One of the big reasons that diesel engines are so popular in Europe is tax policies that result in very high fuel costs. Those high prices mean that the improved efficiency of diesels makes it easier to recover the higher up-front cost. Sweden has been a leader in making tax and regulatory policy changes to encourage the use of ethanol as a fuel by mandating that large gas stations must provide biofuel pumps by 2009 and cutting taxes on both biofuels and flex-fuel cars.
Since engines running on ethanol inherently consume more fuel, having to pay the same taxes as gasoline means that owners have a financial disincentive to use ethanol. At a meeting of the Institution of Mechanical Engineers (I Mech E) in Norwich England Ford engineer John Bennett urged the UK government to follow a similar path to Sweden in order to kick start both use and demand for biofuels. The flex-fuel model already accounts for over eighty percent of Focus sales in Sweden and FFVs make up almost twenty percent of all car sales in the country.
[Source: Just-Auto - Sub.req'd]