Finland Policy Brief

Finland is following the EU energy and climate policies and targets. The European Union is currently strongly developing its energy and climate policy. In 2016 the new Energy and Climate Strategy was published in Finland.

Background

The Paris Climate Agreement entered into force in November 2016 with objective to hold the increase in the global average temperature to below 2 °C above pre-industrial levels. It also pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels. The EU has also set climate and energy policy targets for 2030 in which the key target is to reduce greenhouse gas (GHG) emissions by at least 40 % from the 1990 level: 43 % in the emissions trading sector and 30 % in the non-ETS sector (i.e. effort sharing sector), compared to the 2005 levels. The European Commission has issued a proposal for a regulation. For Finland, binding target of reducing effort sharing sector emissions by 39 % would be set.


The Government Programme of Prime Minister Sipilä sets ambitious targets in the energy sector. Aims are:

• to increase the share of renewable energy to over 50 % of end consumption,

• to increase self-sufficiency to over 55 %,

• to phase out coal use in energy production,

• to halve the domestic use of imported oil, and

• to bring the share of renewable transport fuels up to 40 % (23.5 % of the fuel energy content).

An effort will be made to achieve all this by 2030.

This National Energy and Climate Strategy

• discusses the key starting points and objectives of the Government Programme goals,

• discusses the adequacy of current measures for meeting its targets (the basic scenario) and

• measures by which its targets can be attained (the policy scenario),

• specifies key measures for achieving the binding emission reduction targets in the effort sharing sector by 2030.

The strategy examines the possibility of transitioning into an economy fully based on renewable energy by 2050.

The long-term objective of Finland is to be a carbon-neutral society and the report published by the Parliamentary Committee on Energy and Climate Issues in October 2014, ”Energy and Climate Roadmap 2050”, provides a strategic level guide to meet this target. The roadmap analyzed the means of constructing a low-carbon society and achieving an 80–95 % reduction in greenhouse gas emissions from the 1990 level in Finland by 2050.


Finland’s New Energy and Climate Strategy in details

On 24th November 2016 the new Energy and Climate Strategy was published by the Finnish government. The Strategy outlines the actions that will enable Finland to attain the targets specified in the Government Programme and adopted in the EU for 2030. It also set the course for achieving an 80−95 % reduction in greenhouse gas emissions by 2050.


•Finland will phase out the use of coal for energy, with minor exceptions,

•the share of transport biofuels will be increased to 30 %,

•there will be obligation to blend light fuel oil used in machinery and heating with 10 % of bioliquids,

•the minimum aim is to have 250 000 electric and 50 000 gas-powered vehicles on the roads,

•the electricity market will be developed at the regional and the European level,

•the flexibility of electricity demand and supply and, in general, system-level energy efficiency will be improved,

• technology neutral tendering processes will be organized in 2018−2020, on the basis of which aid will be granted to cost-effective new electricity production from renewable energy,

• the share of renewable energy in the end consumption will increase to about 50 % and the self-sufficiency in energy to 55 %,

• the share of renewable energy use in transport will clearly exceed the Government Programme target,

• the domestic use of imported oil will be halved as planned and

• the greatest non-ETS sector reductions in emissions will be achieved in the transport sector, and this will be the foundation of the medium term climate policy plan of 2017.


This National Energy and Climate Strategy outlines the concrete actions and objectives that will enable Finland to achieve the energy and climate targets specified in Prime Minister Sipilä's Government Programme and jointly adopted in the EU for 2030, and to systematically set the course for reaching the 2050 targets. Approximately 3/4 of all GHG emissions in Finland come from energy production and consumption, including energy used for transport. Emissions are also produced in industrial processes, from the soil and livestock farming in agriculture and in the waste processing sector. Measures in all sectors are needed to achieve the targets. Energy sector measures includes both the production and use of energy. Energy efficiency is at the centre in not only reducing the use of fossil fuels and the greenhouse gas emissions caused by them but also increasing the share of renewable energy.

The energy and climate policy has three basic dimensions that must be kept in balance in transition to a carbon neutral society. The energy system must:

1. be cost-effective and enable the growth of the national economy and Finnish companies’ competitiveness in the global market

2. be sustainable from the perspective of greenhouse gas emissions and the environment, and

3. offer sufficient security of supply.

The transformation of the energy system must be controlled and based on the existing system. Energy production and industrial investments have long life cycles, and the replacement rate of buildings and the vehicle fleet is slow. Calculations of an optimal energy production structure in the future are useless if we do not also take into account the required investments with funding needs, and the markets that should make the investments commercially profitable over time. Understanding this dynamics plays a key role in developing energy and climate policy that supports the preconditions for growth.