Biofuel distribution obligation to increase gradually to 20 per cent
The biofuel distribution obligation will increase from the current four to six per cent for 2011–2014, followed by a phased increase to 20 per cent by 2020. On 30 December 2010, the President of the Republic approved an act amending the current act on promoting the use of biofuels in traffic. The new act entered into force at the turn of the year.
In connection with the renewable energy obligation package outlined in spring 2010, the Government set a higher target, raising the share of renewable energy in traffic to 20 per cent by 2020. The key measure for achieving this target is a distribution obligation regarding biofuels.
Since the distribution obligation was set, the use of biofuels in Finland has grown from close to zero in 2007 to approximately 160,000 tonnes of oil equivalent in 2010. According to the new act, consumption will reach 730,000 tonnes by 2020.
Finland chiefly aims to meet this target through so-called double-counted biofuels, meaning an actual quantity of biofuels of 365,000 tonnes. Double counting can be applied when a biofuel is derived from food waste, other waste, or inedible cellulose or lignocelluloses, i.e. wood-based raw material. The aim is to establish two or three of these second-generation production units, which refine biodiesel from forestry by-products.
An increased distribution obligation will not necessarily require any changes to vehicles, because the 20 per cent share is attainable with stock of the current type, provided that the use of biofuels is mainly focussed on diesel vehicles.
The increase in costs due to the use of biofuels will amount to around 110–130 million euros in 2010, depending on the proportion of double counted biofuels. If, as estimated, the price of crude oil rises by 50 per cent from current levels by 2020, while taxation on biofuels falls in accordance with the Government’s proposal regarding energy taxation, no major additional consumer costs will be imposed by the obligation.
For further information, please contact
Petteri Kuuva, Senior Engineer, Ministry of Employment and the Economy, tel. +358 10 606 4811
Anja Liukko, Senior Legal Advisor, Ministry of Employment and the Economy, tel. +358 10 606 2078