GAIN Report - SW6013
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Sweden, along with Spain, has requested that the European Commission establish a new Directive on the quality of petrol and diesel fuels to permit gasoline to contain 10% ethanol, rather than the current 5%.
Policy for Supporting Production of Bio-Fuels Feedstock
When it comes to support for bio-fuels feedstock production, EU regulations offer farmers two systems for encouraging the cultivation of energy crops: the energy aid that was introduced with the 2003 CAP reform and the already existing scheme for using set-aside land for the cultivation of crops for non-food uses. The energy aid of €45 per hectare is available to farmers who produce energy crops. It is applied on a maximum guaranteed area in the whole EU, of 1.5 million hectares. Interest in applying for this support was limited among Swedish (and EU) farmers in 2004, probably because of the lack of awareness that the scheme existed. In 2005, however, the number of applicants in Sweden more than doubled, from 867 in 2004 to 1,750 in 2005.
Within the EU Rural Development Program, the GOS has funded SEK 20 million to support projects developing bio-energy as a complementary activity at farm level.
B. Size of Total Motor Vehicles Petroleum Based Energy Market
Total Swedish motor vehicle utilization of gas and diesel amounted to about 5.5 million cubic meters in 2005. The share of bio-fuels amounted to 3%, calculated on the basis of energy content.
Sales of clean vehicles have been hampered by the fact that there were not enough gas stations offering bio-fuel at the pump. Nevertheless, sales of clean cars increased from 5,386 in 2004 to 22,618 in 2005. The GOS decision to require that larger gas stations sell at least one type of bio-fuel is expected to further increase sales of clean cars.
Volvo, Saab and Ford all have clean flexible fuel vehicles currently available on the Swedish market. Volvo and Saab have also announced plans to introduce hybrid vehicles within the next few years.
C. Bio-Fuels Production Capacities
Ethanol is the most common liquid bio-fuel in Sweden, comprising almost 90% of all liquid bio-fuel use in 2004. It is considered the highest potential bio-fuel with regard to production as well as consumption. Swedish consumption of ethanol has increased substantially over the past year. The Swedish government’s promotion of bio-fuel utilization has certainly helped the rapid increase of consumption of ethanol. Expectations are that consumption will continue to increase, which is also reflected in increased sales of clean cars and buses.
About 80% of Sweden’s ethanol production is based on cereals. The remaining 20% is based on wood through fermentation of sulphite liquor, a by-product of chemical paper pulp production. Cereal-based ethanol is the additive used to reach the 5% ethanol requirement for gasoline in Sweden. Ethanol produced from sulphite liquor is utilized in 85% ethanol (E85) for clean flexi-fuel vehicles.
USDA Foreign Agricultural Service