Energy Policy Lessons from Sweden
The U.S. energy policy can be summed up in two words: cheap energy. For generations, the U.S. business model has been based on securing the flow of cheap fossil fuel. Government policy has avoided taxation schemes that would make those fuels more costly. As a result, for most of our industrial history, we have been insulated from any motivation to become more efficient and to seek alternative energy sources.
Those days are coming to an end. We seem to be on a one-way, dead-end street. And we continue to look for reprieves from the inevitable consequences of depleting resources in a growing world economy. The natural gas boom is the latest step in prolonging a long history of cheap energy policy and avoiding the price signals that would motivate us to become more efficient and less reliant on depleting resources.
So after I delivered the keynote address at the International BioEnergy Days (IBED) conference in Lidkoping, Sweden, in late September—Sweden was chosen because it consistently ranks at the top of lists for energy efficiency and reduced dependence on fossil fuels—I decided to spend extra time in the country to see what the Swedes have done and are doing.
My work with bioenergy has taken me many places. But my visit to Sweden was perhaps the most eye-opening. I knew things were different on my first day. On the way from the airport to Lidkoping, we stopped at a Max Burger (a fast food burger shop very similar to McDonald’s) and each menu item not only listed the price, but also the carbon footprint it had accumulated on its trip to a food tray.
This was a glimpse into the cultural norms of consumption choices in the country that has been the highest ranked in the world for many years by Germanwatch for its climate change performance. The U.S. is number 52 and China is number 54 in the rankings.
From listening to our policymakers discuss environmental policy, one would think it is bad for the economy to be good to the environment. In Sweden, that is not at all the case.
Many of us in the alternative sector understand that the future of our society can be one of greater energy independence, sustainability, and efficiency, all coupled with economic growth and job creation. The U.S. is not there yet and perhaps is not even on the path yet, but in Sweden, that vision of the future is the reality.
I spent seven days there. The first two were at the IBED conference and the others were spent touring bioenergy facilities and meeting with bioenergy companies and government officials. The IBED conference will be held in the U.S. next year in Minnesota. I would urge those who are in the bioenergy sector to attend.
My keynote speech at IBED addressed my vision for the Northeastern U.S. and how we at Maine Energy Systems are using European biofuels technology in our corner of the country to lower heating costs, create jobs, increase energy self-sufficiency, and lower carbon footprints. I also spoke about how my company, FutureMetrics, is working with policymakers, community leaders, and industry to facilitate the growth of biomass-fueled heating and combined-heat-and-power (CHP) systems. A number of speakers talked about how Sweden has succeeded with energy policies in moving toward a much reduced reliance on fossil fuels for heating, electricity, and transportation. In the process, the country has also dramatically lowered its carbon footprint.
The move away from fossil fuels in Sweden began in the 1970s after the oil shocks. But the more substantive transformation that has brought real structural change began in earnest in 1991 with the implementation of a carbon tax. I realize that in the political climate of the U.S. today, the word tax is a four-letter word. But let’s look at what has happened in Sweden.
The current tax on carbon emissions falls on petroleum-derived products, natural gas, and coal. The cost of wood pellets delivered to Europe is about $185 per ton for cost insurance and freight, which is less than the carbon penalty. Note also that the cost of a ton of coal in Rotterdam is about $120, according to Argus Biomass Markets.
One might think that these sorts of prices on energy and transportation fuels would cripple an economy. In fact, the Swedish economy did undergo a period of transition after the carbon tax was promulgated. As the use of alternative and renewable energy sources increased, however, the new infrastructure and jobs associated with creating energy from what was once waste, and from other renewable sources, complemented by efficiency gains, drove the Swedish gross domestic product (GDP) per capita to become equal to or greater than the U.S.’s by the mid-2000s.
The policies promulgated after the oil shocks of the 1970s and the carbon taxes started in 1991 have greatly reduced Sweden’s reliance on fossil fuels. Energy independence is much closer to reality in Sweden than in the U.S., and a significant portion of that displacement has come from the use of biomass.
More recent laws require that every town have a biogas filling station for cars and trucks, with the biogas upgraded to at least 97 percent methane and almost no carbon dioxide. Biogas is produced in many local and regional biogas facilities from agricultural and food wastes.
This has not only created a market for wastes, but also jobs that support energy and transportation. Since biogas does not incur a carbon tax, it is about 30 to 35 percent less expensive to travel the same distance with biogas than with diesel or E85 gasoline. Sweden also provides tangible benefits to biogas vehicle owners, such as free parking, exemption from city gate tolls, special lanes, and significant tax breaks for corporate purchases of biogas vehicles (40 percent reduction on valuation tax). The Volvo factory in Sweden cannot keep up with demand for green cars.
The byproduct of these policies is what wins Sweden the top ranking in environmental stewardship.
Real Energy Policy
So the message is that a real energy policy can work. A real energy policy can not only deliver greater self-sufficiency for the long-term, but also can be done without long-term harm to the economy. For example, a policy with future targets for carbon taxes incrementally applied over a five-year span would provide advanced notice and allow the renewable economy to develop ahead of the crisis.
A real energy policy requires that energy users have a motivation to become more efficient, to use more of what we might consider waste, and to support an infrastructure for alternatives. But to really notice the dead end on the one-way street, we need to foster an awareness of the consequences of a continued reliance on fossil fuel ingrained as a cultural norm.
We have a long way to go, but at least we can look elsewhere and see how our future could be different; even from simple acts like making a fast food choice based on minimizing the use of nonrenewable fossil fuel energy. Lowering carbon output is good for the planet’s future, but lowering our dependence on fossil fuel energy is good for our economic future.
Author: William Strauss