Policy instruments directed at renewable transportation fuels – An international comparison

About the project

The production of transportation fuels from renewable primary energy sources requires ongoing support if it is to reach commercial maturity. Worldwide, the most common types of support are politically derived ‘policy instruments’. A variety of such instruments have been and are applied in differing contexts in different parts of the world; in this project we describe and dissect policy instruments that have been used in Brazil, the EU (with prime focus on Germany), and the US. As the political economy of biofuels these jurisdictions has evolved over past decades, and policy interventions have also changed, the analysis focuses on key points of change or major market inflections. Emphasis was placed on the following aspects of enquiry in particular:

• underlying motivations for policy interventions, how were they formulated, and how outcomes align with the initial objectives;
• how instruments supported the biofuels sector(s) in the short and longer terms;
• lessons of relevance to the promotion of renewable biofuels in Sweden.

During the study period, the Swedish government proposed a new ‘hybrid’ quota system for low-level blended biofuels. However, pure and high-level blended biofuels outside the quota system and retaining tax exemptions. This has affected the deductions drawn for the Swedish way forward regarding biofuel-related policy instruments. Further, two important Swedish policy goals affect biofuel futures: zero net 2050 greenhouse gas emissions, and a fossil independent 2030 transport sector. While transportation biofuels will be part of the toolbox to reach both these goals, lack of clarity regarding their application to biofuels (particularly for the latter) make many questions re-garding future policy instruments difficult to answer definitively.