Case 6.1: Energifabriken - fossil fuel free circular economy - Sweden
Name of the company: Energifabriken
Country: Sweden
Size of the business: 12 employees
Website: https://energifabriken.se/
Background
The enterprise was established by three farm families, who were interested in replacing their fossil-based energy they used for heating the premises, drying the grain and for all the farm vehicles and machines with more sustainable options with the vision of becoming fossil-free and sustainable at their farms. The six partners have diversified previous work experience and educational backgrounds, incl. four partners with degrees in agricultural science. The three farms switched to Rapeseed Methyl Ester (RME) use instead of ordinary diesel and fuel-oil, and replaced the conventional electricity contracts with green, sustainably produced electricity contracts and started using transports based on fossil free fuel. The challenges related with reaching the goal of having fossil-free fuel on the farms, inspired the partners to use this experience, knowledge and networks for a potential business opportunity and answer the demand from other companies for fossil-free fuel. Private company was established with the plan to build a factory to produce biodiesel out of rapeseed oil. The enterprise received 300 000 EUR financial investment support from the Swedish Environmental Protection Agency through KLIMP, the Climate Investment Program, in order to build a biodiesel refinery. The market analysis showed that trading biofuel instead of building the plant would be more competitive as at the time a local manufacturer was already operating in the region and additional plant was not needed. Thus, the enterprise started to buy biodiesel from other producers and sell it to transportation companies utilizing their own experience in using it in their own farms. In 2018 the company bought a biorefinery developing the circular production starting from farming, producing and distributing biofuel. The company is still growing and at present has offices in three location in Sweden and distribution network in Sweden and Norway. In 2018, it bought another biofuel company and became owner of the largest net of filling stations for renewable fuel in Sweden.
Main activities
The main activity is buying, selling and distributing biofuels, RME, hydrotreated vegetable oil (HVO) and ethanol-based fuel for lorries (ED95). The three farming families’ interest in developing fossil-free operations helped them to gain the experience and knowledge and use it to create a business opportunity for biofuel.
The owner families are still running their own farms as well with the ongoing goal to achieve sustainable production, including using Best Available Technology (BAT), for example, commercial fertilizers together with modern spreading technology in order to generate a large climate impact.
Market
Energifabriken distributes and sells biofuels, RME, HVO and ED95 to customers in Sweden and Norway. The company has approximately 60 filling stations. The company owns a factory for RME production in Karlshamn, Sweden. Energifabriken is mostly selling to other businesses. The company is selling fuel for vehicles in heavy transports (lorries and busses) with the customer segments growing over time. Bio-fuel is also sold for company cars and to taxi companies and for housing and to crematories. The fuel is distributed by bulk lorries. The company also leases tanks to over 200 customers.
In addition to the fuel station network for completely renewable fuels, Energifabriken has for a long time developed the infrastructure for biofuels with different types of tank solutions. Often these include permits, legal aid, level monitoring and rental solutions with various pumping systems for refuelling vehicles. Customers are typically pioneers in renewable transport and renewable energy. The Energy Factory is Sweden’s largest specialized distributor of biofuels and bio-fuel oil and delivers to customers throughout Sweden. Company offers consultations regarding energy conversion and offers everything from advice and support to the implementation of the conversion and the follow up on the effects of the fuel change.
Challenges and solutions
The manager of the company sees large opportunities for innovation regarding bio-fuels as the norm in society has changed and there is a growing demand for bio-fuels of different kinds. There is a room and need for different sustainable solutions. One advantage for Energifabriken was that the company was fast and first mover, but it sees that there is room for many more companies and solutions.
The largest challenges are in the policy system. The industry is dependent on long-term regulation and cost-neutral energy politics and constant rule and policy changes are problematic for investment decisions. Also, the public procurement ought to be a driving force towards more sustainability.
Another potential challenge is that the requirements for more sustainable fuel production may lead into price conflicts regarding food production and fuel prices.
Funding
The Energifabriken has not received much financial support over the years. One important exception is support from the Climate Investment Program, which made it possible to develop the tank station network. The company also got some smaller support from the Vinnova, the Innovation Agency of Sweden for a pre-study. Otherwise, the company has financed itself over the years. The use of bank loans for the acquisition of the factory was an exception.
What makes this case innovative?
Energifabriken represents a good case of developing circular production motivated by interest in becoming more sustainable in production. The company handles the entire chain of biofuel from cultivation of raw material to production of fuel and use. The primary production in the owners’ farms do not use fossil fuels. The use of this experience has boosted the development of biodiesel production and distribution system benefitting other producers and consumers.
Other related Business Cases
Case 6.2: Ziedi JP – circular economy in a Latvian farm – Latvia
Case 6.3: Wapnö Farm – sustainability and the circular economy example in a Swedish farm – Sweden