Biodiesel fuels in Sweden: drivers, barriers, networks and key stakeholders Challenge Lab 2014: Sustainable Transport and Mobility Solutions Master’s Thesis in Complex Adaptive Systems and Industrial Ecology Cecilia Hult and Daniella Mendoza Department of Energy and Environment Chalmers University of Technology Gothenburg, Sweden 2014 REPORT NO. 2014:06 Biodiesel fuels in Sweden: drivers, barriers, networks and key stakeholders Challenge Lab 2014: Sustainable Transport and Mobility Solutions CECILIA HULT DANIELLA MENDOZA Department of Energy and Environment Chalmers University of Technology Gothenburg, Sweden 2014 Biodiesel fuels in Sweden: drivers, barriers, networks and key stakeholders Challenge Lab 2014: Sustainable Transport and Mobility Solutions CECILIA HULT DANIELLA MENDOZA c CECILIA HULT AND DANIELLA MENDOZA, 2014. Technical report no 2014:06 Department of Energy and Environment Chalmers University of Technology SE–412 96 Göteborg Sweden Telephone +46 (0)31–772 1000 Cover: The Challenge Lab 2014 takes on biodiesel. Photo “Rapsfeld 2007” by Daniel Schwen is licenced under CC BY-SA 2.5 Reproservice, Chalmers Gothenburg, Sweden 2014 Biodiesel fuels in Sweden: drivers, barriers, networks and key stakeholders Challenge Lab 2014: Sustainable Transport and Mobility Solutions CECILIA HULT DANIELLA MENDOZA Department of Energy and Environment Chalmers University of Technology Abstract This thesis consists of two parts. Part I describes the Challenge Lab method, which is a method developed for students to find a thesis research question to support transition into a sustainable society. The Challenge Lab method was carried out by 12 students during Spring 2014 and contains methodologies, tools, perspectives, theories and frameworks for students to work with complex problems related to sustainable development. This years’ work include backcast- ing, self-leadership, multi-level perspective, systems theory, systems transition, design-thinking, etc. Part II addresses the uncertainties of the barriers and drivers for development, diffusion and use of biodiesel fuel in Sweden and as well as the networks and key stakeholders connected to biodiesel fuels. In Sweden, biodiesel fuels have the biggest market share among the biofuels, 53.4%, but only hold a small market share out of the total vehicle fuels, 4.3% (based on energy content). The aim of this report is to increase awareness and encourage development, diffusion and use of biodiesel fuels (FAME, HVO and DME). The barriers and drivers were identified with the methodology of Functions of Innovation Systems and key stakeholders were identified through Social Network Analysis. The research method was semi-structured interviews with stakeholders as well as literature studies. The the main identified drivers are i) HVO commercialisation and, ii) EU policy on emission standards; and the main identified barriers are i) high production costs of biodiesels compared to fossil diesels, ii) limited state aid (mainly tax exemption) that lacks future oriented vision, iii) low visibility of biodiesels, iv) weak market for biodiesel fuels in a high-blend form, v) petition on regulatory change for HVO, vi) environmental concerns associated with biofuels, vii) feedstock limitations and viii) lack of strong advocacy coalitions. Furthermore, important stakeholders in the Swedish biodiesel market are Preem, Volvo Group and policy makers on national level. Keywords: DME, FAME, HVO, RME, biodiesel, functions of innovation systems, social networks analysis, technical innovation systems Acknowledgements In our endeavours for a sustainable world, the Challenge Lab will hopefully be a small step for mankind towards the goals we are all working for. Daniella Mendoza is responsible for the parts with Functions of Innovation systems and Cecilia Hult is responsible for the Social network analysis parts. The rest of the report are written jointly. Thanks We would like to thank the Challenge Lab participants, for an unforgettable journey. We would also like to thank our examiner John Holmberg, our supervisor Ulrika Lundqvist, our project manager David Andersson and Kamilla Kohn Rådberg. You have all been very helpful in the confusion that follows a pilot project. Finally, we would also like to thank our families, friends and dear ones. Without love and friendship, the world would be a dull place. Permissions The photo of the wall (figure 6) is printed with the permission of the photogra- pher Olivia Zhiyu Tang. Front image “Rapsfeld 2007” by Daniel Schwen is licenced under Creative Commons Attribution-ShareAlike 2.5. Available at flickr.com. Figure 5 is from the article “Backcasting - A Natural Step in Operationalising Sustainable Development” (Holmberg, 1998). vi Contents 1 Introduction 1 1 Background 1 2 Aim and objectives of thesis 2 3 Scope and limitations of thesis 3 4 Outline of thesis 3 2 Challenge Lab 5 1 Introduction 5 1.1 Background 5 1.2 Aim and objectives 7 2 Method 8 2.1 Overview 8 2.2 Outside-in 10 2.3 Inside-out 16 2.4 System theory 24 2.5 Identifying hot-spots 26 2.6 Project formation 30 3 Results 33 3.1 Outside-in 34 3.2 Inside-out 41 3.3 System theory 42 3.4 Identifying hot-spots 42 3.5 Project formation 43 vii 3 Biodiesel 47 1 Introduction 47 1.1 Background 47 1.2 Aim and objectives 50 1.3 Scope and limitations 50 2 Theory 51 2.1 Biodiesels 51 2.2 Functions of Innovation Systems 57 2.3 Social network analysis 61 3 Method 62 3.1 Functions of Innovation System 62 3.2 Social network analysis 64 3.3 Interviews 65 4 Results 66 4.1 Functions of Innovation Systems 67 4.2 Social network analysis 79 4 Discussion and recommendations 89 1 The Challenge Lab 89 1.1 The Challenge Lab aims 89 1.2 The Challenge Lab method 94 1.3 The tools and frameworks 95 2 Biodiesel and stakeholders 98 2.1 Results 98 2.2 Method 101 5 Conclusion 103 1 The Challenge Lab 103 2 Biodiesel 104 Bibliography 107 Appendix A Contact list 118 Appendix B Standardised questionnaire 119 Appendix C List of published articles and authors 122 Appendix D List of conferences and participants 128 viii List of Figures 1 Triple helix and knowledge triangle models 6 2 Means used in the Challenge Lab method 9 3 Model of Challenge Lab method 10 4 Means used in the outside-in step of the Challenge Lab method 11 5 Backcasting methodology 12 6 The working wall 12 7 The funnel 14 8 The sustainability compass 15 9 Means used in the inside-out step of the Challenge Lab method 17 10 Theory U 19 11 The 5R model for good dialogue 23 12 Triangle and circle time for dialogue 24 13 Means used in the system and transition theory step of the Challenge Lab method 25 14 Means used in the identifying hot-spots step of the Challenge Lab method 27 15 Means used in the project formation step of the Challenge Lab method 30 16 Design thinking and multi-level methodology 31 17 World population growth 35 18 Gross domestic product over time 36 19 Primary energy supply 37 20 Oil discoveries 37 21 Land use in 2007 38 ix 22 The compass realisation 40 23 Greenhouse gas emissions worldwide, EU and in Sweden by sector 48 24 Transport emissions worldwide, EU and in Sweden by mode 48 25 Market share per fuel type in Sweden, 2012 53 26 Market share of biodiesels per company 53 27 Use over time of biofuels for transportation in Sweden 68 28 Estimated production costs of various biofuel systems expressed as per litre of petrol 70 29 Typical GHG savings from biofuel production 75 30 Barriers and drivers to the functions of innovation systems of the biodiesel system in Sweden 78 31 Influence network based on stakeholder interviews 81 32 Article co-authorship network 82 33 Conference participance network 85 x 1 Introduction 1 Background Environmental concerns are what worries Swedes the most (Weibull, Oscarsson, and Bergström, 2013). This is not surprising considering the unsustainable world of the 21st century. But sustainability is not only the environmental question of pollution that the Swedes worry about. The Brundtland Commision (Brundtland, 1987) states that sustainable development mean “to meet the need of the present without compromising the ability of future generations to meet their own needs”. Future generations will not only have needs of clean air and water, but also access to good health, education, and shelter from flooding and other natural disasters. Climate change, pollution, social unrest and disease are a few of the world problems that need to be addressed so that the children of tomorrow can have a fulfilling life. It is only natural that academia and academic scholars take on the challenge of creating a sustainable world. They have the knowledge and the predisposition to seek solutions to complex and complicated problem. However, both the private and the public sectors also face the challenge of building a sustainable society. The Challenge Lab was created by Chalmers, and amongst others, its vice president for sustainability John Holmberg, as one answer to how to address complex societal challenges. The aims for the Challenge Lab are i) to combine diverse competencies and to bring them together to find innovative solutions to complex problems associated with sustainability and ii) to be a “neutral 1 1. Introduction arena” that brings stakeholders together in dialogue on sustainability topics. Bringing academia, the public and private sector together with students as a common denominator opens up for new and innovative solutions. In the pilot of the Challenge Lab, 12 students at Chalmers wrote their master’s theses during Spring 2014 on topics related to sustainability while interacting with both industry and the public sector. For the pilot run of the Challenge Lab, the targeted subject was transportation in the Gothenburg area. The Transport and mobility solutions cluster is one out of five identified knowledge clusters in the Gothenburg region (Andersson, 2013).