Liquid diesel biofuel production in Sweden : a study of producers using forestry- or agricultural sector feedstock

Abstract: The transportation sector is the only sector of the Swedish society that is still increasing the emissions of carbon dioxide and other green house gases. Diesel fuel represents one of the fuels that contributes to these emissions and the use of diesel fuels is increasing every year. The main purpose of this study was to make an estimation of the current business situation for producers of liquid diesel biofuels in Sweden such as biodiesel, synthetic diesel and crude tall diesel and examine the forces of competition of the industry today and its future prospects. The study revealed that the rivalry among the existing firms was low mainly due to the geographical spread of the companies. Moreover the success of the biodiesel industry was influenced by a long-term guarantee of the tax exempt for biofuels and by the price level of petroleum diesel. Biodiesel demand also benefits from the increasing trend of using alternative transportation fuels but there was at the same time a tendency of customer skepticism towards the fuel. The producers were therefore also influenced by both government policy and of the media. Expansion of the industry was limited by raw material availability and it was not likely to grow within the next couple of years and the overcapacity was about 20-30% for the whole industry. Most of the biodiesel in Sweden was sold to the oil companies that blended it in with conventional diesel and sold it as regular diesel fuel. The industry was also selling pure biodiesel fuel directly to mainly haulage firms or municipalities with heavy transport vehicles. The small-scale biodiesel producers were hoping that the car manufacturers would allow passenger cars to use pure biodiesel. The industry was also hoping to see that more municipalities included biodiesel as an option in their vehicle fuel procurement plans like ethanol and biogas. The producers of synthetic diesel and crude tall diesel in Sweden were still developing and none were on full commercial scale but respondents expressed that the market potential for their products was “almost unlimited”. A couple of the firms had the option to produce synthetic diesel but were primarily focusing on other fuels that were more raw material efficient. The crude tall diesel production was considered to be more limited by available resources in Sweden than the production of synthetic diesel of cellulosic biomass. The firms using forestry sector feedstock were otherwise facing similar difficulties and mostly with the authorities. As they were getting more established they were expecting competition primarily with the petroleum diesel price. This could be solved by selling the fuels to customers with demands on low emission fuels or with environmental policies. The study was conducted by interviewing all the biodiesel producers in Sweden and several of the companies that were entering the industry of producing biofuels from cellulosic biomass. The firms were asked individually about their perceptions on producing liquid diesel biofuels and the prospects of these fuels in the future. This report is therefore based on their thoughts and comments and presents both a general picture of the industries and what aspects were important to them.