The world’s car makers are racing each other to produce powerful new models that run on ethanol-based fuels for the booming Swedish market.
Sweden is a world leader in the use of biofuels. With the Swedish government investing a great deal of money in subsidising the rise of ethanol-powered cars, over 40,000 cars on the road here (1 percent of the four million cars) are flex-fuel models designed to run on a blend of up to 85 percent ethanol (E85).
In March 2007, the Environment Ministry announced a rebate of 10,000 Swedish Kronar (1,080 Euro) for those who buy an eco-car. Under the previous government these were already 20 percent cheaper to insure, taxed less and exempt from the Stockholm congestion charge. In addition, the untaxed biofuels amounts to some 1 billion Swedish Kronar (109 million euro) of government subsidy.
The recently elected conservative government of Fredik Reinfeldt, is prepared to spend another half-billion Swedish Kronar (55 million euro) on the development of biofuels.
Sweden has also just signed an agreement with the United States, to work together on the development of biofuels. “The U.S. can learn from us, as Sweden is so far in front, and Swedish companies need U.S. capital, so it seems like a win-win situation,” Frank Nilsson at the Swedish Energy Ministry told IPS.
The first half of 2007 saw 23,058 flex-fuel vehicles sold in Sweden, an increase of 25 percent over the same period last year. Likewise, during May 2007, the sale of E85 (85 percent ethanol and 15 percent petrol) rose by 46 percent, compared with the same period in 2006, while sales of petrol fell by 3.3 percent over the same period.
The long-term ambition of the Swedish government is to free Sweden from dependency on petroleum entirely. In 2005, the then Socialist-led government stated its ambition to “break Sweden’s dependence on fossil fuels by 2020”, and the current conservative government has indicated it will continue along this path, with biofuels playing an important part.
To this end, the previous government set up the Commission for Oil Independence, which published its findings in July 2006. According to its report, the next few years need to see a twelve-fold increase in the amount of domestic biofuel production.
Currently, all Sweden’s biofuel is imported from the sugarcane plantations of Brazil. But already, there are doubts about the sustainability of importing ethanol from Brazil. Sweden agreed to abolish a special tax on Brazilian ethanol imports during a visit of President Lula da Silva to Stockholm on Sep. 11.
The Commission had warned: “In the present situation, imports of Brazilian ethanol would be economically advantageous for Sweden. However, with increased demand on the world market, we can expect higher prices and an ‘upward price adjustment in relation to our own domestic production’.”
This has led to a push by the Swedish government for ‘second generation’ biofuels, such as ethanol made from wood cellulose.
Sweden hopes to crack the secret of making ethanol and diesel fuel cheaply from forest materials – such as byproducts from this densely wooded country’s large logging industry. Currently, the ‘black fuel’ method is very fuel intensive, and hence not commercially viable.
Martin Larrsson of the Ministry of the Environment told IPS that he could see subsidies for ‘first generation’ biofuels (that is imported Brazilian ethanol) decreasing, and subsidies for ‘second generation’ biofuels (such as wood-derived ethanol) increasing.
The oil companies are involved in this process, as their refining know-how and infrastructure can easily be turned to the manufacture of fuel, and products such as plastics in biomass factories. Ingla Hadga, of the Swedish Petroleum Institute, which represents oil giants operating in Sweden, such as Shell, Mobil and Statoil, told IPS that the oil companies are quite happy with the idea of moving into biofuels — and that they don’t see any threat to petroleum’s future from this sector just yet.
In the mean time, the Swedish government continues to push for lower EU tariffs on imported ethanol. In February 2007, Sten Tolgfors, minister for foreign trade, complained that current tariffs of 1.80 Swedish Kronor per litre of ethanol (0.20 Euro) effectively amounted to a 60 percent increase in the price. Tolgfors also stated that “Free trade helps countries use their comparative advantages. Tariffs undermine these and distort the conditions for production.”
The paper industry is also involved in the development of cellulose-based vehicle fuels. The experimental Chemrec plant, in Piteå, in the extreme north of Sweden, is working to turn a paper pulp byproduct into fuel.
Maria Grahn, of Chalmers University of Technology, told IPS that this “black liquor” is usually burnt off to generate heat by the paper mill, but Volvo hope that this can be turned, by a process of gasification, into diesel, which can power their heavy-tracked vehicles.
In January 2007, Volvo and VantagePoint, a U.S. venture capital firm, pledged a 10 million dollars investment in Chemrec.
“Chemrec could dramatically change the profitability of pulp mills and enable them to participate in the exploding alternative fuels industry,” said Bernie Bulkin of Vantage.
A similar clean hydrogen-rich synthesis gas or CHRISGAS plant – from cellulose – located in south-central Sweden, run by Växjö University, and also funded by the EU, received 20 million euro from the Swedish Energy Agency in November 2006, conditional on industry providing 7 million euro, probably from the car and oil industries.
But not everyone is happy about the idea of generating energy from Sweden’s forests. In May 2007, Bertil Leijding, boss of Sweden’s SCA Norrbränslen, one of Europe’s largest sellers of wood fuel for burning, warned that existing forestry industries risked being pushed out by the burgeoning, and state-subsidised ethanol industries.
The World Rainforest Movement has warned that “converting pulp mills in the North to biorefineries will drive the expansion of industrial tree plantations in the South”, as the growing wood hunger leads to companies from Sweden and Finland expanding their cultivation of quick-growth forests in countries such as Brazil.
The international charity Grain, which prefers to use the term “agrofuel”, recently warned that “the wide-scale cultivation of agrofuels will actually make things worse in many parts of the world, notably South-east Asia and the Amazon basin where the drying of peat lands and the felling of tropical forest will release far more carbon dioxide into the atmosphere than will be saved by using agrofuels.”
“We need to make a clear separation between biogas from waste, like landfill and manure, on the one hand, and between agrofuels from monoculture plantations on the other,” Almuth Ernsting, BiofuelsWatch, told IPS.
A source in the Green Party – not in government any more – said: “There is a need to establish socially and environmentally friendly forms of ethanol manufacture. We clearly cannot have the whole world using western levels of car use, running on ethanol.” IPS