Is Finland Winning Its Climate Fight?
Year 2022 was an important milestone in Europe’s path to climate neutrality as the continent’s energy security was jeopardized by Russia’s invasion of Ukraine. One of the countries least rattled by Russia’s weaponization of energy was Finland. The secret: ambitious climate goals, diverse energy sources, and investments in new technologies.
A year after the onset of the war in Ukraine, the European Union is sourcing its natural gas from outside Russia and stepping up its green transition, with the European Commission proposing a temporary emergency regulation(Link to another website.) to deploy more renewable energy sources. Meanwhile, Finland is pursuing the most ambitious climate goals among industrialized countries. The new Climate Act, which entered into force in 2022, aims to reach carbon neutrality by 2035(Link to another website.).
In the spring of 2022, Russia cut off both its gas and electricity exports to Finland, prompting the Finnish state-owned gas company to turn elsewhere for sources of natural gas. In order to permanently replace Russian gas, the company has chartered a liquefied natural gas (LNG) terminal(Link to another website.) from U.S.-based company Excelerate Energy. Finland’s energy security is further enhanced by the Balticconnector pipeline which connects Finland to the EU gas market via Estonia.
On the electricity front, Finland is expected to become self-sufficient in 2023. The Nordic energy market, a common free electric-energy market in the Nordic countries, along with increased electricity generation from nuclear, water and wind power as well as other sources, should compensate for the country’s loss of imported Russian electricity.
Hydrogen Superpower
A cornerstone of the Finnish push for climate neutrality is the reduction of carbon emissions through green hydrogen. The global market for green hydrogen presents massive potential, as current hydrogen production is primarily fossil fuel-based. The International Energy Agency (IEA)(Link to another website.) noted in a 2022 report that low-emission hydrogen made up less than one percent of total production ever the last three years. The Finnish government recently declared(Link to another website.) that Finland could produce at least 10% of the EU’s green hydrogen in 2030.
Business Finland, the national innovation funding agency, has laid out a national hydrogen roadmap(Link to another website.) for the use of hydrogen in green chemicals, fuels, storage, transport and end use. The national climate and energy strategy(Link to another website.) likewise recognizes the potential of hydrogen, stating that part of the 150 million euros used for large energy technology projects will be allocated to the promotion of the hydrogen economy.
Finland took a more concrete step towards a hydrogen economy when Gasgrid, the state-owned gas transmission system operator, founded a hydrogen transmission company(Link to another website.) in 2022 after the market had opened up for competition. The subsidiary will establish a national transmission network for hydrogen, which will play an important role in Finland’s climate efforts.
Winds of Change
Finland’s hydrogen ambitions will be supported by clean electricity produced by wind power. Despite getting off to a slow start, wind power increased by 75 percent(Link to another website.) in 2022 and is now the fastest growing electricity source in the country. In total, wind accounted for 14%(Link to another website.) of the country’s energy consumption in 2022. Finland now has nearly 1,400 wind turbines producing over 5,600 MW of power, and capacity should increase by around 1,000 MW annually. A large part of this production is domestically owned, which is helping the country achieve its climate targets in a self-sufficient way.
According to the Finnish Wind Power Association, there is considerable potential to increase the capacity of wind power, with the industry striving to achieve a minimum of 30 TWh of annual production in 2030. Finland’s new climate strategy calls for increased land-based wind energy and offshore wind power demonstration projects, such as the two 15-megawatt turbines(Link to another website.) to be constructed off the coast of Tahkoluoto, Pori.
Battery Mecca
Energy storage is another area contributing to Finland’s climate strategy. As with the country’s hydrogen ambitions, the national battery strategy(Link to another website.), outlined in 2021, seeks to strengthen the battery sector’s innovative environment, accelerate the country’s sustainable growth and support the achievement of climate objectives in transport. The proposed measures should support Finland becoming an important player in the battery and electrification sector.
Finland’s advantageous position in energy storage is confirmed by Bloomberg’s BNEF, a strategic research provider that found Finland and Czechia the only two countries in 2022 whose performance did not decline in its lithium-ion supply chain ranking(Link to another website.). Finland also ranked fourth globally and the highest in Europe. This high placement was attributed to a growing battery metals supply chain, a clean grid and quality infrastructure.
One success story to come out of Finland’s thriving battery sector is Terrafame’s new factory in Sotkamo, which produces battery chemicals with the world’s smallest carbon footprint. The Vaasa region in Ostrobothnia is home to the GigaVaasa area(Link to another website.), a sort of Silicon Valley for energy storage that could one day emerge as an international hotspot for sustainable battery manufacturing.
Biofuel in the Tank
Biofuels(Link to another website.), such as bioethanol and biodiesel, are not only central to Finland’s climate efforts, but they also rank among the country’s top exports. Finland has set a target to increase the share of its transport biofuels to 30% by 2029. According to the IEA, Finland has a high potential of solid biomass, which most of the country’s bioenergy (energy made from biomass) already stems from.
Several large Finnish companies such as Neste, UPM Biofuels and Wärtsilä are working on various biofuel solutions. In March, 2022, Neste announced it had signed agreements to launch a joint venture with US-based Marathon Petroleum to produce renewable diesel in California, where there is a growing market for renewable fuel. With the agreement, the company claimed to become the only global provider of renewable products with a production footprint in North America, Asia and Europe.
The Finnish Defence Forces are also looking at biofuels(Link to another website.) in land and sea transport. Despite there being no obligation for militaries to reduce their emissions, Finland has set a public goal to gradually halve the emissions produced by its land and sea forces by the end of the 2020s. Ideally, this would also improve the military’s national security of supply.
Nuclear Know-How
Nuclear energy makes up around one third of Finland’s domestic energy production. The country has five operating nuclear reactors, of which the latest, Olkiluoto 3(Link to another website.), entered commercial operation in April 2023. Finland is also actively involved in developing new nuclear technology in the form of Small Modular Reactors (SMR) and nuclear fusion.
SMR’s can be built near cities or industrial complexes, making them good sources for low-emission district heat production. VTT Technical Research Centre of Finland is currently developing a simplified SMR tailored for district heating. In the domain of fusion energy, Finland contributes to the ITER(Link to another website.) project where 35 countries collaborate to build the world’s largest tokamak, a donut-shaped magnetic fusion device that generates 500 MW of fusion power. Finland is also involved in ITER’s successor, DEMO(Link to another website.), whose goal is to design a plant that safely produces electricity in a consistent manner.
In order to domestically dispose of its spent nuclear fuel, Finland has built Onkalo(Link to another website.), the world's first permanent repository for high-level nuclear waste, near the Olkiluoto nuclear plant. Inside a chamber that sits in a tunnel burrowed 500 meters (1,600 ft) below sea level, copper casks containing spent fuel rods from nuclear reactors will remain in place for 100,000 years. Filling up the repository will continue into the next century.
Future Tools
The IEA recently reported(Link to another website.) that global energy-related CO2 emissions were negated by the growth of clean energy sources in 2022 and rose just under one percent despite the disruption in energy markets caused by Russia’s invasion of Ukraine. This shows that clean energy is already having a considerable effect on global emissions.
The Finnish Climate Change Panel has similarly concluded that emissions are dropping faster than expected, and Finland is on track to becoming an economy based on low-carbon hydrogen solutions. However, the use of fossil fuels in has largely been replaced by wood fuel, and increased logging has led to a reduction in carbon sinks in Finnish forests. To accelerate the green transition, the Climate Change Panel recommends limiting the burning of wood-based biomass.
Finland’s ambitious climate targets, the rise in energy prices and the phasing out of Russian fossil energy have expedited the need for new energy solutions, perhaps involving smart grids, AI and machine learning. Future energy solutions based on these technologies, or sector integration(Link to another website.), where the users and producers of energy are linked with each other, could further accelerate Finland’s green transition.
Kim Haldin / Embassy of Finland