Policy instruments

Policy instruments comprise a variety of measures and activities which can be grouped under the following:

• economic measures (subsidies, taxes, fees and certificates)
• indirect economic measures (e.g. access to the grid)
• non-economic measures (agreements, regulation)
• information and education campaigns
• research and development as well as pilot projects

The following overview is the result of an initial investigation, the results of which will be discussed in the project workshop on 24-25 October.

Different targets for renewable energy and bioenergy exist in the Nordic Countries. Not all have a specific target for bioenergy, although the sector in all countries is set to play an important role.

• Targets in Denmark include a proposed increase in the share of renewable energy to 30 % by 2025, where the Biomass Agreement for electricity production plays a significant part;

• In Finland, renewable energy targets aim at 25 % in 2015 and 40 % by 2025. As bioenergy represent 95% of renewable energy in Finland, this target is primarily linked to the increase in the application of bioenergy in the energy system.

• In Norway, a proposed target for bioenergy has been set to increase the use of bioenergy by 14 TWh by 2020, which is close to a doubling from current use (16 TWh/year). In relation to this, a medium-term target exists by 2012 to generate 4 TWh of heat from bioenergy. A general ambitious target is 30 TWh more renewable energy and energy savings compared to 2001 by 2020.

• Sweden has an ambitious strategy to break Sweden’s dependency on oil by 2020 through the use of energy efficiency and increased use of renewable energy.

Framework conditions and support mechanisms differ between the Nordic countries.

In Sweden, the energy tax and CO2 tax exemptions on bioenergy in heat and electricity along with the green certificate market from 2003 have proven efficient in the expansion of bioenergy in the electricity generation. The tax exemption for biofuels is one of the corner stones in the Swedish efforts to increase the use of biofuels. Other important drivers include a wide range of government initiatives (grants, programmes, obligations) to kick-start a clean transportation fuel value chain from production via car producers and fuel distribution to end-consumers.

In Denmark, the Biomass Action Plan Agreements from 1993 and 1997 have been instrumental in introducing straw and wood chips in the electricity generation and CHP, but also the high opportunity cost of fossil fuels have induced the growth in bioenergy in heat and electricity, also in the individual use of pellet ovens. No support mechanisms are in place for 1st generation biofuels in the transportation sector. Numerous pilot projects and research is supported by the Government in developing 2nd generation biofuels.

In Finland, feed-in tariffs for peat in electricity generation and tax subsidies on renewables support the use of bioenergy. Since 2003, an additional tax subsidy is provided for large-scale electricity producers using bioenergy (>100 MWh) and from 2008 an expected subsidy for biogas in electricity production is planned. Biogas is expected based on agro-biomass, slaughter waste, manure and community waste. As in Denmark, Finland does not operate with tax exemptions for biofuels in transport.

In Norway, focus is on eliminating the main bottleneck for district heating through investment subsidies in the creation of district heating networks through investment support and support programmes for the promotion of bioenergy in district heating. Past support to the domestic pellet production has led to an overcapacity despite programmes to promote pellet ovens in households. In the transportation sector, biofuels are exempted from several of the taxes levied on ordinary fuels. Also reductions in the Vehicle Import Duty on E85 cars are in place since summer 2007.
Grants, programmes and R&D are common instruments across the Nordic countries, especially in the area of second generation bio-ethanol, production and processing of domestic fuels, hybrid cars, and biogas.

Additional information can be found i the report on policy measures in the Nordic countries.
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