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The fuel security and climate policy nexus

Author

Listed:
  • Sanctuary, Mark

    (KTH Royal Institute of Technology, & IVL Swedish Environmental Research Institute)

  • Fagerström, Anton

    (IVL Swedish Environmental Research Institute)

  • Feiz, Roozbeh

    (Linköping University)

  • Lönnqvist, Tomas

    (IVL Swedish Environmental Research Institute)

  • Lindfors, Axel

    (Linköping University)

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.

Suggested Citation

  • Sanctuary, Mark & Fagerström, Anton & Feiz, Roozbeh & Lönnqvist, Tomas & Lindfors, Axel, 2024. "The fuel security and climate policy nexus," Working Paper Series in Economics and Institutions of Innovation 501, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0501
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    More about this item

    Keywords

    Fuel security premium; renewable fuel; climate policy; biofuels; electricity;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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