Case Study

Sweden Sets the Green Energy Standard

Bioenergy is Sweden’s leading energy source, comprising one third of the country’s total energy supply. Through pioneering efforts that include fiscal incentives and strong political support, the country now serves as an example of best practice for countries such as Malaysia that are seeking to intensify their green energy growth.

Leading the way in bioenergy

As is the case with Malaysia, Sweden is a country endowed with a wealth of natural resources that enriches its renewable and green energy potential. The sources of energy at its disposal include sunlight, wind, abundant rainfall which feeds large rivers, and extensive forests.

Since the early 1970s, Sweden has worked to effectively and sustainably maximise these natural assets with the aim of mitigating its over-reliance on fossil fuels, which accounted for more than 75 per cent of its energy generation in 1970. Since this time, Swedish authorities have engaged in a series of pioneering efforts to incorporate a range of fiscal incentives and strong political support to drive down the overall share of fossil fuels in the national energy mix. As a result of these efforts, this share was reduced to 26 per cent as of 2014, which represents the lowest in the European Union.

For purposes of comparison, the target established by the Eleventh Malaysia Plan (2016-2020) is for the share of fossil fuels in the national energy mix to continue to fall over the coming years, to approximately 82 per cent by 2020. This figure compares to the 2013 average of 81 per cent recorded among the member states of the International Energy Agency, the majority of which are advanced economies.

These concerted efforts by Swedish authorities have transformed the Nordic country into the top-ranked nation globally in terms of power generation from clean energy. At present, approximately 50 per cent of its entire energy supply comes from renewable sources (see fig. 1).

Overall, bioenergy is the largest single source of power generated in Sweden, comprising one third of the total energy mix. The generation of bioenergy has grown from 11 per cent of the total energy mix, or 52 terawatt hours (TWh) in 1983, to 23 per cent, or 129 TWh in 2013, surpassing the contribution of oil in 2009. Since then, this resource has exceeded the combined contribution of hydropower and nuclear power in the nation’s clean energy matrix.

In Malaysia, bioenergy  is in a far earlier development stage and so valuable lessons are offered by Sweden. Nevertheless, government incentives enacted in Malaysia, such as the Feed-in-Tariff mechanism, have been stimulating investment in the green energy segment for a number of years and the growth of green and renewable energy generation is set to continue.



District heating and the key success factors

The catalyst of Sweden’s increasing utilisation of bioenergy, and in particular biomass, has been its district heating strategy. District heating, which makes up a considerable portion of national energy use, is an environmentally friendly way to heat homes, buildings and other areas in which heating throughout a district is supplied via a central system capable of running on an assortment of fuels. This technique has been available in Sweden since the 1950s, and by 2013 it accounted for 58 per cent of total energy use in residential and non-residential premises. In turn, biomass as a fuel source for district heating plants has increased substantially over the past two decades. By 2013, it comprised 60 per cent of the input energy in district heating production.

The expansion and success of Sweden’s district heating system, and incorporation of green energy into the national grid in general, is primarily due to three interrelated factors: strong political support; the introduction of effective fiscal incentives; and municipal assistance. Significantly, these factors are particularly relevant to the Malaysian context given that government’s National Biomass Strategy 2020. This document sets out to create higher value-added economic activities and numerous employment opportunities in the biomass segment over the next few years.

Strong political support

During the oil crisis of the 1970s, Sweden committed to switching the main source of energy supply from foreign oil to resources native to Sweden in an effort to mitigate dependence on other countries, despite the costs involved. With scant indigenous hydrocarbon reserves and an inability to further expand its hydropower resources, one of the most viable options was green energy.

To drive this plan, the Swedish government began to invest in nuclear and clean energy research and development (R&D), including into green technologies. This research led to the discovery that large swathes of Swedish forests could serve as an ideal source for heating. The revelation prompted the redesign of boilers to incorporate biomass, which consisted mostly of forest residues and, subsequently, other waste material.

The R&D also provided support to technological developments in the biomass industry. As such, the key areas of focus have been combustion and conversion technologies, demonstration of pre-competitive technologies, fuel production, harvesting supply programmes, and ash recycling.

Sweden has continued its long-term support of the bioenergy segment and as a consequence was able to meet its 2020 target to achieve 50 per cent of all energy generation from renewable sources eight years earlier than anticipated, in 2012. The current figure of 51 per cent is the highest in the European Union.

Fiscal incentives

To further bolster the bioenergy segment, biomass is now exempt from all energy-, carbon dioxide- and sulphur oxide-related taxes in Sweden. The original introduction of these taxes followed an energy tax reform in 1991, which increased the costs of using fossil fuels by between 30 to 60 per cent. This reform provided an important stimulus to the biomass sector by helping it become the preferred fuel for district heating.

As a result, several new biomass-fired combined heat and power production plants were built, despite a lack of economic competitiveness in the biomass-based electricity production field. Moreover, since oil boilers were redesigned to utilise biomass, the majority of the population began to choose this green resource as the primary means of warming their homes.

Municipal involvement

The development of biomass district heating systems falls primarily under the purview of Sweden’s municipalities. In fact, a majority of the district heating systems are owned and operated by municipalities or by private companies on their behalf. These local authorities have garnered robust support for biomass-fuelled district heating due to the fact that the system provides economic and environmentally sustainable heating for both domestic and industrial use. Simultaneously, this system affords numerous economic benefits by generating employment opportunities for the local population while also providing a viable disposal option for organic industrial waste products, such as those emitted by sawmills.


Final remarks

Sweden affords a number of countries, not just Malaysia, a series of valuable lessons in terms of how to foster the growth of a sustainable, manageable and economically viable green energy sector. It also provides an important example of how the public and private sector have engaged in collaborative relations to respond to evolving consumer attitudes regarding clean energy and a green lifestyle.

Political support, fiscal incentives and local-level cooperation between authorities have all helped to transform Sweden into a true global leader of green energy. The example has been set; it is now up to other nations to set their own green energy standards.


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