The full compilation is currently only available in Swedish. Below is a translated excerpt.

The biofuel-producing industry often points out that their decisions and willingness to invest are heavily influenced by uncertain policy measures, legislation, guidelines, etc. In recent years, a number of studies have investigated theese issues. The studies point out that clear and long-term political conditions for transition are of importance, and that uncertainty in these aspects affects both industry, financiers and other market participants.

In order to achieve the goals for the transport sector, access to sustainable renewable fuels needs to increase, and the production conditions in Sweden are good. Both current producers and new stakeholders in the fuel industry have plans to greatly expand the production of renewable fuels over the next ten years. [1]  However, without policy measures pushing for development, there is a significant risk that the plans will not be realized. The government’s assignment to the so-called bioeconomy investigation (Bioekonomiutredningen) therefore included analyzing measures that promote efficient production of liquid biofuels based on domestic raw materials in Sweden, including proposals for long-term production support.

Within the industry, however, it is also often highlighted that a high degree of uncertainty and frequent changes in the scope and design of the policy measures hinder development. Sweden and the EU have had been measures promoting the development of renewable fuels since the beginning of the 2000s, and in 2008 the first fuel directive was introduced with targets for use and with clear sustainability criteria. However, the design of policy instruments has changed over time and they are often decided for short periods of time. As an example, the reduction obligation was introduced in 2018, as a long-term policy instrument designed to apply until 2030. It is now being changed drastically after only five years. Uncertainty increases the risk with investments and can affect development, both directly through reduced willingness to invest on the part of companies, and indirectly through uncertainty among consumers on the vehicle market and worse conditions on the capital market. The example above also shows that it is not enough to design a policy instrument that is long-term, but that there also needs to be broad political agreement around it.

To what extent and how does political uncertainty and instability in policy measures affect willingness to invest and the development of renewable fuels? As a first step in clarifying the state of knowledge regarding this, f3 has summarized how it is raised in a few examples from the literature. Here are some conclusions:

  • In the litterature, it is unanimously emphasized that political uncertainty, short-term policy measures, and frequent changes to policy measures contribute to making investments in industry, and, thus the development of renewable fuels, more difficult.
  • Uncertain policy measures aimed directly at promotion of renewable fuels is not only what effects investments and decision-making. There is also an effect from uncertainty about permit processes, policy measures designed for other sectors that affect the demand for biofuels and bio rawmaterials, and from targets and ambitions for climate policy in large, both in Sweden and internationally.
  • To a large extent, the studied litterature bases its conclusions on interviews, surveys and workshops with industry representatives and other stakeholders. In these, political uncertainty is consistently highlighted as a central barrier to the industry’s transition. The conclusion is also established in general policy research around barriers and driving forces.
  • Few have studied the issue from an empirical perspective, specifically for renewable fuels. From a comparative study of developments in the US and within the EU, however, there are indications that higher uncertainty also has an impact on actual investments over time.

Several of the studies also highlight examples of knowledge gaps in the field, and it is clear that the issue can be approached from several different perspectives and with different research methods.

In the overview made by f3, a summary of the outcome of a selection of current and central investigations and research studies concerning the importance of political uncertainty for the development of renewable fuel production is presented. The overview takes its point of departure from the so-called bioeconomy investigation (Bioekonomiutredningen), whose first interim report was published in spring 2023.

Read or download the overview in its entirety as a PDF (in Swedish).