The biofuel bubble in northern Sweden and Finland

Abstract

Purpose -The purpose of this paper is to offer a critique of government intervention in the production of biofuel in northern Sweden and Finland, highlighting some of the welfare consequences. Design/methodology/approach -After a short review of government interventions, including laws, taxes and subsidies, Austrian economic principles are applied, which lead to universal statements about the impacts of government intervention. Findings -Government intervention on behalf of the biofuel production industry leads to the emergence of an investment bubble, with consequential negative impacts on welfare. Practical implications -The paper informs about the true costs of intervention in biofuel production, which suggests that policy makers may abstain from justifying interventions for the sake of increasing people's welfare. Originality/value -The paper contributes to the research of the production impacts of a new energy technology in the form of biofuel in particular and of governmental intervention in production in general. The paper, furthermore, enhances the use of the method and theory of the Austrian school of economic science.

Shipping sulphur regulation, freight transportation prices and diesel markets in the Baltic Sea region

“…Actually, in Finland, diesel oil consumption has increased with more than 60 per cent between 1992 and 2012, whereas gasoline demand has been on continuous decline (Finnish Petroleum Federation, 2013). It is not a surprise that in Sweden and Finland, there exist ambitious goals to develop and get rid of the foreign energy dependency by 2020 (in Finland, 20 per cent of diesel content would then arise from biofuel sources) and 2030 (in Sweden, all diesel cars would then use biofuels) in liquid fuels used in cars (Walter, 2012). Actually, Swedish import of wood from Estonia consists nowadays considerable amount of the so-called pellets and "fuel wood" (Olsson et al, 2012).…”