Isa.se

1. Renewable energy  This presentation will introduce you to investment opportunities in the Swedish cleantech industry, which has emerged as one of the world’s most interesting. The presentation - which complements an Invest in Sweden Agency publication – will provide insights into Sweden in terms of both its current attractions and historical acheivements. Efforts in Sweden to reduce the national carbon footprint are evident wherever you look – across industries, households and public bodies. This presentation will introduce you to investment opportunities in the Swedish cleantech industry, which has emerged as one of the world’s most interesting. The presentation - which complements an Invest in Sweden Agency publication – will provide insights into Sweden in terms of both its current attractions and historical acheivements. Efforts in Sweden to reduce the national carbon footprint are evident wherever you look – across industries, households and public bodies.

2. www.isa.se 2 Bioenergy Sweden among bioenergy world leaders System approach to efficient use of bioenergy Full value chain coverage from raw material handling and processing to optimized end product mix

3. www.isa.se 3 A world leader in biogas/bioenergy Energy from biological sources today account for nearly 30 percent of Sweden’s final energy use – a level that few other countries can match. Swedish municipalities have spearheaded solutions to capture energy in organic waste and sewage and to redistribute that energy, in the form of heat, electricity and renewable fuels, in district heating systems and in public and local transport systems. Several hundred biogas plants provide electricity, heat and fuel to Swedish cities and some 35 upgrading plants turn the biogas into vehicle fuel. As can be seen from the graph to the right, biogas has now surpassed natural gas as the major supply for gas-driven vehicles in Sweden. Energy from biological sources today account for nearly 30 percent of Sweden’s final energy use – a level that few other countries can match. Swedish municipalities have spearheaded solutions to capture energy in organic waste and sewage and to redistribute that energy, in the form of heat, electricity and renewable fuels, in district heating systems and in public and local transport systems. Several hundred biogas plants provide electricity, heat and fuel to Swedish cities and some 35 upgrading plants turn the biogas into vehicle fuel. As can be seen from the graph to the right, biogas has now surpassed natural gas as the major supply for gas-driven vehicles in Sweden.

4. www.isa.se 4 System approach to bioenergy generation and distribution Swedish municipalities have spearheaded solutions to capture energy in all forms of organic waste, be it of human, feedstock, farming or industrial origin – and to redistribute that energy, in the form of heat, electricity and renewable fuels, in district heating systems and in public and local transport systems A holistic approach – taking into account possible efficiencies and synergies throughout the value chain – is characteristic of efforts undertaken. One example is the penetration of Swedish district heating and district cooling systems, which reach large shares of the population. Some 75 percent of commercial buildings are connected to the district heating system. As mentionned, Sweden has a well built-up infrastructure for biogas production and there are large numbers of biogas-driven vehicles and biogas filling stations. Large-scale biogas plants are now planned in several locations. One example is the GoBiGas (Göteborg Biomass Gasification) project, which will see a variety of biofuels, including synthetic diesel, dimethyl ether (DME), hydrogen gas and upgraded biogas, being produced from biomass. The project, a world-first for its size, is a cooperation between the municipal energy company Göteborg Energi and the German energy company E.ON. The intention is to transform low grade biomass such as forestry residues into biogas, with an efficiency of 60-70%. The plant will be sited next to an existing CHP (combined heat and power) plant, where parts of the gas can be used. In addition, most of the waste heat will be used for district heating, which will contribute to increasing efficiency to 90 percent. Swedish municipalities have spearheaded solutions to capture energy in all forms of organic waste, be it of human, feedstock, farming or industrial origin – and to redistribute that energy, in the form of heat, electricity and renewable fuels, in district heating systems and in public and local transport systems A holistic approach – taking into account possible efficiencies and synergies throughout the value chain – is characteristic of efforts undertaken. One example is the penetration of Swedish district heating and district cooling systems, which reach large shares of the population. Some 75 percent of commercial buildings are connected to the district heating system. As mentionned, Sweden has a well built-up infrastructure for biogas production and there are large numbers of biogas-driven vehicles and biogas filling stations. Large-scale biogas plants are now planned in several locations. One example is the GoBiGas (Göteborg Biomass Gasification) project, which will see a variety of biofuels, including synthetic diesel, dimethyl ether (DME), hydrogen gas and upgraded biogas, being produced from biomass. The project, a world-first for its size, is a cooperation between the municipal energy company Göteborg Energi and the German energy company E.ON. The intention is to transform low grade biomass such as forestry residues into biogas, with an efficiency of 60-70%. The plant will be sited next to an existing CHP (combined heat and power) plant, where parts of the gas can be used. In addition, most of the waste heat will be used for district heating, which will contribute to increasing efficiency to 90 percent.

5. www.isa.se 5 Inspiring examples all over the country Sweden offers bioenergy inspiration in abundance, here are just a few examples: * Sveg is the site for the Chinese/Swedish joint venture involving a subsidiary of State Grid of China. Together with National Bio Energy and Dragon Power, the municipality of Härjedalen has formed a company that will build a biofuel combine plant - one of the world’s first commercial plants to produce ethanol from forest raw materials. The plant will also produce pellets, briquettes, electricity and district heating using forest-based raw material and peat. In Storuman, north Sweden, the new bioenergy combine set up by Skellefteå Kraft uses a unique ”steamdry” process to capture energy in forest biomass. 98 percent efficiency means the world’s cleanest biopellets can be produced here. (Annually 105,000 tons of pellets, 48 million kWh electricity and 40 million kWh heat will be produced here) * Västerås offers a great showcase for a complete system for re-cycling raw materials, waste, nutrients and energy between urban and rural areas. Vehicle gas, electricity, heat and bio-manure is produced from food wastes, silaged grass ley and sludge – and farmers participate actively through their co-ownership of a company that links together the activities of the local authority with waste management and energy generating companies. The Skåne region to the south is home to NSR, a recycling company owned by six municipalities. It is one of Europe’s foremost biogas producers, with a number of pioneering technology implementations. For example, a pipeline pumps pumps bio-manure directly to farms in the area. Sweden offers bioenergy inspiration in abundance, here are just a few examples: * Sveg is the site for the Chinese/Swedish joint venture involving a subsidiary of State Grid of China. Together with National Bio Energy and Dragon Power, the municipality of Härjedalen has formed a company that will build a biofuel combine plant - one of the world’s first commercial plants to produce ethanol from forest raw materials. The plant will also produce pellets, briquettes, electricity and district heating using forest-based raw material and peat. In Storuman, north Sweden, the new bioenergy combine set up by Skellefteå Kraft uses a unique ”steamdry” process to capture energy in forest biomass. 98 percent efficiency means the world’s cleanest biopellets can be produced here. (Annually 105,000 tons of pellets, 48 million kWh electricity and 40 million kWh heat will be produced here) * Västerås offers a great showcase for a complete system for re-cycling raw materials, waste, nutrients and energy between urban and rural areas. Vehicle gas, electricity, heat and bio-manure is produced from food wastes, silaged grass ley and sludge – and farmers participate actively through their co-ownership of a company that links together the activities of the local authority with waste management and energy generating companies. The Skåne region to the south is home to NSR, a recycling company owned by six municipalities. It is one of Europe’s foremost biogas producers, with a number of pioneering technology implementations. For example, a pipeline pumps pumps bio-manure directly to farms in the area.

6. Timber stocks per inhabitant Forests are not uniformly distributed around the world. Often areas with large populations have very few forests – and vice versa. Sweden has vast forests and very few people. One way of illustrating this is to compare how much forest a country has in relation to its population. A comparison of the situation in Sweden with conditions in certain other European countries shows that there are 327 cubic metres of wood per Swede, whereas in France and Germany there are only 50 and 35 cubic metres per capita, respectively. In Great Britain the figure is as low as 6 cubic metres per inhabitant. Forests are not uniformly distributed around the world. Often areas with large populations have very few forests – and vice versa. Sweden has vast forests and very few people. One way of illustrating this is to compare how much forest a country has in relation to its population. A comparison of the situation in Sweden with conditions in certain other European countries shows that there are 327 cubic metres of wood per Swede, whereas in France and Germany there are only 50 and 35 cubic metres per capita, respectively. In Great Britain the figure is as low as 6 cubic metres per inhabitant.

7. 95 percent of the trunk is put to use

8. Heat and Power Abundant access of wood in the Northern Sweden. Biofuels are the dominating fuel in the heat and power plants. CPH (Combined Power and Heat) plants are more effective, e.g. the Sveg plant, in the northern of Sweden. Fuel cell power plants producing electricity and thermal energy are expected to achieve efficiencies of 80 % or more, when used as CHP plants.

9. A combined heat and power plant will solve the surplus problems in warm seasons Heat or electricity generated by 1 million m3 wood fuel

10. Electricity from heat and power production

12. The Swedish pellets market (tonnes/year)

13. Biofuels Sweden in forefront of vehicle fuel development Gasification of biomass Ethanol from cellulose Biodiesel from talloil DME from black liquor

15. Ideal place to develop and manufacture 1st and 2nd generation biofuels Few countries boast such good prerequisites for biofuel development as Sweden: 1) There is ample access to raw material, such as biomass from vast forests, agriculture, waste and by-products from pulp and paper manufacturing. 2) Capabilities in forest chemistry have resulted in technologies for creating biofuels with high energy value. 3) Sweden has solid refining know-how in its petrochemical industry (a Swedish refinery produces the world’s cleanest diesel) 4) Sweden is home to the two largest manufacturers of heavy diesel engines, truck makers Scania and Volvo. Volvo Trucks recently introduced seven carbon-neutral engines capable of running on specific alternative fuels – engines that are being put to the test in Sweden. In addition, Sweden’s automotive brands Saab and Volvo are pioneering hybrid plug-in vehicles. 5) Sweden has several dedicated vehicle test environments, e.g. Test Site Sweden and Swedish Winter Test Region.Few countries boast such good prerequisites for biofuel development as Sweden: 1) There is ample access to raw material, such as biomass from vast forests, agriculture, waste and by-products from pulp and paper manufacturing. 2) Capabilities in forest chemistry have resulted in technologies for creating biofuels with high energy value. 3) Sweden has solid refining know-how in its petrochemical industry (a Swedish refinery produces the world’s cleanest diesel) 4) Sweden is home to the two largest manufacturers of heavy diesel engines, truck makers Scania and Volvo. Volvo Trucks recently introduced seven carbon-neutral engines capable of running on specific alternative fuels – engines that are being put to the test in Sweden. In addition, Sweden’s automotive brands Saab and Volvo are pioneering hybrid plug-in vehicles. 5) Sweden has several dedicated vehicle test environments, e.g. Test Site Sweden and Swedish Winter Test Region.

16. First generation biofuels are in commercial useBiofuels available on the market with subsidies

17. Second generation biofuels more energy efficientSome of the second generation biofuels are in commercial use

18. Biofuels’ energy efficiency and CO2 emission compared to fossil fuels’ Biofuels are by far cheaper than fossil fuelsBiofuels are by far cheaper than fossil fuels

19. Sweden has produced ethanol since the 1930’s In Sweden ethanol was already produced in the 1930’s. Scania drove their first trucks on ethanol, before cheap oil was discovered. In Sweden there is an easy access to ethanol, with 676 filling stations or 15 % of the total nearly the same as in whole US. Sweden has over 70 years experience with ethanol and 20 years experience of driving ethanol busses with over 400 ethanol buses on our streets.

20. World firsts in 2nd generation biofuels Considerable efforts are devoted in Sweden to creating new revenue streams out of the forest resources and to developing efficient processes in optimally integrated biorefinery systems. The BioDME and SunPine projects clearly demonstrate Sweden’s competitive advantages. The BioDME and SunPine projects, both located in the city of Piteå in northern Sweden, will see construction of two separate plants for biofuel production in Piteå. The company Chemrec, which is funded among others by US investors, has developed a gasification technology that enables black liquor, a by-product from pulp manufacturing, to be transformed into DME dimethyl ether, probably the most environmental-friendly biofuel. SunPine has developed a technology that enables industrial-scale manufacturing of green diesel from cellulose. Both projects are world-firsts. Background info - Black liquor to DME-project World’s first BioDME-plant to be built at Smurfit Kappa Kraftliner factory in Piteå. Project partners: Chemrec (gasification technology), Volvo Trucks (demonstration trucks), Smurfit Kappa (raw material supply), Preem (distribution). Other partners: Delphi (DME fuel injection systems), ETC, Center for Energy Technology in Piteå (synthesis gas expertise), Haldor Topsøe (DME synthesis technology), Swedish Energy Agency (financial support), Total (DME fuel grade specification). www.biodme.eu Background info – Sunpine tall oil biodiesel Developer: SunPine (owned by Preem, Sveaskog, Södra Skogsägarna and the founders). Plant in Piteå to produce tall oil diesel, shipping to Göteborg for upgrade at Preem biorefinery. Distribution to corporate customers. Investments: EUR 25 million in SunPine plant in Piteå, EUR 25 million in biorefinery in Göteborg www.sunpine.se Considerable efforts are devoted in Sweden to creating new revenue streams out of the forest resources and to developing efficient processes in optimally integrated biorefinery systems. The BioDME and SunPine projects clearly demonstrate Sweden’s competitive advantages. The BioDME and SunPine projects, both located in the city of Piteå in northern Sweden, will see construction of two separate plants for biofuel production in Piteå. The company Chemrec, which is funded among others by US investors, has developed a gasification technology that enables black liquor, a by-product from pulp manufacturing, to be transformed into DME dimethyl ether, probably the most environmental-friendly biofuel. SunPine has developed a technology that enables industrial-scale manufacturing of green diesel from cellulose. Both projects are world-firsts. Background info - Black liquor to DME-project World’s first BioDME-plant to be built at Smurfit Kappa Kraftliner factory in Piteå. Project partners: Chemrec (gasification technology), Volvo Trucks (demonstration trucks), Smurfit Kappa (raw material supply), Preem (distribution). Other partners: Delphi (DME fuel injection systems), ETC, Center for Energy Technology in Piteå (synthesis gas expertise), Haldor Topsøe (DME synthesis technology), Swedish Energy Agency (financial support), Total (DME fuel grade specification). www.biodme.eu Background info – Sunpine tall oil biodiesel Developer: SunPine (owned by Preem, Sveaskog, Södra Skogsägarna and the founders). Plant in Piteå to produce tall oil diesel, shipping to Göteborg for upgrade at Preem biorefinery. Distribution to corporate customers. Investments: EUR 25 million in SunPine plant in Piteå, EUR 25 million in biorefinery in Göteborg www.sunpine.se

21. A great test market for biofuels Sweden has embraced renewable fuels, including biogas and ethanol, in a major way: Green cars account for nearly 40 percent of new car sales. (NOTE: The spike in december 2007 is partly due to high sales of diesel cars – the sales rebate of SEK 6,000 related to particle filters was abolished from 1/1 2008) By October 2008, 35 percent (1226/3586) of filling stations sold renewable fuels, primarily ethanol. (This is partly due to a law requiring filling stations of a certain size to offer renewable fuels. The rapid growth in green car sales is primarily explained by the introduction of a wide range of incentives, such as free car road tolls, free residential parking and cash rebates on sales prices. These incentives, having now achieved their purpose, are being phased out. Local public transport has made important contributions to the use of renewable fuels, for example Stockholm Public Transport, which operates the world’s largest fleet of ethanol buses. Biogas in public transport is widespread in the Göteborg, Norrköping/ Linköping and Skåne regions Sweden has embraced renewable fuels, including biogas and ethanol, in a major way: Green cars account for nearly 40 percent of new car sales. (NOTE: The spike in december 2007 is partly due to high sales of diesel cars – the sales rebate of SEK 6,000 related to particle filters was abolished from 1/1 2008) By October 2008, 35 percent (1226/3586) of filling stations sold renewable fuels, primarily ethanol. (This is partly due to a law requiring filling stations of a certain size to offer renewable fuels. The rapid growth in green car sales is primarily explained by the introduction of a wide range of incentives, such as free car road tolls, free residential parking and cash rebates on sales prices. These incentives, having now achieved their purpose, are being phased out. Local public transport has made important contributions to the use of renewable fuels, for example Stockholm Public Transport, which operates the world’s largest fleet of ethanol buses. Biogas in public transport is widespread in the Göteborg, Norrköping/ Linköping and Skåne regions

22. The Pulp Mill becomes a Biorefinery with Chemrec Technology

23. Executive summary – investment opportunities in Swedish biofuels Fluctuating oil prices and a high import dependence of fossil fuel, with warning-signs for an emerging physical shortage and CO2 emissions are increasing, which most scientists and politicians believe will lead to global warming The need for alternative energy solutions has therefore increased. Sweden has early imposed on itself a stricter energy policy than agreed within European Union. Recent governmental commitments like becoming independent of oil within 2020. Sweden together with the Nordic countries are world leaders in bioenergy use and technology. The share of biomass in the total energy production is here the highest in the world. Investment opportunities exists in Swedish ethanol plants and heat and power plants, due to future demands. The Swedish goals are to decrease the oil use in transportation with 40-50 % and heating process in real estates should be completely oil free by 2020. Investment opportunities also exists in new technologies, such as ethanol from cellulose, dimethyl ether (DME), Fisher Tropsch diesel (FTD) and hydrogen. One of the first plants producing second generation biofuels – “black liquor”, is now commercializing its technology (Chemrec).

24. Wind power Sweden is a hotspot for wind farm construction and by 2020, a 20-fold increase is projected The targeted wind power output by 2020 is 30 TWh from 5,000 new wind turbines representing an investment volume of some 15 billion Euro 2/3 will be on-shore constructions for arctic climate and 1/3 will be off-shore constructions

25. Sweden offers some of Europe’s best potential for wind farm expansion, due to vast sparsely populated areas, good wind conditions and a long coastline. There is currently strong build-up of, with extensive developments foreseeable for the next decade. The target for wind power output, as recommended by the Swedish Energy Agency, is 30 TWh by 2020, a 20-fold increase compared with the current production levels. To reach that goal, some 5,000 new wind turbines may be needed. The incentive structure is in place, with renewable energy producers receiving electricity certificates from the State, in proportion to the quantity that they produce. The subsidy is linked to the price of the certificate Political unity and stability is another benefit. There is firm government commitment to wind power and the electricity certificate system will be prolonged until 2030 Sweden offers some of Europe’s best potential for wind farm expansion, due to vast sparsely populated areas, good wind conditions and a long coastline. There is currently strong build-up of, with extensive developments foreseeable for the next decade. The target for wind power output, as recommended by the Swedish Energy Agency, is 30 TWh by 2020, a 20-fold increase compared with the current production levels. To reach that goal, some 5,000 new wind turbines may be needed. The incentive structure is in place, with renewable energy producers receiving electricity certificates from the State, in proportion to the quantity that they produce. The subsidy is linked to the price of the certificate Political unity and stability is another benefit. There is firm government commitment to wind power and the electricity certificate system will be prolonged until 2030

26. Over 50 TWh of wind power potentialCost in SEK per kWh, assuming 10% of technical potential is realized The Swedish Energy Agency and the energy industry research institute Elforsk have studied the economic potential for onshore and offshore wind power in Sweden by 2020. The study considers the physical, technical and economic conditions that affect profitability in wind power projects, and shows a total technical wind power potential of 510 TWh per year on land and 46 TWh per year at sea. Assuming 10 percent of the technical potential can be realized, this still leaves potential for more than 50 TWh per year from wind power in Sweden. The graph shows estimated costs for such a build-up. The map to the right shows the current situation for large (>20 MW) wind power projects. As of end-2008, there were some 10.3 TWh under construction or with all necessary consents and 6.3 TWh under environmental assessment. Onshore wind farm projects accounted for 3.8 TWh / 4.4TWh and offshore for 6.5 TWh / 1.9 TWh. Northern Sweden, particularly the Västerbotten and Jämtland counties, is likely to see the most extensive build-up going forward. These are sparsely populated areas with good wind conditions, where few parties are affected by developments. In the Markbygden area, outside Piteå, there are plans to build Europe’s largest wind farm – 1,000 wind turbines to generate 8–12 TWh annually. Construction on the wind farm began in 2008.The Swedish Energy Agency and the energy industry research institute Elforsk have studied the economic potential for onshore and offshore wind power in Sweden by 2020. The study considers the physical, technical and economic conditions that affect profitability in wind power projects, and shows a total technical wind power potential of 510 TWh per year on land and 46 TWh per year at sea. Assuming 10 percent of the technical potential can be realized, this still leaves potential for more than 50 TWh per year from wind power in Sweden. The graph shows estimated costs for such a build-up. The map to the right shows the current situation for large (>20 MW) wind power projects. As of end-2008, there were some 10.3 TWh under construction or with all necessary consents and 6.3 TWh under environmental assessment. Onshore wind farm projects accounted for 3.8 TWh / 4.4TWh and offshore for 6.5 TWh / 1.9 TWh. Northern Sweden, particularly the Västerbotten and Jämtland counties, is likely to see the most extensive build-up going forward. These are sparsely populated areas with good wind conditions, where few parties are affected by developments. In the Markbygden area, outside Piteå, there are plans to build Europe’s largest wind farm – 1,000 wind turbines to generate 8–12 TWh annually. Construction on the wind farm began in 2008.

28. Wind power potential and conditions

29. The Swedish government works to speed up large-scale expansion Wind power build-up is facilitated by initiatives from the Swedish government: Property tax on wind power plants to be reduced from 0.5% to 0.2% 7 public authorities assigned to coordinate wind power development, 4 wind power coordinators assigned by Ministry of the Environment 50 million USD in incentives to pilot projects Establishment of a national center for wind power Extension of the electricity certificate system until 2030 Raise the limit for the environment permission from 1 MW to 25 MW Wind power build-up is facilitated by initiatives from the Swedish government: Property tax on wind power plants to be reduced from 0.5% to 0.2% 7 public authorities assigned to coordinate wind power development, 4 wind power coordinators assigned by Ministry of the Environment 50 million USD in incentives to pilot projects Establishment of a national center for wind power Extension of the electricity certificate system until 2030 Raise the limit for the environment permission from 1 MW to 25 MW

30. Sweden for wind power manufacturing Sweden has a solid industrial base for wind power manufacturing, with a number of world-leading suppliers to the wind energy industry, including SKF (bearings and sealing solutions, remote monitoring systems), ABB (power and fiber optic cables) and ESAB (welding and cutting technology). The industrial know-how in heavy engineering and advanced construction is a considerable benefit for companies planning to establish manufacturing or assembly activities here. For instance, Sweden is home to several globally leading specialty steel companies. In addition, Sweden boasts strong aerospace, information technology and electronics industries. Research on wind power in Arctic environments and on composite material for wind turbines is carried out at a number of locations. Foreign investment activity is high. Danish Vestas has acquired two Swedish foundries to secure supply and has established its northern European headquarters in Malmö, to cover the Nordic and Baltic markets, the UK and Poland. Malmö is also home to wind tower manufacturing for Enercon. Sweden has a solid industrial base for wind power manufacturing, with a number of world-leading suppliers to the wind energy industry, including SKF (bearings and sealing solutions, remote monitoring systems), ABB (power and fiber optic cables) and ESAB (welding and cutting technology). The industrial know-how in heavy engineering and advanced construction is a considerable benefit for companies planning to establish manufacturing or assembly activities here. For instance, Sweden is home to several globally leading specialty steel companies. In addition, Sweden boasts strong aerospace, information technology and electronics industries. Research on wind power in Arctic environments and on composite material for wind turbines is carried out at a number of locations. Foreign investment activity is high. Danish Vestas has acquired two Swedish foundries to secure supply and has established its northern European headquarters in Malmö, to cover the Nordic and Baltic markets, the UK and Poland. Malmö is also home to wind tower manufacturing for Enercon.

31. Converting to electric/hybrid cars Sweden use aprox. 100 TWh for transportation 50 TWh or 50% of that is used by private cars 80% of all daily rides are shorter than 80 km, well in range of new generation of batteries. So the equivalent of 40 TWh can be served by electricity alone. With the better efficiency of electric motors this saves 30 TWh… …as10 TWh of electric power covers the need. The remaining 10 TWh, (long drives) can be covered by second generation biofuels.

33. Huge solar potential Solar energy is expected to increase to 20% of world energy by 2025. The PV market has grown by about 40% a year in the 2000s. Global estimated installed capacity by 2030 is 1,000 GW. Consumer prices for solar energy are expected to drop by half in ten years. Thin-film technology is lowering costs by about 80%.

34. Solar hybrid technologies Integration of solar electricity and solar heating modules – a hybrid technology that supplies waste heat and enhances efficiency. Solar electricity and heat pump technology – a hybrid technology powerful enough to make single-family homes energy self-sufficient Solar cells, new battery technology and LED lighting – a hybrid technology for environments with no power line infrastructure. On-grid solar cells and solar heating systems connected to the district heating network – large hybrid systems that are a superb choice for heating in sunny countries.