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GAIN Report - SW6013

Page 3 of 8

SECTION I. DOMESTIC POLICY ENVIRONMENT

A. Policies for Supporting and/or use of Bio-Fuels

The Government of Sweden (GOS) has established a long-term energy policy aimed at supplying domestic needs solely from renewable energy sources. In September 2005, Sweden’s Prime Minister Goran Persson announced a new policy target to create the conditions necessary to break Sweden’s dependence on fossil fuels by 2020. Sweden is, indeed, among the leading countries worldwide in the utilization of renewable resources for energy production and is firmly in the forefront with regard to bio-fuel utilization within the transportation sector as well. This is due in large part to measures taken by the GOS to promote the utilization of bio-fuels and other renewable fuels, mainly through tax incentives.

Sweden promotes the use of ethanol and bio-diesel through tax relief. There are no energy taxes for ethanol or bio-diesel. Without tax relief, these fuels would be unable to compete with conventional gasoline and diesel at today’s production costs. Total energy taxes for gasoline and diesel amount to about € 0.08/ KWh and € 0.05/KWh, respectively. These taxes represent about 30% of the price for gasoline and about 40% of the diesel price.

Energy Tax

Carbon

Sulfur Tax

Total

SEK/KWh

Dioxide Tax

2.84

2.12

0

4.96

0.68

0.74

2.61

0

3.35

0.42

0

0

0

0

0

Table 1. Swedish Energy Taxes 2005

Energy

Source Conventional Gas (SEK/liter) Diesel Oil (SEK/liter) Ethanol/RME

SEK 1 equals about 0.11 and US$ 0.14

In addition, the Swedish government promotes the use of ethanol and bio-diesel through lower taxes on and free parking for “clean” vehicles. The Swedish Road Administration defines a clean vehicle as one that runs with renewable fuels if they are not too fuel consuming, as well as very low consumption petrol and diesel cars if their emissions of nitrogen oxide and particle matter are relatively low. Companies that use clean vehicles in their fleets receive a 30% investment subsidy. The GOS has also set the target that 35% of all cars purchased by the central government should be environmentally friendly. In addition, the Swedish government has proposed to abolish the VAT on bio-fuels.

In December 2005, the Swedish government imposed a regulation requiring that larger gas stations sell at least one type of bio-fuel. Gas stations selling more than 3,000 cubic meters of fuel per year (60% of total Swedish gas stations) are affected by this new requirement. In 2006, the Swedish government set aside SEK 50 million (USD 6.25 million) for this purpose and an additional SEK 100 million (USD 12.5 million) in 2007. In 2009, small gas stations will also be required to offer at least one type of bio-fuel.

EU Directive 2003/30/EC requires that 5.75% of energy used for transportation in 2010 shall be from bio-fuels. For 2005, Sweden has set a more ambitious goal of 3% ethanol utilization for transport, compared to the EU’s goal of 2%. Eight EU countries have national goals between 2-3% while the rest have goals below 1.5%.

UNCLASSIFIED

USDA Foreign Agricultural Service

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