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Home , Biodiesel by region

Past, present and future energy blend

Helen Lindblom Swedish Energy Agency 2011-08-22 Outline of presentation

• About the Swedish Energy Agency • Global use of • Swedish use of biofuels • policy in EU/ • Outlook for 2020

The Swedish Energy Agency

• The Swedish Energy Agency is a government agency for national energy policy issues. The Agency’s headquarters are in Eskilstuna and it has around 300 employees. • The Swedish Energy Agency operates in various sectors of society to create conditions for an efficient and sustainable energy use and a cost- effective Swedish energy supply. • Our mission is to promote the development of Sweden’s energy system so that it will become ecologically and economically sustainable. This means that energy must be available at competitive prices and that energy generation must make the least possible impact on people and the environment. In simple words, a smarter use of energy!

Our organisation

Energy Analysis: Analysis of the energy system, energy markets and energy/climate policy, forecasts, statistics Energy Technology: Runs the swedish energy research programme (ordering, funding and evaluation of research, development and demonstration of new energy technology) Energy Efficiency: Energy efficiency improvment in housing, commercial premises and industry. Developing and monotoring the municipal energy and climate advisory service, testing of energy consuming products Market Development: Making business from Swedish research by bringing together researchers and business developers, contractors, customers and capital. Also international climate policy and CDM/JI projects.

Outline of presentation

• About the Swedish Energy Agency • Global use of biofuels • Swedish use of biofuels • Biofuel policy in EU/Sweden • Outlook for 2020

Global use of biofuels

World transport energy use by fuel Use of and by region Ethanol Biodiesel Petrol Diesel 100% 90% 2% 80% 70% Other 60% 50% EU 44% 40% 53% 30% 20% USA 10% 0% Ethanol Biodiesel

• Biofuels stand for 2 % of global transport energy use, ethanol is by far the most common biofuel • USA and Brazil main producers and users of ethanol (90 % of global supply/use) • Biodiesel is mainly produced/used in Main inputs for production

• Ethanol: – USA: Corn – Brazil: Sugar cane – Europe: Cereals, wine residue etc. • Biodiesel: – Europe: – Asia: – USA: Soy oil Market for biofuels

• Demand is driven politically, through policy measures. Biofuels cannot compete with fossil fuels today without some kind of support (exceptions do exist, but are few). • Main reasons for biofuel policy: – Security of supply (Brazil and USA) – Agricultural sector – Climate change (EU) • The global trade of ethanol is quite complex as ethanol is treated as an agricultural product. Both the USA and EU have high import duty in order to protect domestic production. – E.g. the import duty of ethanol to the EU is 19,2 EUR per 100 liters. The world market price is normally around 30-40 EUR per 100 liters excluding import duty  Ethanol price including duty: 40 + 19 = 59 euro/liter. Outline of presentation

• About the Swedish Energy Agency • Global use of biofuels • Swedish use of biofuels • Biofuel policy in EU/Sweden • Outlook for 2020

Energy use in Sweden 1970-2010

(exkluding losses in conversion, transformation and nuclear power)

500

450

400 International transport 350

300 National transport

250 TWh 200 Residential, services etc. 150

100 Industry

50

0

- End use of energy in industry and housing has been constant (due to large efficiency improvements and changes in energy carrier) - The transport sector energy use has almost doubled from 56 TWh in 1970 to 96 TWh in 2010 (from 70 to 126 TWh when international transport is included). - National transport accounts for ~25 % of Swedish energy use. Use of bioenergy in Sweden (2009)

Residential sector 12% Transport sector 4% District heating 33%

Industry sector 40%

Electricity production 11% Total: 127 TWh bioenergy Transport sector energy use

(including international shipping and aviation)

140,0

120,0

100,0 Renewable motor fuels Natural gas 80,0

Aviation fuels

Medium/heavy fuel oils TWh 60,0 Bunker oils Electricity 40,0 Diesel/gas oil Petrol 20,0

0,0

Total increase since 1970: almost 90 % Petrol: 15 % decrease since year 2000 Diesel: more than 50 % increase since year 2000 Energy use for national transports by transport mode, 2010

Railways/metro Shipping: 2% /tram: 3% Aviation: 2%

Road: 93% Biofuel use in Sweden 2000-2010

6,0

5,0 Current trend: • Biodiesel and 4,0 biogas

Biodiesel increases 3,0 TWh Biogas • Ethanol Etanol 2,0 levels off

1,0

0,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Biofuel share of road transport energy use 6,0%

5,0%

5,7 % biofuels 4,0% share in 2010! 3,0%

Procent 2,0%

1,0%

0,0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Ethanol production and use in Sweden

• Production: – Two ethanol producers in Sweden, of which one is dominating – Tota production covers around 50 % of domestic demand – Small volumes of ”2nd generation” is produced (lut från sulfitmassa) • Use: – Low-admixture in petrol (95 % of all petrol sold in Sweden contains 5 % ethanol) Low admixture Ethanol in E85 Ethanol in ED95 – E85, mixture of 85 % ethanol and 15 % petrol (less ethanol in winter time). Mainly for passenger cars – ED95, mainly used as bus fuel and use in Sweden

• Use: – Biodiesel (RME) is used as low-admixture in diesel (in average 90 % of the diesel used for transport contains 5 % biodiesel). (Low admixture has been permitted since 2006) – Very small volumes of ”pure” biodiesel on the market so far – From april 2011 – hydrogenated (HVO) introduced on the Swedish market. A biodiesel, but different from RME since it’s identical with fossil diesel. Allows for higher admixture in diesel compared to RME (currently the admixture of HVO is around 15 % + 5 % RME). Present HVO- capacity is 100 000 m3 (diesel demand is around 5 000 000). • Production: – One major producer and several small-scale producers of RME – One producer of HVO – Around 40 % of demand is imported from other countries

Biogas production and use in Sweden

• Production: – Around 230 production facilities – Most of the biogas for transport (upgraded biogas) is produced from waste • Use: – Biogas is often sold as ”fordonsgas” which is normally a mixture of biogas and natural gas. The average mixture is 65 % biogas and 35 % natural gas, but there are large variations across the country. – Also some LNG and LBG on the market, but so far very small 80 volumes. 70

60

– Around 120 public fueling stations 50 40

(most of them in the south) 30 Million Million m3 20 10 0 2006 2007 2008 2009 2010 Prognos 2011 Future biofuels

• The Agency is financing several large research projects in the field of renewable motor fuels covering the entire chain from cultivation of raw materials for biobased motor fuels to the use of new fuels. Examples of projects: – Black liqour gasification in Piteå (paper mill industry). Main focus is to produce DME (dimethylether) which can be used in diesel engines. – Gothenburg Biomass Gasification Project. Forest residue will be used to produce biomethane which will be upgraded to natural gas quality. – Ethanol demonstration plant in Örnsköldsvik, production. Started up in 2004. Used as a center for development and as a test bed for research results produced by university departments. • Research, development, and demonstration projects constitute an important element of long-term development strategy. It takes time for new techology to enter the market!

Outline of presentation

• About the Swedish Energy Agency • Global use of biofuels • Swedish use of biofuels • Biofuel policy in EU/Sweden • Outlook for 2020

Targets for climate and energy

• International level: – Kyoto protocol targets • EU level: – 20-20-20 targets • 20 % increase in energy efficiency (compared to projections) in 2020 • 20 % less green house gas emissions (compared to 1990) in 2020 • 20 % renewable energy in 2020 (49 % for Sweden) – 10 % renewable energy in transport sector in 2020 (includes renewable electricity) • National level: – 50 % of Sweden's energy use in 2020 will come from renewable energy sources (in line with EU target for Sweden - 49 %) – In 2030 Sweden will have a vehicle fleet that is independent of fossil energy (not specified further) – Sweden’s net greenhouse gas emissions will be zero by the middle of this century

EU directives concerning biofuels

• Renewables directive (2009/28/EC) – Sets a binding target of 10 % renewable energy in transport by 2020 – Renewables need to fulfil sustainability criteria (-35 % compared to fossil fuels, - 50 % in 2017) • Fuel quality directive (2009/30/EC)

– Requires suppliers of motor fuels in the EU to reduce CO2 emissions by 6 percent per unit of energy (as seen in a life cycle perspective) in 2020 from the level in 2010. – Specifies permitted levels of low-admixture additives in motor fuels (10 % ethanol or 3 % methanol in petrol, 7 % biodiesel in diesel) • Emission performance standards for new passenger cars (regulation EC no. 443/2009)

– New cars must not on average emit more than 130 g CO2/km. Applies to 65 % of new cars in 2012, 100 % in 2015. – Producer level, not national level

National policies for biofuels

• Tax exemption for biobased motor fuels – However, some restriction from 2011 for low-admixture - only up to 6,5 % blending in petrol and 5 % in diesel is exempted. Additional low-admixture is subject to full tax (= the tax of petrol/diesel).

• Motor vehicle tax based on the vehicle’s CO2 emissions. From 2011 this also applies to light duty vehicles, buses and motor caravans. – ”Clean vehicles” are exempted from vehicle tax for 5 years. – Before july 2009; premium of 10 000 SEK for purchase of clean car • Law requiring larger petrol stations to sell at least one renewable fuel (since april 2006) • Cars provided as a benefit to employees are subject to tax. Biofuel driven cars have reduced notional value. • Public authorities are required to ensure that passenger cars purchased or leased are clean vehicles and that light goods vehicles have

emission levels less than 230 g CO2/km

Effects of current policy

Costs for ethanol and petrol, 2010 (excl. VAT) 12

• Low admixture used at its 10

maximum levels – generally 8 cheaper than petrol when no 6 Tax 4 Product cost

tax is added fuel of SEK/liter 2 0 Ethanol Petrol

Number of petrol stations with renewable fuels • Results of “the pump law” : 2000 E85 1800 of around 3000 petrol 1500 RME stations offer an alternative to 1000 fossil fuels Fordonsg 500 as

0 2003 2004 2005 2006 2007 2008 2009 2010 Source: SPI

Effects of current policy

Registration of new cars 2006-2010 • Large increase in 100%

“clean vehicles” – 90% stands for about 40 Clean cars other than petrol 80% and diesel below 120 g/km % of total sales. 70% Diesel below 120 g/km However, most of 60% the new clean cars 50% Petrol below 120 g/km are low-emitting 40% Diesel above 120 g/km diesel cars - not 30% 20% biofuel cars. Petrol above 120 g/km 10% • Most of the biofuel 0% driven cars are 2006 2007 2008 2009 2010 ethanol cars Source: Bil Sweden • Gas and hybrids slow development

Consumer behaviour

• Consumers respond very quickly to changes in policy!

Ex 1: In July 2009 the premium of 10 000 SEK for clean vehicles was taken away  sharp decline in clean vehicles sales.

Consumer behaviour

Ex. 2: Sales of E85 very dependent on the relative price to petrol

3 30 E85 cheaper 2 than 25

1 20

0 15

jan-08 mar-08 maj-08 jul-08 sep-08 nov-08 jan-09 mar-09 maj-09 m3 1000

-1 E85 more 10 expensive

kr/l differens kr/lbensinekvivalent differens -2 than 5 gasoline -3 0 E85-pris Volym E85 Outline of presentation

• About the Swedish Energy Agency • Global use of biofuels • Swedish use of biofuels • Biofuel policy in EU/Sweden • Outlook for 2020

Outlook for 2020

• The Energy Agency’s longterm projections on the energy system are carried out every 2 years. • Used primarily for Sweden’s reports to EU and UN (climate reporting) • Also used for follow-ups and action plans (Is Sweden going to reach the EU and national energy targets? If not, what must be done in order to reach them?) • Business-as-usual approach, only existing measures are taken into account; analysis of the future energy system based on current policy

Main conclusions from latest projection (march 2011) • Large efficiency improvment in cars over the next years • Large share of new cars are expected to be diesel cars (more efficient)

• The EU emission performance standard (max. 130 g CO2/km) will have a large effect on the market • Hybrids, plug-ins and electrical vehicles do enter the market, but very slowly • Continued increase in transport activity counteracts the gains of efficiency improvements • Energy use expected to increase, but slower than before • No new fuels on the market Main conclusions from latest forecast cont. • 10 % target for 2020 will probably be reached in Sweden, but only with a small margin. The renewable share only slightly increasing between 2012 and 2020. • Renewable electricity (for rail transport - not road) makes up a large proportion of the renewable energy for transport. Very slow introduction of electric cars. • Low-admixture ethanol and biodiesel will soon be at it’s maximum levels (due to restriction in tax exemption) • Share of ethanol cars in car sales is decreasing • Biogas – potential but may face capacity problems • It seems higher oil prices also bring higher biofuel prices. High oil prices is not neccesarily the ”solution” • Biodiesel has problems competing with fossil diesel today • Uncertain development of tax exemption  In simple words: if we want to reach more than 10 % renewables in 2020 new measures is likely to be needed

Energy use for national transport 1970-2020 Statistics 1970-2009, projection 2010-2020 120,0

100,0 Renewable fuels Aviation fuels 80,0

Electricity

60,0 Diesel/Eo1 TWh

Petrol 40,0

20,0

0,0 1970 1980 1990 2000 2010 2020 Renewable energy in the transport sector 2007-2020 (statistics 2007-2009, projection 2010-2020)

9,0

8,0

7,0 Renewable electricity 6,0 Biogas 5,0

Other biodiesel TWh 4,0 Low ad. biodiesel 3,0 Other ethanol

2,0 Low ad. ethanol

1,0

0,0 2007 2010 2015 2020 Publications in the area of biofuels

• Energiläget/Energy in Sweden 2010,ET2010:45 • Transportsektorns energianvändning 2010, ES2011:05 (Transport sector energy use 2010) • Energiindikatorer 2011, ER2011:12 (Yearly follow-up on the Swedish energy policy targets) • Produktion och användning av biogas 2009 (Production and use of biogas 2009) • Fokus III- Transportsektorn, ER2010:07 • Kortsiktsprognoser (Short-term forecasts) – Published every March and August. • Långsiktsprognos 2010/ Long term forecast 2010. • www.energimyndigheten.se, webbshop

Thank you for your attention!

Questions?

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