254grants became an integral part of the business. In the next phase, a market for the biogas needed to be identified and targeted. It started with the region’s public transportation company, Västerås Lokaltrafik (VL). In 2006–2007, VL removed 40 diesel buses and replaced them with biogas buses. As these buses were not mass manufactured, economies of scale were limited and hence the buses were very expensive. Biogas buses cost an additional 14 million SEK for modifications Directionality in Innovation Policy and the Ongoing Failure of Green. . .

255over the coming years. VL agreed that the price they paid for the biogas would not follow the price for diesel, and it was expected that diesel prices would increase 7% annually and they would break in 2017 as the relative price gap increased over time.

In reality, this meant investments in biogas could be regarded as large-scale speculation in oil price fluctuations. Optimism was high, and VL made forecasts in 2011 that 90% of their buses would run on biogas in 2016 and 100% in 2020. The CEO of Vafab, Eva Myrinsa, argued that Vafab faced a “huge challenge” in meeting demand in the following years, when production would have to increase 150% per year. Thanks to an agreement with Swedish Biogas, the creation of another facility was initiated in 2011. The “huge challenge” turned out to become the reverse form of