The tax in Sweden on bio-oil used in district heating and industry must be removed. Statistics show that the use of fossil fuels in district heating doubled from 2020 to 2021, says the Swedish Bioenergy Association (Svebio).
According to Swedenergy (Energiföretagen Sverige), a non-profit industry and special interest organization for companies that supply, distribute, sell, and store energy, Sweden’s district heating system produces around 55 TWh annually.
In district heating, only 6 percent of fuels come from fossil sources, the rest is made up of renewable energy or recovered heat.
However, as of January 1, 2021, the use of bio-oil as fuel for industrial and district heating became subject to both energy and carbon dioxide (CO2) tax just like its fossil counterparts, when Sweden refrained from seeking tax exemption from the EU for these renewable fuels.
While bio-oils represent minor shares of the total fuel consumption, the negative climate effect of the tax is already showing. Statistics for 2021 from Swedenergy show that greenhouse gas (GHG) emissions from district heating increased compared to 2020.
Increased demand for district heating and electricity production
Swedenergy highlighted that 2021 was a colder year than 2020, which led to increased demand for district heating. Higher electricity prices also made it attractive for cogeneration plants to produce more electricity and led to more demand for district heating.
District heating deliveries to end customers in 2021 increased from 44.6 TWh in 2019 to 51.9 TWh in 2021, the highest deliveries of district heating since 2011.
Just over 100 district heating networks delivered fossil fuel-free district heating. Despite this, the total emissions of GHGs increased by 0.29 million tonnes of carbon dioxide equivalents (CO2eq) compared to 2020.
The higher climate emissions are mainly due to the increased deliveries but also to the increased use of fossil fuels in 2021. Swenergy has warned on several occasions that the controversial bio-oil tax means a return to fossil fuels and stops the phasing out of fossil oil, Swenergy said in a statement.
The introduction of full energy and carbon dioxide tax for several bio-oils, including Rapeseed Methyl Ester (RME) and Used Cooking Oil Methyl Ester (UCOME), meant that it became approximately 75 percent more expensive to use taxed bio-oil compared to fossil oil in 2021.
As a result, heating companies and businesses reverted to using fossil fuels for cost reasons while numerous planned conversions from fossil oil have been canceled or suspended.
Now we have it in black and white that the tax results in increased emissions of fossil carbon dioxide from our heating plants. It must be removed in the autumn, in connection with the decision that biofuels for transport will receive a ten-year tax exemption, commented Gustav Melin, CEO of the Swedish Bioenergy Association (Svebio).
