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Interview with Ulf Svahn, MD at the Swedish Petroleum & Biofuels Institute

In many ways, Sweden has positioned itself at the forefront of the biofuels market. Consumers, retailers and politicians all seem to be equally concerned about the improvement of air quality. We talk to Ulf Svahn about the increasing importance of HVO, the difficulties in dealing with the European Union and much more.

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Ulf Svahn has been the Managing Director of the Swedish Petroleum & Biofuels Institute for 10 years. The industry organisation has the purpose of improving industry conditions as well as being a link between politicians, authorities and other groups of interest.

In 2016 we discussed Sweden’s fuel mix here in Stockholm. Two years later, what kind of developments has there been? Has the share of biofuels grown?

The share of biofuels has grown during those two years. Biofuels have a 20% market share in the Swedish market in 2017. If you include the renewable directive we are at 30%. That is way ahead of anyone in Europe – Austria is on second place with 10% if we match it on renewable directive scale.

Is HVO (Hydrogenated Vegetable Oil) still the most important part of that new fuel mix?

Very much so. HVO is blended into the ordinary diesel at service stations at a level between 15 and 20% depending on the part of the country and the retailer. HVO is also sold as 100% to certain vehicles such as lorries and trucks.

Is there a big difference in use between passenger vehicles and heavy-duty vehicles when it comes to choosing biofuels over traditional formats?

It depends on the money. There is a lot of demand for 100% HVO in the heavy-duty sector as it is very good to reduce emissions. Light-duty vehicles, they have to go to service stations and they buy what is available. Most diesel cars do not take HVO 100. A couple of French manufacturers have said that their cars can take HVO 100 but mainly they have to stick with what they have instructed of the car. They have to stick to diesel.  So there is a difference between light and heavy-duty vehicles.

Is there a big difference between Swedish retailers when offering different fuel types?

In Sweden, at some of its stations Preem sells fuel with 50% HVO. If you look at the rest I think they can differ through the year because you have suppliers, depos and so on. We say between 20 and 30% is the normal share of HVO in diesel.

For the last years the big oil companies have gradually left the Nordic region.  How does that affect what fuels are offered at the market?

I think it is much easier because we have original, local players in the Swedish market so it is easier for them to adapt to new trends.  Sweden is at the frontline when it comes to climate and environment issues, and they can show that by being a local, regional player instead of a huge global player of the fuelling industry.

What would you say to those who are critical of the use of food as a raw material for biofuels?

If you look at Sweden for instance, the land being used for growing crops has been going down for the last 50 years. That’s a lot. There is a lot of land just standing there, not being used, and we can use that land to produce food-based raw material for production of biofuels without hindering the global food market. It is a very narrow scope discussion to say that it has to be linked to food prices, poverty and the lack of food.  There needs to be a more mature discussion.

With a growing demand for HVO the big challenge is getting enough supply. Sweden currently imports most of it. What steps does Sweden need to take to ensure that supply?

I would like to see more European demand for HVO. With a higher demand there would be better possibilities for HVO producers because as it requires a very high investment to produce it. We all know that the price for the product is much higher than the fossil counterpart. So we need policy instruments. If we could introduce a very solid increase in demand for HVO in the European market, that would be a major step.  Second is the raw material base, which might be settled when the renewable directive comes into place.  The insecurities surrounding the raw material base for production is also hindering the investments in HVO production.

Many believe the current focus of the European Union is more set on electric vehicles that in other forms of alternative fuels such as biofuels. How do you see that?

I am not at all happy with the European Union stance on biofuels. If we look at the International Energy Agency, they very clearly state that if we follow their 450 scenario, we will have 720 million hybrid and electric vehicles by 2040, reducing the use of fossil oil to 6 million barrels per day, using 96 million today for the transport sector. Electricity is an important solution for the future but it is not the final solution, at least not in the decades to come.

Do you feel like hydrogen could be another solution for the Swedish Market?

Hydrogen is linked to power production. If you haven't got power production from sustainable raw materials (wind, solar, etc.) you increase the emissions of carbon dioxide. So you have to move away from gas and coal to something else to produce power. That goes with hydrogen because you have to produce a lot of power and electricity to be able to produce hydrogen. You need an excess of electricity to have hydrogen.  I think there are a number of steps in between.  The hydrogen path will only be successful if it turns out that battery electric cars are too polluting or expensive to make. It is difficult to predict.  

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