New report illustrates relation between GHG performance and market value of biofuels in the new Swedish reduction obligation system

In 2017, the Swedish government proposed to introduce a reduction obligation for transportation fuel distributors. This would imply an obligation to reduce greenhouse gas emissions from fossil petrol and diesel through a gradual increased share of biofuels. The aim is to create improved conditions for phasing out fossil fuels through an increased proportion of biofuels with good greenhouse gas performance in a lifecycle perspective. The reduction obligation also means that not only production cost determine the overall economic performance of a biofuel production route, but also the greenhouse gas emissions. This is because biofuels with low greenhouse gas emissions can be blended in lower volumes than biofuels with poorer greenhouse gas performance.

In a recently finished f3 project, lead by Erik Furusjö, IVL, the main objectives have been to illustrate how the greenhouse gas performance of different biofuels relate to their economic value in the new reduction obligation system, and to compare the resulting cost of greenhouse gas reduction for different types of biofuels. Co-writer of the report has been Joakim Lundgren, Bio4Energy/Luleå University of Technology. The project is titled Evaluation of biofuel production costs in relation to the new reduction obligation quota system.

Results show that the lowest cost for CO2 reduction is obtained for biofuels that combine a low production cost with a high greenhouse gas performance. Of the biofuels available on the market today, this is applicable for biogas produced via digestion of waste, as well as for sugarcane-based ethanol. However, emerging biofuels, so-called advanced biofuels, have the potential to achieve lower reduction costs than many of thoseproduced via today’s production chains.

The project report is written in Swedish with a short English summary.