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Peter Boisen, Chairman of NGVA Europe and Sweden's number one advocate for natural gas vehicles (NGVs), files this country report outlining industry developments in Sweden.
Executive summary
Sweden’s fleet of NGVs during the first half of 2008 increased from 14,536 to 15,474 vehicles. The number of filling stations went from 115 stations to 118 stations, and the gas sales increased by about 9 %. The fuel prices remained at about 70-80% of the corresponding price for gasoline.
Several large new Swedish projects for production of biomethane have been made public, and the industry is set to increase the sales of NG/biomethane by a factor 5 by 2014. Various new exciting product offers will together with continued investments in refuelling stations and biomethane production facilities be the main driver behind the planned market expansion.
EU policies will play an important role - increased support of the biomethane option, support of NG refuelling infrastructure developments, and the new mandatory CO2 emission targets introduced from 2012.
NGV fleets
The total number of NGVs at the end of June, 2008, was 15,474 vehicles including 14,278 LD (light duty) passenger cars and vans, 808 HD (heavy duty) buses, and 388 MD/HD trucks.
In Sweden sales of OEM (original equipment manufacturer) produced vehicles, including QVM (qualified vehicle modifier) conversions of brand new vehicles account for the vast majority of all NGVs present in the market. Conversions must be made in accordance with the ECE R115 rules, and the national road authority also insists on component testing according to the ECE R110 ‘COLD’ alternative, i.e. with all components tested at temperatures down to – 40 degrees C. Factory produced LD vehicles must have a European Whole Vehicle Type Approval (including the fulfilment of ECE R110 rules) and must currently meet Euro 4 emission rules. MD/HD OEM vehicles must have engines certified according to the Euro IV emission rules, but the complete vehicles are homologated according to national Swedish regulations, unless the OEM has arranged a voluntary European Whole Vehicle Type Approval.
Dual fuel projects
There are right now also several independent projects looking at the opportunity to introduce MD/HD vehicles using dual fuel engines, and including liquefied natural gas (LNG) fuel tanks (possibly complemented with CNG tanks in trailers). These projects also include the creation of an LNG refuelling network. It has been estimated that about 24 well located LNG or L-CNG (liquefied compressed natural gas) stations would provide an adequate countrywide refuelling network for HD vehicles used in long distance traffic (roughly one station every 2-300 km along the major Swedish highways). Considering potential HD fuel volumes the infrastructure cost per Nm3 of gas would be rather insignificant.
Sales of LD vehicles by segment
The more important LD segments include the following vehicle categories:
- Medium to large size company cars where the drivers enjoy a 40 % reduction of personal income tax on the privilege of free personal use of the car (annual value up to 16,000 SEK (or about €1,700). The sales within this segment dropped dramatically in mid 2007, following the withdrawal of the Volvo S80/V70/S60 Bi-Fuel models, but is now starting to pick up. An allocation of 500 MB B-class cars was quickly sold out, and the new Volkswagen Passat Eco Fuel, available from end of 2008 both in sedan and wagon version, and including automatic as well as manual transmission, with a new compressor and turbo charged engine, and with an operating range of some 420 km on gas, is expected to become very successful. Sales of Opel Zafira with a new turbo charged engine are also likely to pick up in 2009. Several other manufacturers have also shown very promising concept cars with small turbo charged engines and including micro hybrid solutions (e.g. Fiat and Hyundai).
- Medium to large size taxi cabs (typically wagons with good luggage space and fitted with automatic transmission). Sales are supported by low fuel costs, and by preferential treatment of environmentally superior taxi cabs (e.g. taxi ordering policies both from public and private institutions/enterprises, and special priority lanes at airports, railway stations or ferry terminals)
- Vans used by public enterprises for various service jobs (supported by municipal environmental procurement policies)
- Small to medium sized cars used for example by municipally employed nursing personal servicing sick and elderly persons (supported by municipal environmental procurement policies).
- All sizes of passenger cars bought for private use with national 10,000 SEK (about €1060) support for environmental vehicles, and also supported by lower fuelling cost, free municipal parking benefits and (at least in the near future) exemption from road congestion charges (Stockholm).
Sales during the first half of 2008 were by brand: Volkswagen 571, Opel 205, MB 42 (not counting 500 B-class sold with delivery from July onwards), Fiat 26, Iveco 23, and others 4. Sales are expected to boom from early 2009 thanks to the new product offers from Volkswagen, MB, and Opel.
High penetration of the city bus and refuse truck segments
The sales of HD NG buses is an interesting story. Natural gas is only available in the southwest part of Sweden meaning that NG buses in all other parts of Sweden have to rely on biomethane as a fuel. In line with the gradual introduction of more and more production sites for biomethane (a development which started in 1996) Sweden now has 19 cities with fleets of NG buses of which 15 cities depend on biomethane rather than NG for the propulsion of these buses. About 13% of all Swedish buses used for city traffic are now fuelled by NG/biomethane, and the use of NG/biomethane is now also starting in regional bus traffic. The continued growth mainly depends on the rate of installation of new biomethane production capacity.
Concerning trucks, most of the present fleets consist of municipal refuse trucks, also mainly relying on biomethane as a fuel.
Refuelling network and sales of NG/biomethane for use in vehicles
Sweden (with a population of 9 million people, and a land area of 449,000 km2) now has 90 public and 28 private (mainly bus depots) CNG stations. Until recently these stations were all located below a line drawn from Uppsala in the East to Uddevalla in the West leaving about two thirds of Sweden without refuelling opportunities. But in the last year we have seen new stations created in Boden (above the Polar circle), Skellefteå, and Östersund in the northern part of Sweden (all supplying locally produced biomethane), and many more new plants are under development.
Four different distributor organisations lead the expansion of the refuelling network. E.ON Gas Sweden has its base in southern Sweden, Fordonsgas Sverige AB in western Sweden, Svensk Biogas AB in eastern/central Sweden, and AGA Gas in the Stockholm area.
Together they have the immediate target to reach a total of some 400 filling stations, and to expand the total annual Swedish sales from currently around 60 million Nm3 annually to 2-300 million Nm3 (about 3 % of total Swedish road fuel consumption), all by 2014. Biomethane today accounts for some 53 % of the total sales of NG/biomethane, and the share is expected to continue to grow year by year.
To be recognized as a proper public refuelling station the station must offer self service filling around the clock, and payment must be possible via all major internationally recognized standard credit or payment cards. In addition a number of other demands are covered via a voluntary certification system.
The retail pricing of CNG in Sweden (whether natural gas or biomethane) varies locally but the price including VAT and fuel tax (zero on biomethane, and low on natural gas) is usually 20-30 % lower than the price for a similar amount of energy supplied in the form of gasoline. Part of the gas price is, of course, required to cover the investments in new refuelling stations. With growing sales volumes, and with a more mature refuelling infrastructure, it may eventually be possible to increase the fuel cost advantage.
The Swedish government also uses an annual road tax scheme which differentiates the tax depending upon the fuel choice. The basic principle is that the average driver should, either via fuel tax, or via the annual road tax, pay the same total tax whether using a gasoline or diesel powered car, but that special benefits should be offered to people using environmentally enhanced vehicles. Thus the annual road tax is somewhat lower for NGVs than for gasoline powered cars. The main effect of whole scheme, however, is that people driving far above average annual mileages will prefer diesel powered cars over gasoline powered cars.
Major new developments
Göteborg Energi is planning a two stage introduction of a new plant for production of biomethane via gasification of cellulose waste from the forest industry. Stage 1 is scheduled for completion in 2011, and the plant will eventually deliver some 80 million Nm3 biomethane annually (to be compared with typically 2-6 million Nm3 in a conventional local AD (anaerobic digestion) plant for conversion of sewage sludge, household waste, manure etc). Looking at feedstock potentials dozens of such plants could eventually be established within Sweden.
Another major development is a newly planned plant in Karlshamn which within a few years will start production of both bioethanol and biomethane. The planned annual capacity, expressed in gasoline litre equivalents, is for ethanol 92 million litres, and for biomethane 40 million litres (about 35 million Nm3 of methane).
The Swedish government has also recently proposed a new major support scheme to stimulate the creation of a large number of co-operatives where some 20 farms will each produce raw biogas from manure and then send the raw gas via low pressure piplelines to one common gas upgrading facility delivering pure biomethane for use in vehicles. The total budget is an investment support of some 600 million SEK (about €64 million) over the period 2009-2014.
The industry also plans to improve the supply of liquefied methane to remote locations without close access to the natural gas grid or to biomethane production plants. This will be arranged in several different ways – LNG imports to seaboard terminals, liquefaction of about 20 % of the high pressure natural gas passing through pressure reduction stations (virtually without any consumption of energy thanks to the cooling which occurs when the pressure is reduced), and via the introduction of cryogenic upgrading technologies at biomethane production plants. The liquefied gas, whether natural gas or biomethane, would be moved via tank trailers holding 20-21 tons of gas to various remote locations at a transportation cost which is only marginally higher than for conventional liquid fuels. The use of L-CNG stations will allow supply both of LNG (for long haulage trucks) and CNG (for all kinds of CNG vehicles).
For comparatively short distances there will be a continued use of the mother-daughter concept including trucking of CNG.
Political support
Sweden is part of the EU and any national policies will obviously have to stay in line with overriding EU policies. The food vs fuel debate in 2008 has led to a questioning of the European biofuel targets proposed as late as in January, 2008. It is difficult to predict the final revised targets, but it is already clear that the EU will focus on support of biofuels produced from various organic waste resources or ‘aquacultures’ (read algae). As it happens there are already numerous technologies for very efficient production of biomethane from these resources.
It has also been suggested by various EP (European Parliament) committees that subsidies for production of biogas must not favour heat and power generation over production of pure biomethane for direct use in vehicles, or for injection into the natural gas grid. In addition it has been suggested that the grid owners must open the grid for injection of biomethane meeting all relevant criteria.
Biomethane could in the longer term gradually supplement an increasing share of the natural gas supplies and eventually contribute to methane becoming a major fuel with a high share of renewable gas. For Sweden a biomethane share above 50 % would definitely be feasible in a 2030 perspective. For other countries without similar forest waste resources a 20-30 % biomethane share would still be within reach. Together with natural gas this means the potential for methane to become a major fuel with a very high renewable content.
A crucial success factor for NGVs all over Europe is the rapid development of an adequate public refuelling infrastructure. We must have stations not only in the urban areas but also along the major highways, we must have round the clock refuelling opportunities, we must be able to pay using standard credit or payment cards, and the stations must be continuously supervised and any technical problems resolved without delay. Preferably the dispensers will also be located at normal filling stations offering various other services like toilets and an opportunity to buy snacks, drinks etc.
Italy, Germany, Austria, Switzerland, and Sweden now have reasonably good facilities. The Czech Republic and Bulgaria are not far behind, and great steps are now being taken in the Netherlands. France and Spain have announced ambitious plans, but still have a far way to go. Other not mentioned European countries do not offer adequate public refuelling opportunities and thus effectively impede the Europe wide development of the NGV market. This shortcoming has been recognized by various EP committees, and it has been proposed that the vehicle fuel distributors in each market should be prompted to include methane refuelling at many of their stations. The European NGV industry still has important lobbying challenges on its plate.
The new mandatory EU demands on average CO2 emissions in new LD vehicles of no more than 130 g/km from 2012 (followed by further annual reductions of this target) will very significantly support the NGV market development.
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