Friday, November 18, 2005

Sweden first to break dependence on oil! New programme presented

The Swedish prime minister announced that the government would appoint a commission that will try to make Sweden independent of oil by 2020.

article by Mona Sahlin, Minister for Sustainable Development

In recent weeks we have read about and anguished over the devastation in the United States. These natural disasters have also reminded us how vulnerable we are to the forces of the weather. A hurricane that puts a number of oil rigs out of action affects the availability of oil, the economies and the price of petrol around the world.

We have seen the consequences in every country. In light of the oil supply disruptions, the Swedish Government recently decided to allow withdrawals from the country's emergency stocks of petroleum products. The whole world is now dreading the problems brought about by dependence on oil. In a situation where President Bush speaks to the nation about using cars less - and where Ford and Toyota demand that the President takes steps to reduce dependence on oil - each and every one of us can see how the devastation created by the hurricanes rapidly changes the attitude towards fuel. It is as though the idea that oil is a finite resource is only now seriously having an impact on the debate. But there is reason to believe that this awareness will also remain on the agenda in the slightly longer term.

Climate change is the greatest and most important environmental challenge of our time. Most of the world's climate researchers agree that the Earth's climate system is changing - and in order to slow down these changes, emissions of greenhouse gases must be reduced. The Government is therefore setting a new policy target: the creation of the conditions necessary to break Sweden's dependence on fossil fuels by 2020. A Sweden free of fossil fuels would give us enormous advantages, not least by reducing the impact from fluctuations in oil prices. The price of oil has tripled since 1996! Old oil price records are now being beaten at a rapid rate.

It is already a major competitive advantage for Sweden's industry and the economy that, by international standards, the country has such a small dependence on oil. Swedish policy instruments such as investment grants, norms for energy use, loans with interest subsidies and information drives have formed the basis of a conscious policy to gradually reduce oil use. Since 1994 the use of oil in the housing and services sector has decreased by 15.2 TWh. The use of oil in industry has remained largely unchanged - although industrial production has increased by 70 per cent! Measures to increase energy efficiency and to promote the development of district heating continue to be politically important tools. An increasing number of households are taking advantage of the benefits of district heating and heating pellets; car industry order books are being filled with hybrid and ethanol cars. This trend must be speeded up. The Government is therefore presenting a national programme against dependence on oil with the following main features.

. Tax relief for conversion from oil. It is unacceptable that many owners of single-family homes are dependent on oil for their heating and are thus hard hit by high oil prices. In the next few weeks I will be presenting a Government Bill on financial support for the owners of single-family homes and multi-dwelling buildings in order to encourage conversion from oil heating to renewable energy heating, beginning next year. The public sector must take the lead and set a good example. For some time now, therefore, special support has been available to libraries, public swimming baths and hospitals, for example, that become more fuel efficient by converting to renewable energy.

. More renewable energy. Oil and coal are finite fuels. The target must be that we base our entire energy supply on renewable fuels. The EU trading system represents an important step towards improved competitiveness in renewable energy at European level. In our country, renewable electricity has increased by approximately 4.5 TWh since 2002, not least by means of the green certificate system. We will give a longer term perspective on electricity certificates in a Government Bill to be presented next spring. The level of ambition has been set very high - by 2016, renewable electricity production will have increased by 15 TWh from the 2002 level. A directive to state-owned Vattenfall means the company will be responsible for major investments in renewable energy for the future. A new inquiry will submit proposals to the Government on how also agricultural production of renewable energy can be increased.

. Measures for renewable fuels. Breaking dependence on oil in the transport sector will be a great challenge and the Government therefore has an ambitious policy to increase the percentage of renewable fuels. For the individual, it will pay to choose an environmentally friendly car. Carbon dioxide neutral fuels will be cheap - they are exempt from both carbon dioxide tax and energy tax for a five-year period. Environmental cars will be exempted from the Stockholm Trial with environmental charges and will have access to free parking in some municipalities. Cars that are classified as a taxable benefit and run on environmentally friendly fuel will continue to enjoy tax relief. The Government will give priority to purchasing environmentally friendly cars. Sweden is also working actively in the EU for us to permit a higher blend of ethanol in petrol, a measure which would quickly have a great positive effect. The readjustment of the transport sector requires both international and national efforts with broad contributions by researchers, industry, users and the state.

. Research and new knowledge for a renewable society. Resources for energy research will now be increased substantially - the level advised in the budget amounts to some SEK 815 million per year. Next year the Government will therefore present a new Bill in this area. The purpose of these measures is to achieve more renewable energy production and more efficient energy use. Special research projects in areas such as energy use in built environments, biofuels, gasification of biomass, and commercialisation and risk capital provision may also be called for.

. Continued investment in district heating. District heating has increased radically in Sweden in recent years and the Government wants this trend to continue. The Government will thus offer clear financial incentives where biofuels and environmentally friendly heating will be economically advantageous. New money for climate investment programmes in all the municipalities in the country will also be significant in reducing dependence on fossil fuels.

Along with high oil prices and climate change, an increasing number of countries are recognising the problem with fossil fuels. Sweden has the chance to be an international model and a successful actor in export markets for alternative solutions. But this requires conscious investments - not a reactionary policy that obstructs the transition to alternative energy sources and investments in the environment of the future. Breaking dependence on oil brings many opportunities for strengthened competitiveness, technological development and progress. The aim is to break dependence on fossil fuels by 2020. By then no home will need oil for heating. By then no motorist will be obliged to use petrol as the sole option available. By then there will always be better alternatives to oil.


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