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Sweden’s biodiesel blending rate fell to a 12-month low in December 2022 as the high cost of renewable diesel deterred physical use of the fuel at a time when many blenders had completed their obligations for the year, newly-updated government data shows.
The Nordic country typically has the highest biodiesel blending rates in Europe, given the tough GHG-reduction mandate (30.5% in 2022 and 2023) inherited from the previous center-left government and compelling tax incentives for the use of renewable diesel (RD), which is also known as hydrotreated vegetable oil or HVO.
But targets and incentives for HVO and fatty acid methyl ester (FAME) became much more uncertain in October last year after the newly-elected right-wing government said it would revert to the EU’s baseline GHG reduction target (6%) from 2024 onwards.
The government comments made in October were interpreted as a majorly bearish development for demand for various biodiesels.
The data, which was updated in the past several days, shows that various biodiesels (mainly renewable diesel and FAME) accounted for 25% of the total volume of diesel/diesel-type fuel in the final month of last year, compared with 19% in the final month of 2021.
“For blending, it is quite common that it varies over the season since we have the winter quality diesel during the winter time,” one official source said about the figures.
“We have also noticed that fuel suppliers tend to make sure that they fulfill the greenhouse gas reduction mandate during the year, which causes blend levels to decrease by the end of the year,” the source said.
He added: “When it comes to products such as pure biodiesel (HVO100 and B100) they have become more expensive, so customers that used to pay the premium are instead opting for conventional diesel fuel.”
A total of 128,685 cubic meters of biodiesel were consumed in Sweden in December 2022, compared with overall diesel (including biodiesels) sales of 419,293 cubic meters, with the 25% blend rate down from 27% in November and 38% in October.
The full-year dataset for 2022 shows that 1.8498 million cubic meters of HVO/FAME were consumed in 2022, out of a diesel/biodiesel total of 4.9467 million cubic meters, giving an average blending rate for last year of 37% – the highest year on record.
That compares with a biodiesel average annual blending rate for 2021 of around 29%.
Consumption of ethanol in Sweden, where an E10 mandate (up to 10% ethanol, at least 90% fossil diesel) has been in place since 2021, the implied blend rate for ethanol was 9% in December last year, steady from 9% in November but down from 10% in October.