Swedish Bioenergy Association

The Future of Bioenergy Markets in Europe

Gustav Melin2011 Aug 17

Swedish Bioenergy Association

Interest organisation for companies and private persons

Almost 300 member companies are producers, users, manufacturing firms, consultants and service companies etc.

• Mission: – To increase the use of bioenergy in an

economically and environmentally optimal way.

Efficient political instruments are:

• General, PPP – Polluter Pays Principle– They who are responsible for an emission should pay for

polluting. Then the legislation steer towards less emissions and better actions and habits. Example carbon dioxide tax, Sulphur tax, NOX-fees.

• Long term– Support restricted in time give uncertain investment

situations and promote often wrong products and optimization of subsidies.

• Neutral to techniques– Mening that the most profitable solutions are chosen in

competition with other possible solutions • Simple and logical

– Easy to understand and administrate

• Represents and promotes interests of bioenergy stakeholders

• 30 national associations• About 80 associated companies• Activities: lobbying, workshops, newsletters,

European projects, working groups, conferences and networking, etc.

• Based in Brussels in the Renewable Energy House.

• Member of EREC (European Renewable Energy Council) and WBA (World Bioenergy Association).

About AEBIOM European Biomass Association

Sent to members in June. Available on Aebiom web site, www.aebiom.org.

2011 Aebiom Statistical Report

Energy, bioenergy and other renewables

Energy in EU27

2005 2010 20200

200

400

600

800

1000

1200

1400

Gross final energy consump-tion RES

Mto

e

20,5 %11,5%8%

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

100

200

300

400

500

600

700

800

Solid fuelsOilNatural gasNuclearRenewables

Mto

eGross inland consumption by fuel in

the EU27 (Mtoe) 2009

Source: Eurostat

Total gross inland consumption all fuels: 1702 Mtoe Solid fuels: 268 Mtoe Oil: 622 Mtoe Natural gas: 417 Mtoe Nuclear: 231 Mtoe Renewables: 153 Mtoe

Gross inland consumption of renewable 1995-2008 in EU27 (stacked, Mtoe)

Source: Eurostat

Estimation of total contribution expected from bioenergy in EU27

Biolec-tricity14%

Heat62%

Transport24%

Source: AEBIOM, based on NREAPs

Total contribution of bioenergy in 2020 in

EU27: 138,5 Mtoe

20102020

Biolectricity12%

Heat70%

Transport18%

Total contribution of bioenergy in 2010 in EU27: 83,8 Mtoe

Note: Bioenergy is considered as the gross final energy consumption, made up of the sum of bioelectricity, biomass for heat, bioheat and transport biofuels.

Share of renewable energy in Sweden’s energy use

Andelen förnybar energi i Sverige var år 2009, 45,3 procent. Det betyder att Sverige ligger långt före tidtabellen när det gäller att nå EU-målet på 50 procent förnybart 2020.

Underlag: Energimyndighetens kortsiktsprognos 15 mars 2010.

Bioenergy 128,7 TWh;

32%

Oil 119 TWh; 29,6%

Hydro power 59,7 TWh; 14,8%

Nuclear power 50,5 TWh; 12,6%

Coal 23,6 TWh; 6%

Fossil gas 14,4 TWh; 3% Wind power 3,2 TWh; 1% Heat pumps 3 TWh; 0,7%

Share of final energy use in Sweden 2010

Economic Growth and Carbon Reduction

The Swedish CO2 tax, basic design

• Introduced in 1991, gradually increased tax rate• Paid in relation to CO2 emissions on each type of

fossil fuel (carbon content)• Full tax on heating and motor fuels• Reduced tax rate for industry, due to risk for

carbon leakage• ”Tax shift” – increasing CO2 tax and reducing

direct income taxes

A simple and cheap system

• Low administrative costs for tax authorities and operators– A CO2 tax can easily be added to an existing energy tax system– Administrative costs for Swedish Tax Administration is 0.01 % of total

revenues for energy and CO2 taxes

• No need to measure actual CO2 emissions from each installation– Tax rates per unit (ton, litre) fuel based on basis of average carbon

content– E.g.: CO2 tax for petrol = 2.323 kg/l x 0.103 €/kg = 0.24 €/litre

CO2 tax gradual increase since 1991

0

20

40

60

80

100

12019

91

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Carbon tax (euro/tonne) Carbon tax, industry level (euro/tonne)

Design to prevent carbon leakage in energy-intensive industry

• 1991• Two levels of taxation for

heating fuels – lower level for industry

• CO2 tax exemption for raw material use in industry

• 2008• Second period EU ETS

system – ETS covers major energy-intensive industry

• Zero CO2 tax on ETS covered industry from 2011

• CO2 tax raised for non ETS industry – in 2011 and in 2015 – up to 60 % of regular CO2 tax

”Green Tax Shift” – regardless of colour of government

1990/91 ”the big tax reform”- Lowered income and labor taxes – 6 billion €- CO2 tax and VAT on energy 0,3 + 1,6 billion €- Investment aid for biomass CHP

Green tax shift 2001 – 2006- 1,5 billion € tax shift, raised environmental taxes, cut in income

taxes, focus on low incomes

Policy 2007 – 2010- Increased environmental taxes by 0,5 billion €- Lowered income taxes by 7 billion €, focus on working people

Lessons learned about CO2 tax…• A CO2 tax is easy to administer and it gives results!• Households and companies are free to choose the measures best

for them – the tax uses the free market system and is ”tecnique neutral”.

• Start at low level and raise the tax gradually.• Announce tax measures long ahead, to give time for adjustment. • Tax revenues can be partly used to adress distributional

consequences.• Support measures may be necessary for a limited time, to help

households and businesses with adjustment.

Important that the system is long term stable!

Austria

Belgium

Bulgaria

Czech Rep

ublic

Denmark

Estonia

Finlan

dFra

nce

Germany

Greece

Hungary

Irelan

dIta

lyLat

via

Lithuan

ia

Netherl

ands

Poland

Portuga

l

Romania

Slovak R

epublic

Slove

niaSp

ain

Swed

en

United Kingd

om0

200

400

600

800

1000

1200

1400

1600

1800

2000

kt

Source: Pro Pellets Austria; Pelletsatlas, 2009; EPC

Pellets production in EU27 in 2010 (kt)

Total production in EU27 in 2010: 9.241 kt

Source: Pro Pellets Austria; Pelletsatlas, 2009

Austria

Belgium

Bulgaria

Czech Rep

ublic

Denmark

Finlan

dFra

nce

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuan

ia

Netherl

ands

Poland

Portuga

l

Romania

Slova

kia

Slovenia

Spain

Sweden

United Kingd

om0

500

1000

1500

2000

2500

kt

Total consumption of pellets in EU27 in 2010 (kt)

Total consumption in EU27 in 2010: 9.817 kt

Source: Pro Pellets Austria; Pelletsatlas, 2009

Total consumption of pellets in EU27, 2005-2010 (kt)

2005 2006 2007 2008 20100

2,000

4,000

6,000

8,000

10,000

12,000

3,8354,603

6,028

7,021

9,817

kt

Burner size 5 – 50 MWth

Several suppliers

Last months approx. 0,69 € euro/$ USDCrude oil approx.107 USD/Barrel, One barrel is 1,7 MWh energy, this corresponds to € 210 per tonne pellets (4,8 MWh). Price of pellets delivered to industry customer in port €125 inland €150.

Replace oil almost half the cost

Challenges in the pellet sector

• Estimated volumes of 40 Mt globally in 2020• How to secure a “reasonable” price before a large

retrofit investment of a coal plant, or an investment in a pellet plant.

• logistics, transport and storing capacity• CHP is needed to reduce cost for electricity

production

Renewable energy use in Sweden 2009

Biopower 12,6 TWh; 8,6%

Import 2 TWh; 1,3%

Fossil fuel power 7,2 TWh; 4,9%

Nuclear power 55,1 TWh; 37,6%

Hydropower 66,2 TWh; 45,2%

Wind power 3,5 TWh; 2,4%

Electricity production in Sweden 2010

56,2 per cent are currently renewable electricity in Sweden

• Current Bio power production 12,6 TWh

• Will increase to 18 TWh in 2020

• And increase wind power from 3,5 to 10 TWh in 2020

Electricity certificate system will give additional volumes in Sweden

1 Excl. high mountains, restricted military areas, urban land and water surfaces.Millions cubic metre standing volume (stem volume over bark from stump to tip) Source: National Board of Inventory

Total standing volume of round wood in Swedish forest from 1924

Source: Rautinen A. and al.

1990 2000 20050

20

40

60

80

100

120

140

160

0

3

6

9

12

15

18

21

24

18.720.8

22.2144.6 151.0 155.6

Growing stock volume Forest area

Fore

st a

rea

(mill

ion

ha)

Grow

ing stock volume (billion m

3)Forest area (million ha)

and growing stock volume (billion m3)

Source: Corinne Le Quéré et al, Natures Geoscience 2009

Global sources and sinks of carbon dioxide (CO2) 2008 (Billion tonnes C per year)

Fossils and cement 8,5Deforestation 1,2Forest growth -4,5Sink in oceans -2,5Residual 1,3Accumulated inatmosphere 3,7

Consumption of energy in transport in EU27 in 2020

Source: AEBIOM, based on NREAPs

9%

Total consumption of energy in the transport

sector

BiofuelsHydrogenRenewable electricityOthers

9%

Biofu-els91%

of which advanced biofuels (Art. 21)

90 per cent of fuels in transport sector is fossil in

2020!!!

This is the main problem not environmental problems that may appear if we do wrong when producing biofuels

Contribution of bioethanol and biodiesel in the transport sector in EU27

Source: AEBIOM, based on table 12 of NREAPs2005 2010 2020

0

5000

10000

15000

20000

25000

Bioethanol

Biodiesel

ktoe

Our view on EU transport sector

• 90 % fossil dependence in the transport sector 2020 is to much.

• Low blending is not enough for an energy shift, we need new fuels and vehicles.

• 50 % renewable in the Swedish transport sector possible in 2030

• Targets for green vehicles, should steer both towards energy efficiency and renewable fuels. tail pipe values are misleading.

• Green innovation increases EUs competitive power on the global market.

Global trends –How we see the world

• Fossil fuels get more and more expensive and damaging

• Biofuels get cheaper and cheaper and LCA improves.

• There is enough land and biomass available for powerful expansion of both food and energy production. Demand must come to make production possible.

• Biomass for energy can bring investments, work and wealth to rural areas and poor countries.

How to increase the speed of the energy shift in transport sector.

• We need to find a solution for expanding European biofuel production, together with allowing imports of not only world market priced fossils but also low cost sustainable bioethanol and biodiesel.

Thank you for your attention

Gustav Melin, President Aebiommelin@aebiom.orgwww.aebiom.org