A resource-wise economy and carbon neutral society 2017
Finland's timber stock is growing favourably, greenhouse gas emissions have taken a new upward turn

14.6.2018 10.17
Finland's timber stock is growing favourably, greenhouse gas emissions have taken a new upward turn

The resource wisdom of the Finnish economy is based on production with specific power as well as energy-efficient solutions. Finland is an energy and material intensive country due to the structure of its production, sparse population, long distances and, in part, cold climate conditions. While the share of services in the economy has increased, services also consume energy and require other production input.

An observation of the annual masses of natural resources reveals that the amount of soil material used for construction is vast. This is also the case in many other EU countries. Forest resources are used primarily in the forest industry and, to some extent, exploited in construction as well as also energy production in connection with by-product flows. When measured in masses, the use of wood continues to remain clearly below the annual growth of timber in Finland's forests.

In 2016, there was a slight upward turn in Finland's greenhouse gas emissions while still being 12.4 million tonnes less than during the year of comparison 1990. This was mainly brought on by an increase in carbon consumption and a decrease in the share of biofuel used in transport. In addition, a growth in the production of the mineral industry and chemical industry slightly increased the emissions. The emissions caused by waste management were somewhat reduced and the emissions of agriculture remained at their previous level.

An increase in emissions and the use of materials is expected in both consumption and investments as a result of economic growth. On the other hand, new technology and methods curbing the amount of emissions are simultaneously introduced. When it comes to renewable energy, Finland continues to be among the top countries in the European Union.

Finland’s greenhouse gas emissions grew by 6 per cent in 2016

Climate change is one of key global challenges. Finland is committed to global climate change mitigation. Finland's energy and climate policy are based partly on the joint policy measures of the EU and partly on national measures. An image illustrating greenhouse gas emissions and removal presents the emissions resulting from the energy sector, industrial processes and production, agriculture and waste management. Greenhouse gas removal refers to the carbon dioxide fixation from the atmosphere to carbon reservoirs, such as the biomass of plants. Forests provide Finland's most significant carbon sink.

In 2016, the total amount of Finland's greenhouse gas emissions was 58.8 million tonnes in carbon dioxide equivalents (CO² equivalents). Compared to 2015, there was a 6 per cent increase in the emissions, but the total volume was 18 per cent lower than in 1990. The biggest increase concerned traffic-related emissions and the emissions of combined electricity and heat production. In the context of traffic, the increase was caused by the decline in the share of biofuels in the total fuel consumption in traffic. In combined electricity and heat production, the growth in carbon consumption was the cause.

Emissions not included in emission trading grew by 5 per cent in total compared to 2015. In the sector for industrial processes and product use, emissions grew by 4 per cent since the previous year. The increase was mainly caused by the emissions of the mineral industry (13 per cent) and the chemical industry (11 per cent). The emissions from waste management was reduced by around 7 per cent. In 2016, carbon dioxide sequestration, or carbon sink, was 6 per cent lower than in the previous year. The total volume of the sinks was over 20 million tonnes in 2016.

The demand for energy is partly affected by the economic situation and meteorological conditions. At the national level, it is possible to affect traffic, a significant source of greenhouse gas emissions.

Timber stock in Finnish forests grew by around 24 million cubic metres

Forests are one of Finland's key natural resources. Therefore, a simple balance observation of the growth and removal of standing timber has been selected as one of the used descriptors. Forests are a living natural asset requiring long-term rotation, and wood grows slower in the north than in the south. In addition, carbon dioxide sequestration is dependent on a tree's stage of growing.

The total removal rate of forests has been lower than the growth of standing timber over the entire period under consideration since the 1990s. The annual growth of the standing timber surged in the 1970s, and this development it still ongoing. The increase in the growth of standing timber can be explained by improved forest management, the age category structure of forests and global warming. Based on recent stocktaking results, the annual growth rate comprises roughly 110 million cubic metres.

Thanks to active forest management, the total surface area of understocked forests has been strongly reduced compared to the forests of the 1970s. Although the use of Finnish wood has increased, over one fifth of the growth will remain in the forest, therefore increasing the timber stock and carbon sequestration. Most standing timber roughens in North and Eastern Finland.

The removal rate of standing timber has also increased. In 2016, the removal rate increased to reach a new record at nearly 86 million cubic metres. In 2000–2015, the standing timber removal rate was on average 71 million cubic metres of which private forests accounted for 83 per cent. Although the forest industry has particularly cut down on the production capacity of the paper industry, the use of industrial wood has been increasing in recent years.

To ensure that the standing timber will continue growing at the current rate, active and sustainable forest management measures will also be needed in the future. A favourable development of the biodiversity of forest nature requires the conservation and protection of forests. Forests have become increasingly vulnerable to weather and climate risks. In order to ensure the growth of standing timber, efforts must be made to promote the prevention of risks concerning tree damage and diseases as well as growing forests with multiple species.

Renewable energy accounts for 39 per cent of final energy consumption

There is a desire to increase the use of renewable energy, particularly in order to reduce greenhouse gas emissions. The use of renewable sources of energy also promotes the consumption of domestic energy and therefore improves and maintains the security of supply in the energy sector.

Increasing the share of renewable energy and cutting the share of fossil energy sources has been Finland's goal for a long time by now. Renewable sources of energy used in Finland include hydro and wind power, solar energy, geothermal heat, biogas, recycling and waste-derived fuels, wood-based fuels as well as other plant and animal-based fuels. The energy consumption in Finland is affected by the cold climate, long distances and the fairly energy intensive industry in the country.

The goals set for renewable energy at the EU level are determined as the relative share of renewable energy of the final energy consumption. Final energy consumption measures the consumption of electricity and heat as well as the fuels used for heating buildings, transport fuels and process fuels used in the industrial sector. This differs from the total consumption of energy in that the energy transmission and transformer losses have been reduced from the rate.

The growth in the share of energy produced by renewable energy sources out of the final energy consumption describes a transition from the fossil economy towards sustainable energy production.

Finland is among the EU's top countries in the use of renewable energy, In 2016, the use of renewable energy sources grew by 2 per cent, breaking a new record. The sources covered 34 per cent of the total energy consumption and slightly below 39 per cent of the final energy consumption. Total consumption grew by 4% since 2015 and final consumption by nearly 5%. Similarly, the use of fossil fuels grew by 7 per cent since the previous year and their share of the total energy consumption was 38 per cent.

Around 4/5 of Finland's renewable energy is based on the by-product flows of the forest industry and forest management. New investments in the forest industry also increase the provision of by-products and forest chips used as energy sources. Hydro power contributes to slightly over 10 per cent of all renewable energy. There has been an increase in the consumption of energy produced by wind power and heat pumps, and transport biofuels in recent years. National measures for reducing traffic emissions are important as traffic is the biggest emission sector outside emission trading.

According to an estimate by the national Energy and Climate Strategy (VNS 7/2016 vp), which has set its sight on the year 2030, renewable energy will contribute to 47 per cent of the final energy consumption in 2030 if no new policy measures are introduced. If policy measures are taken in accordance with the strategy, the share will increase to 50 per cent by 2030 in accordance with the national objectives.

Funds provided by Tekes for resource-efficient and carbon-neutral solutions have decreased

According to Statistics Finland, the total expenditure of research and development activities in Finland was EUR 5.9 billion in 2016 (2.8% of the GDP). Investments by the private sector comprised the majority of these costs. No reliable statistics are available on the public investments on new business, research on resource efficiency and carbon neutrality or innovations.

Due to this absence of overall statistics, the investments by the public sector on innovation funding is observed in this context through the funds granted by the Finnish Funding Agency for Technology and Innovation (Tekes) for resource-wise innovations. Funds provided by Tekes for resource-efficient and carbon-neutral solutions (incl. energy and environmental projects) help companies in Finland develop related business activity and grow in the export market. The graph illustrates the funding granted by Tekes for resource-wise innovations. Their share of the innovation funding by Tekes has varied from 45% to 52% during the period under consideration.

In 2016, the total funding amounted to around EUR 172 million. Compared to 2015, the funding authorisations were reduced by one fourth to EUR 140 million. In connection with the government's key projects, Tekes was provided with the additional authorisations of EU 16 million for the development of new bioeconomy products and services and the promotion of cleantech solutions in small and medium sized enterprises. The beginnings and conclusions of major national innovation programmes are visible in the annual variation of the allocation of funding. In 2017, the funds provided by Tekes for resource-efficient and carbon-neutral solutions remained at the level of the previous year.

In the future, the development of resource-efficient and carbon-neutral solutions will continue to be key to a systemic change, also providing solution possibilities for global challenges. In recent years, the focus has been shifted to developing cooperation between different parties, construction of networks promoting productivity, and forming new, strong ecosystems.

At the beginning of 2018, Tekes and Finpro merged into Business Finland. The provision of funds to innovations will continue under the new organisation. In the coming years, the focus of the programmes of Business Finland will be on the development of resource-efficient and carbon-neutral solutions.

The exploitation of soil material forms over half of the mass-based total consumption of natural resources

The use of natural resources is observed through the total consumption of raw materials. Annual statistical data is not available on the raw material consumption, as a result of which this observation is based on a report of streams of raw materials conducted in 2013. Raw material consumption (RMC) describes the use and total consumption of raw materials. In addition to domestic raw materials, it includes the import and export of raw materials. However, the fact that the indicator is based on masses of material limits it: the indicator only provides an indirect view of the environmental impacts of the exploitation while failing to take into account the scarcity of the resources or their significance from the perspective of wellbeing. RMC does also not include water consumption.

The largest mass-based use category comprises different soil material of which around 100 million tonnes is exploited annually for purposes such as road construction and other needs pertaining to the infrastructure and construction. Construction is also a significant application in other EU countries.

Particularly in the north, roads must be properly protected against ground frost. For its part, a structural change in the society has contributed to an increase in construction as cities and urban areas are expanding. The natural resources used for constructing roads and other infrastructure can be replaced with high-quality and safe recycled materials in limited contexts. Infrastructure construction is primarily public.

A smooth regulatory environment is necessary in order to use safe and cost-effective recycled materials in construction. A new, clarified regulation on the utilisation of certain waste in earth construction will provide clearer frames to the use of recycled materials on diverse earth construction sites in 2018.

Fossil fuels form the second-largest category for raw material consumption. Some of the material consumption of raw timber is also utilised as energy produced from the by-product flows of the production, including wood chip or waste liquors from the forest industry.

In Finland, metal ores are the third most significant target of the consumption of natural resources. Finland differs from many other EU countries in that these raw materials can also be extracted from domestic sources.

In addition to the domestic use, both renewable resources and the metal and mineral stores can be utilised in an energy and material efficient manner in the manufacture of produced export goods.

Reservations related to the indicators and their interpretation, and needs for further research

The aim towards a resource-wise and carbon-neutral society forms an extensive whole underlined by complex links to economic, scientific, social and environmental questions. Although it is not possible to cover all perspectives related to the matter with a few indicators, these can be used to illustrate the development of certain key variables. It would be essential to understand which factors influence the changes and the extent to which these factors can be affected by decision-making carried out in Finland.

The consumption of natural resources is not currently regularly monitored using the RMC analysis in Finland. The above graph presenting the consumption of natural resources based on the RMC analysis is based on calculations carried out in research projects (ENVIMAT, MATPOT). There is need for regular monitoring of the consumption of natural resources based on the RMC analysis. The RMC analysis does not include the utilisation of water, a highly important natural asset at the global level.

Observations on the use of natural resources in masses the level of the total economy provide no information about the resource efficiency, specific power or energy efficiency of agents, which would often provide considerably more transparent and comparable indicators at the level of actors in the production stage. On the other hand, these also fail to provide information about factors with key significance for product and service lifecycles, including the possibilities for repairing, recycling and long-term use of a product in the reuse stage of consumption and resources.


This interpretation text was prepared by Erja Fagerlund at the Ministry of Economic Affairs and Employment in cooperation with the Ministry of Agriculture and Forestry and the Ministry of the Environment. Available documents were utilised in the process.