Swedish flex-fuel and other 'green' car sales could nearly quadruple by 2010-2012, industry observers told just-auto.

The market could reach 150,000 units, up from a 40,000-unit forecast for 2006. That's half of the overall Swedish car market, which is expected to grow to 300,000 units in 2010 from a 285,000-unit forecast this year.

The government is considering introducing a series of measures to boost the greencar trade, already heavily subsidised, this month, according to Mattias Goldmann, a spokesman for the Swedish Association of Green Motorists.

"We don't know exactly what the government will do but we know there will be new incentives," Goldmann said.

Sweden is leading Europe's biofuels market (both in meeting blending targets and developing retail
infrastructure) as it moves to stay at the "forefront"
of Europe's green movement.

Swedes pay no parking or congestion charges to drive flex-fuel, biogas, hybrid or small cars emitting less than 120 grams of CO2 per kilometre.

They also get a significant tax credit on models purchased for work.

On top of these incentives, the state could introduce a EUR1,100 tax credit for flex-fuel purchases or half that credit and double it to EUR3,300 for higher-priced biogas models.

Goldmann said the government is likely to double the biogas incentives to grow the market, especially after Volvo said it would scrap its biogas line due to slumping demand.

"The incentives are too small to make biogas worth it and we can't allow Volvo, a national car maker, to discontinue production," he noted.

A spokesman for the Swedish Automobile Association is confident the subsidies will rise.

However, he doubts the market will grow to 160,000 units without further government and business action.

For one thing, ethanol costs 2% more than petrol and prices must come down to woo consumers to buy flex-fuel cars which account for over 70% of the market and could make up even more in future, the spokesman said.

Moreover, the number of models must rise from 15 now (versus over 100 for petrol) and the market to tweak petrol cars to run on biofuel must develop.

"You can convert petrol models to flex-fuel for just EUR1,000," the spokesman noted, adding that the government will introduce a regulatory framework for this market in coming months.

The Saab 9-5 Biopower is Sweden's best-selling flex-fuel car. The Ford Focus and Volvo V50 are second and third respectively, Bert said.

Ivan Castano