The fuel security and climate policy nexus

Mark Sanctuary, Anton Fagerström (), Roozbeh Feiz (), Tomas Lönnqvist () and Axel Lindfors ()
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Anton Fagerström: IVL Swedish Environmental Research Institute
Roozbeh Feiz: Linköping University
Tomas Lönnqvist: IVL Swedish Environmental Research Institute
Axel Lindfors: Linköping University

No 501, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Swedish transportation has a high reliance on biofuels, accounting for approximately 20% of total energy demand in 2019 for transportation, excluding electricity. This makes Sweden an exceptional opportunity to study the interaction between climate policy and fuel security objectives in a small open economy with no domestic oil production. Despite this high reliance, we estimate Sweden’s fuel security premium to be upwards of 0.065 EUR per liter diesel equivalence (or 12.6 USD/barrel) of imported oil, which is comparable although lower than similar estimates for the USA. We then discuss fuel security policy related to specific fuels including HVO/FAME, biomethane, and electricity. We conclude that electricity, and to some extent biomethane, are the most promising in terms of their potential to support fuel security objectives and reduce greenhouse gas emission.

Keywords: Fuel security premium; renewable fuel; climate policy; biofuels; electricity (search for similar items in EconPapers)
JEL-codes: Q42 Q43 Q58 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2024-08-26
New Economics Papers: this item is included in nep-ene and nep-tre
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