholm which has had a positive impact on the environment. Green cars are exempt from this charge.
- A tax for light-duty vehicles based on carbon dioxide emissions instead of weight was introduced in 2006. It is aimed at motivating car buyers to choose fuel-efficient vehicles.
- As of 2007, at least 85% of all cars purchased by government authorities and 25% of emergency services vehicles have to be environmentally friendly.
- Expansion of biogas stations continues.
According to a recent report issued by the Government’s Globalization Council on May 27, 2008, Sweden is changing its strategy for environment-friendly cars. According to the report, electric is better than ethanol. The report proposes that a cash bonus of SEK 20,000 (USD 3,330) for buying an electric car should be introduced (compared to SEK 10,000 for other types of environment-friendly cars). It is believed that the report will have a certain impact, considering the fact that five ministers are members of the council, including the Minister of Enterprise and Energy.
In addition, the Swedish Government recently announced that it is investing SEK 240 million (USD 40 million) to partially finance research into environmentally friendly vehicles. This project is a collaboration between the Swedish car and power industries to develop plug-in hybrids, the next generation of hybrid vehicles that can be charge directly from a wall socket.
B. Policy for Supporting Production of Bio-Fuels Feedstock
When it comes to support for biofuels feedstock production, EU regulations offer farmers two systems for encouraging the cultivation of energy crops: the energy aid that was introduced with the 2003 CAP reform and the already existing scheme for using set-aside land for the cultivation of crops for non-food uses. The energy aid of €45 per hectare is available to farmers who produce energy crops. It is applied on a maximum guaranteed area in the whole EU, of 2 million hectares.
The Swedish Board of Agriculture is proposing to the Government that special investment support for biogas should be created under the Rural Development Program over the period 2009-2013.
Also, there is an investment support for planting forestry for energy use in Sweden.
D. Size of Total Motor Vehicles Petroleum Based Energy Market
The transport sector is Sweden’s single largest source of greenhouse gases and emissions are still increasing. Sweden has a large number of fuel-thirsty vehicles compared with other European countries. At the same time, Swedish motorists are increasingly choosing environmental-friendly cars. Sales of green cars continue to set new records and Sweden is currently showing the world’s strongest growth in green car sales. During the first six months of 2008, green car registrations increased by 89%. In June 2008, a total of 8,110 new green cars were registered, representing 33.8% of the market (17.2% in 2007) of which 62% were run on something other than gasoline, namely, diesel, E85, gas or electric hybrids. Three years ago, in 2005, the share was only 15%. The sector estimates that 100,000 green cars will be sold in 2008, representing an increase of 86% compared with 2007.
In 2007, a total of 55,000 green cars were registered in Sweden, an increase of 49% from the year before and 18% of all newly registered cars (13% in 2006). The increase reflects the Swedish Government’s decision to require that larger gas stations sell at least one type of biofuel, the introduction of the green car rebate in April 2007 and raised carbon dioxide taxes.
In 2007, ethanol cars were the most common type of green cars (64.9%). Green cars also include cars powered by gas (3.1%), hybrid cars (6.2%) and gasoline (13.7%) and diesel cars (12.1%) that emit less than 120 grams of CO2 per kilometer.
Use of biogas in Sweden has increased in the past few years. Many Swedish communities choose biogas to run local buses and distribution vehicles. The Swedish Government is providing grants for investments in building more filling stations for biogas. It is estimated that about 20% of Swedish vehicles will run on biogas in about 10-20 years.
Further Reading
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- | You can view the full report by clicking here. |
July 2008
