Upgraded biogas for transport in Sweden – effects of policy instruments on production, infrastructure deployment and vehicle sales

Abstract

Sweden is a leading country in the development of upgraded biogas for use in the transport sector. The introduction of a new vehicle fuel is complex when the production, infrastructure, and vehicle fleet must be developed simultaneously. The aim of this article is to present and analyse the development of upgraded biogas in the Swedish transport sector in relation to policy instruments and the availability of a natural gas grid. Plausible implications for the future development of the biogas system are also analysed.The development of upgraded biogas in Sweden's transport sector is heavily influenced in several ways by domestic policy instruments. Investment support schemes and exemptions from energy and carbon dioxide taxes have been key instruments in initiating the construction of new biogas production facilities and infrastructure. The study of the biogas development in relation to the natural gas grid presented in this article indicates that it may not be necessary to construct a comprehensive network of pipelines for methane (natural gas) to develop the market – at least not initially. In Sweden and elsewhere the biogas volumes will still be quite small in the near future and it is possible to achieve biogas development without an available methane gas grid.Public procurement, investment schemes and reduced fringe benefit tax have likely been important policy instruments in the introduction of biogas vehicles, whereas the support for private biogas cars has been short-sighted in some ways, and not sufficient to achieve a competitive cost of ownership for biogas cars in relation to diesel cars.The future strategy for biogas should be based on a realistic potential for using biogas in the transport sector; this would determine whether further market expansion is necessary or if incentives should be focused on development of the production side to cover the current demand for vehicle gas.The development of biogas production likely depends on continued tax exemptions, which are currently available only until the end of 2015; it is uncertain whether they will remain in place. If biogas should be promoted further among private car owners, more visible incentives for private cars are needed together with incentives for expanding the fuelling infrastructure network.