Biofuel in Sweden

Biofuel In Sweden

Sweden has achieved the largest E85 flexible-fuel vehicle fleet in Europe, with a sharp growth from 717 vehicles in 2001 to 195,545 by May 2010. Also, Sweden has the largest ethanol bus fleet in the world, with over 600 buses running on ED95, mainly in Stockholm Most ethanol fuel in Sweden is imported, mainly from Italy and Brazil. Dozens of municipalities have started producing biogas from sewage. At the end of 2009 there were 23,000 gas vehicles and 104 public filling stations.

The recent and accelerated growth of the Swedish fleet of E85 flexifuel vehicles is the result of the National Climate Policy in Global Cooperation Bill passed in 2005, which not only ratified the Kyoto Protocol but also sought to meet the 2003 EU Biofuels Directive regarding targets for use of biofuels, and also let to the 2006 government's commitment to eliminate oil imports by 2020, with the support of BIL Sweden, the national association for the automobile industry.

In order to achieve these goals several government incentives were implemented. Biofuels were exempted of both, the CO₂ and energy taxes until 2009, resulting in a 30% price reduction at the pump of E85 fuel over gasoline and 40% for biodiesel. Furthermore, other demand side incentives for flexifuel vehicle owners include a SEK 10,000 (USD 1,300 as of May, 2009) bonus to buyers of FFVs, exemption from the Stockholm congestion tax, up to 20% discount on auto insurance, free parking spaces in most of the largest cities, lower annual registration taxes, and a 20% tax reduction for flexifuel company cars. Also, a part of the program, the Swedish Government ruled that 25% of their vehicle purchases (excluding police, fire and ambulance vehicles) must be alternative fuel vehicles. By the first months of 2008, this package of incentives resulted in sales of flexible-fuel cars representing 25% of new car sales.

On the supply side, since 2005 the gasoline fulling stations selling more than 3 million liters of fuel a year are required to sell at least one type of biofuel, resulting in more than 1,200 gas stations selling E85 by August 2008. Despite all the sharp growth of E85 flexifuel cars, by 2007 they represented just 2% of the 4 million Swedish vehicle fleet. In addition, this law also mandated all new filling stations to offer alternative fuels, and stations with an annual volume of more than 1 million liters are required to have an alternative fuel pump by 31 December 2009. Therefore, the number of E85 pumps is expected to reach by 2009 nearly 60% of Sweden’s 4,000 filling stations.