Natural gas and biomethane are complementary fuels – developments in Sweden Dr. Mattias Svensson, Energiforsk – Swedish Energy Research Centre EBA Workshop Brussels 3 September 2015

Why biomethane in transports? Only fully oil dependent sector in Sweden! (92 %)* Full utilization of energy with solutions available now Inevitable heat losses in CHP utilization, wind & sun better alternatives Commercially available solutions for oil dependent transports of all types (LDV, MDV, HDV, short, medium and long-distant), with performance on par with diesel soon to come! Natural gas and biomethane: freely intermixed and interchangeable Evident co-distribution and backup synergies (backup for market fluctuations, process failure) allow for 100 % utilization of your biomethane and earlier market buildup Promotional value compensates for added costs Steadily increasing the renewable share gives true greening * Industry – 25 % fossil fuels (oil, coal,natural gas) Households – 10 % fossil fuels (oil) Source: Energiläget 2014, Swedish Energy Agency

Biogas utilisation 2005-2013 264 biogas plants 1.7 TWh biogas (2013) Food waste collection in 190 of Sweden's 290 municipalities 30,000 ton 2005  307,000 ton 2013 (1/3 of potential) The biogasproduction today is around 2 TWh and it is mainly produced from waste products such as sewage sludge and food waste. We have very few agricultural lpants today, but the number is finally starting to grow. The main development the last years is that we are now digesting around 1/3 of the food waste we produce in our housholds. When it comes to the utilisation of biogas in Sweden it is today transport sectro, but has previously been dominated by heat production. Only 3% is used for electricity production. The percentage that is beeing upgraded and used in the transport sector is increasing every year.

Volumes of CNG/biomethane in Sweden Evidence of a fruitful interplay between the use of natural gas and biomethane [GWh] 2014: 1.6TWh (60% renewable)

No. of NGV’s in Sweden The NGV market base: Captive bus fleets (1 bus ≈ 20-30 LDV’s) 2014: 50,102 (46,975; 812; 2,315)

NGV market dynamics of Sweden Local pollution problems + no grid access = biomethane buses Converting to NG buses to solve local pollution problems Grid connected cities of Malmö and Gothenburg NG companies searching for a new market segment The future: 24 m biomethane powered hybrid bus in Malmö from 140601 – most frequent commuter line, BRT concept

NGV market dynamics of Sweden Local pollution problems + no grid access = biomethane buses Environmental state funding to municipals decisive (1998-2010) Non-grid cities upgraded to biomethane to fuel their buses – grid cities followed Captive bus fleets shown* providing the essential niche of the emerging NGV market in Sweden The intercity bus sector is also under ”gasification” in Sweden © Kasper Dudzik, www.kasper.se *Sandén, B., Jonasson, K. Variety Creation, Growth and Selection Dynamics in the Early Phases of a Technological Transition: The Develop-ment of Alternative Transport Fuels in Sweden 1974-2004. pp. 76, 2005. http://publications.lib.chalmers.se/cpl/record/index.xsql?pubid=12635)

Swedish visions and goals The Swedish Gas Industry´s visions are: - 100 % biomethane in the vehicle gas in 2030 - 100 % biomethane in the gas grid in 2050 CHP/ Heat Vehicle fuel Biomethane Natural gas Industrial processes So that was some about the status of today, and what about the future and what about our visions and goals? The Swedish Gas industry´s visions are 100% biomethane in the vehicle gas 2030 and 100% biomethane in the grid 2050. Our national TSO Swedegas is a member of Green Gas comitmet that is working towards the same goal.

Swedish visions and goals Fossil free vehicle fleet in 2050, through the following measures: - ↓ Needs for transports - ↑ Energy efficient vehicles - ↑ Proportion of electricity and bio-fuels On a national level, we have a vision to have a fossil free vehicle fleet in 2050 This should be feasible by decreasing the needs for transports by more sustainable urban planning and more public transport. By developing more energy efficient vehiclesAnd by significaly increasing the proportion of electricity and biofuels.

The realizable biomethane potential for the vehicle fleet in Sweden 2030 TWh Favorable economic and political conditions As we heard before, today around 1 TWh of biomethane is used in the transport sector. Recently a study was performed to calculate the potential biomethane production until 2030 for different scenarious. It could be everything in between about what we produce today and up to 22 TWh, but most probably around 5-10 TWh with the political situation we have today and the very low oil prices.

Biomethane in Sweden today Capital intensive business with still small profit margins need additional drivers and good framework conditions Tax exemption + high fossil fuel taxes most important driver Retail at approx. 2 EUR/kg (9SEK/€) Fringe benefit tax reduction on company cars 40 % Long-term high-volume contracts securing the market Waste management + procurement of public transport Challenges ahead Missing: Extension of existing policies, no new ones to facilitate production growth (tax exemption ruled unlawful by the EU, 2016  ?? certificate system, continued exemption for biomethane only? Competition in the bus segment (HVO, electrification, diesel hybrids) Low oil prices Hearing in September

Biomethane trade in Sweden National trade Similar to certificate trading but without third party control. International trade The Swedish Energy Agency claims that imported biomethane has to fulfil traceability on mass balance level. Not possible through the European gas grid. Decision is appealed. However: One company (Modity) is certified through REDcert, recognized by the European Commission, and is allowed to import biomethane to Sweden

Conclusions The driving forces that co-create NGV markets Oil-dependent transport identified as a major challenge Corporative: Gas companies looking for new markets, clients wanting renewable transport products National, regional and local interest and policy making National policies, regional public procurement and long-term commitments to fulfill environmental goals  Public-private partnerships and supportive national policies are key in building a biomethane powered NGV market! Long-term policy commitment, preferrably % market size! The whole value-chain need to be involved from the beginning!

Natural gas and biomethane are complementary fuels – developments in Sweden Thank you for your attention! Any questions? mattias.svensson@energiforsk.se www.energiforsk.se (www.sgc.se) www.gasification.se October 2016 www.nordicbiogas.com Finland (Sthlm-Turku LNG ferry!) 7-10 Sep 2016

Limited national gas grid in Sweden Denmark (pipeline) Helsingborg Göteborg Laholm Falkenberg Nynäshamn (LNG) Lysekil (LNG) Göteborg (LNG) Lidköping (LBG) The natural gas corresponds to approx. 3% of the total energy supply Biomethane is injected from 10 of the 55 biomethane plants (green arrows) 3 LNG import temrinals so far Sweden is a very small gas country, only 3 % of the total energy supply origins from gas. One major reason for this is of course that we have a very small national gas grid, limited to the south west of Sweden, supplied with natural gas from Denmark. Biomethane has been injected into the gas grid since 2000, today at 10 different locations. Besides that national gas grid, we have two LNG harbours, one which supplies the Stockholm area with gas, which is in operation since 2011, and another one on the west cost in Lysekil, which was taken in operation during 2014. Since 2012, we also have a LBG plant in operation in Lidköping, which I will tell you some more about later on in this presentation. Bjuv Lund Malmö and Trelleborg

Sweden is world leading in transporting gas off-grid This situation ha led to that Sweden today is world leading in transporting gas off-grid. That I will give you some examples of, Read more in case story from IEA Bioenergy Task 37: Non-grid biomethane transportation in Sweden

The future: Regional grids The idea is to connect production units, refuelling stations and customers to an LNG terminal A potential development we see in Sweden is regional gas grids. In these grids, an LNG terminal is connected to both renewable gas producers and costumers. This is creating new market possibilities for biomethane in parts of Sweden that yoday do not have a gas grid.. Source: Swedegas

Drivers spelled out: Biomethane positive externalities Considering the wider picture is important in order for biomethane production to be worthwhile Energy value Promotional: Customer demand Creating a greener image Biomethane Socioeconomic: Lesser air pollution Closing nutrient cycles Climate mitigation Domestic production Job creation Agricultural developm. Securing soil fertility (double cropping and catch crops: more micronutrients and soil carbon, alleviate compaction) Regulatory: Quota systems Feed in Tariffs, premiums CO2 taxation Tax exemptions Procurements National goals