Setting the table for long-term energy and climate policies: the new Finnish government will face far-reaching issues both in the EU and domestically

After the parliamentary elections on 14 April, it is time to look at the challenges for the next government. The formulation of energy and climate policies has to be based on long-term goals. The tasks of Finland’s future government have by and large been laid out by EU obligations. Finland’s Presidency of the EU Council, to start at the beginning of July, will provide us a unique opportunity to influence the EU priorities as we move towards a carbon neutral Europe. In Finland, special attention must be paid to improving the efficiency of emissions reduction measures in the sectors outside the Emissions Trading System.

When the goal is set for as far as 2050, policy measures must be predictable. The enormous investments required to ensure a carbon-free future are based on a long-term energy and climate policy. Therefore, measures must be consistent and extend over government terms. EU regulations also steer work into this direction.

Foundation laid for strategic work

The Governance of the Energy Union, adopted by the EU in late 2018, requires systematic policies from all Member States. All EU Member States, including Finland, have submitted their drafts for an integrated National Energy and Climate Plan (NECP) until 2030. The Commission will issue its recommendations on the plans by the end of June.

The final NECPs are to be submitted by the end of the year. The final plans must include renewable energy and energy efficiency objectives that are sufficiently ambitious in view of the Union’s goals.

At the same time, each Member State is required to prepare a national long-term low-emission strategy (national LTS) until 2050. They will be submitted to the Commission at the turn of the year. In addition to the reduction of greenhouse gases, the LTS must include a perspective on the development of carbon sinks.

Finland has already conducted projects (PITKO and MALULU) that provide extensive information for its LTS. This information will help to prepare a long-term plan required by Finland’s own climate legislation.

Time for decisive implementation

Without clearly defined actions and efficient implementation, strategies and policies are nothing but empty shells.  Effective and cost-efficient action is the key enabling transition into a low-carbon economy.

At the beginning of its term, Finland’s new government should prioritise emissions reduction outside the Emissions Trading System. The reduction target set for Finland by the EU is quite challenging: 39% by 2030.

The important thing is to quickly provide the conditions and economic incentives for measures such as vehicle fleet modernisation to reduce emissions from transport. Similarly, action is required to reduce emissions from agriculture and housing.

At the same time, the implementation of EU’s new energy and climate regulations requires significant investments. The legislation and instruments required by the new energy efficiency directive are particularly challenging, with national implementation scheduled for late June 2020. The renewable energy directive (RED2) involves similarly challenging preparations. Its implementation will continue until summer 2021.

The changes required by the EU’s new, comprehensive electricity market design are also high on the agenda, with the development of smart grids to serve a low-emission energy system as an added national twist. Furthermore, the provisions on emissions trading must be ready well in time before transition into the 2021–2030 emissions trading period.

Looking beyond the horizon during Finland’s Presidency

It is highly likely that new ministers will not assume their duties until only a short time before Finland’s Presidency of the EU Council begins.  One of their challenges is that during the six months of Finland’s Presidency, members in the European Parliament and Commission will change. Consequently, only a few legislative initiatives will be on the table. However, over the next few years Finland will have an excellent opportunity to promote strategically important themes and policies on the development of climate and energy policies.

Our key objective will be to decide on ambitious long-term emission targets for the EU (EU LTS). According to Finland’s view, the Union should strive for carbon neutrality by 2050. Even though decisions regarding policies are made by the European Council consisting of the Heads of Government, the role of the Council of Ministers in its various compositions is vital for the discussions.

In energy and competitiveness related issues we emphasise the importance of low-carbon solutions and technologies. This theme is strongly linked to the discussion on EU LTS, and to its efforts to promote long-term sustainable economic growth in the Union.

Achieving carbon neutrality will require new low-carbon methods in energy-intensive sectors of industry, and a method for carbon dioxide circulation. There is a vast demand for new solutions worldwide. Here, too, what we need first and foremost is instruments with long-term impacts, and far-sighted policies.

Riku Huttunen is Director General of the Energy Department at the Ministry of Economic Affairs and Employment.