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GAIN Report - SW6013

Page 5 of 8

Two Swedish companies produce ethanol for bio-fuel: Agroetanol and Domsjo Fabriker. In addition, the company Etek is running a GOS-financed pilot project to produce ethanol from wood raw material.

Agroetanol is the largest ethanol producer with a yearly capacity of 43,000 MT and plans for expansion. The company produces ethanol from wheat, barley and rye cultivated in neighboring areas. This ethanol is used for the 5% mandatory ethanol blend in gasoline. Wheat comprises two-thirds of the raw material. Swedish cereal production is between 5.0 and 5.5 million tons per year, out of which 0.15 million tons are currently utilized in ethanol production (25,000-30,000 hectares). Agroetanol plans to invest in a new plant with a yearly capacity of about 120,000 MT. Production is expected to start in the summer of 2008.

Domsjo Fabriker produces ethanol for E85 clean vehicles from sulphite. This company has a capacity of about 10,000 MT (13,000 m3) of ethanol per year.

The greatest potential for increased domestic production of ethanol in Sweden lies in wood ethanol. Etek’s pilot project has resulted in the construction of a pilot plant which began operations in early 2005. Production costs are currently high but are expected to decline Substantially in the future – but not lower than the cost of producing ethanol from sugar in Brazil. Further expansion in Swedish production capacity for wood ethanol is expected to take place in about five years.

Bio-Diesel

Bio-diesel utilization in Sweden has not developed as rapidly as ethanol, but is expected to increase substantially in the coming years. From August 2006, Swedish regulations will allow a 5% blend of bio-diesel in conventional diesel – an increase from 2%. As a result, the market for bio-diesel in Sweden will increase substantially to about 250,000 MT per year.

Swedish bio-diesel (rapeseed methyl ester or RME) is produced from rapeseed. Current domestic RME production in Sweden is relatively small, amounting to about 4,000 MT. About 50% of the rapeseed used for RME production is imported, mainly from Germany and Denmark.

As a result of the increased blending of bio-diesel in conventional diesel, two new bio-diesel production plants were established in Sweden. The company Lantmannen began production in late April 2006. Total production is expected to be about 40,000 MT per year. From 2008, Lantmannen hopes to produce 100,000 MT of RME annually. Preem Petroleum and Pestorp are jointly developing a biodiesel production plant with yearly capacity of 160,000 MT. Production is expected to start in January 2007. Both plants will produce their RME mainly from imported rapeseed oil and include other oils to a lesser extent. With these new plants, total capacity for RME production in Sweden will amount to 300,000 MT in 2007.

SECTION II. IMPORT REGIMES

As an EU member, Sweden applies EU import regimes for bio-fuels. Current custom duties in force are: · Biodiesel Custom Code 38249099 Import Duty 6.5% · Bioethanol denatured Custom Code 22072000 Import Duty €10.2/hl · Bioethanol undenatured Custom Code 22071000 Import Duty €19.2/hl

UNCLASSIFIED

USDA Foreign Agricultural Service

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