The European Commission’s final taxonomy proposal has further undermined Sweden’s strategy of a biofuels led transition for transport. Biofuels made from rapeseed and cereals are not considered green enough to qualify as sustainable, and thus, most of Sweden’s existing biofuels production would be unable to obtain a high rating. To put this into context, the taxonomy proposal is to assist with the categorization for financing, and so the decision does not prevent biofuels being sold in Sweden, but it is expected that the cost of capital for such projects would be affected.
Alarik Sandrup, Head of Business Policy at Lantmännen, and also Chairman of the Swedish Bioenergy Association says that the demand for crop-based fuel will still not be affected by the taxonomy. Given Sweden’s short term climate goal is to reduce transport GHG by 70% by 2030 huge demand for biomaterial is expected, through the reduction obligation (reduktionsplikt) where more and more biofuel must be mixed into petrol and diesel.
But what worries Sandrup is that the European Commission's approach to biofuels has spillover effects. “This is probably what we see as the biggest risk. The taxonomy sets a new norm for how the EU views various issues and then this will spread further and chew its way into other legislation that will affect much more, says Alarik Sandrup.” (Nyteknik)
The broader context will also be increasingly challenging for Sweden. The German Bundestag has adopted new guidelines for the promotion of climate-friendly fuels, The new act aims to increase the share of renewables in Germany's transport sector from 6% share to 25% by. Significantly more renewable energy will need to be blended into petrol and diesel in order to reduce German driver's CO2 emissions. Germany will also ban biofuels based on palm oil from the tank from 2023. Given the much larger size of the German market, Swedish motorists should expect that this will have a clear effect on the price that they will need to pay, in order to compete to get the limited volume of biomaterial available. (Argus Media)
The Nordic countries are some of the most dynamic and successful economies in the world. They are also leaders in sustainability, from renewable energy, biofuels, carbon capture and storage and the hydrogen economy, circular economy business models and battery development, the Nordics are pioneers in policy design, technology development and consumer uptake. Mundus Nordic Green News is covering this transition for the international community. Every day we clip the stories of most relevance to international businesspeople and policy experts from the flow of news. We supplement these with our own opinion pieces and commentary, in English.