A resource-wise economy and carbon-neutral society 2020
The foundations of resource wisdom have improved, but there is still work to be done on the path towards emission reduction

12.4.2021 9.49
The foundations of resource wisdom have improved, but there is still work to be done on the path towards emission reduction

Finland’s timber stock continues to grow favourably, and greenhouse gas emissions are on a reasonable track. Business Finland is providing increasing funding for the development of carbon-neutral and resource-efficient solutions.



Greenhouse gas emissions in 2019 decreased by 6% from the previous year

Figure: Total greenhouse gas emissions without LULUCF. (Source: Statistics Finland **2019 preliminary data)

The indicator describes the development of climate emissions in Finland, without the land use sector (LULUCF), from 1990 to 2019. The figure shows how the emissions in 1990, amounting to  slightly more than 70,000 million tonnes of carbon dioxide equivalent, have decreased to less than 53 million tonnes, after having increased to around 85 million tonnes of carbon dioxide equivalent midway in the period under review. Greenhouse gas emissions are a key indicator of climate change mitigation, and the indicator has a strong international analytical basis.

Finland's current situation

According to quick advance data from Statistics Finland, greenhouse gas emissions for 2019 totalled 52.8 million metric tonnes of carbon dioxide equivalent (CO2-eq.).

In 2019, Finland's greenhouse gas emissions decreased by 6% compared to the status in 2018. The decline in emissions in 2019 was most affected by the decline in natural gas and peat consumption, which had increased in the previous year. Emissions not included in emission trading decreased by 2 per cent but exceeded the EU-set emissions quota by 0.2 million tonnes CO2-eq.

Finland has cut its emissions by approximately 26 per cent compared to the 1990s. In 2019, the emissions were 18.4 million tonnes CO2 equivalent lower than in 1990.

The energy sector (fuel use and vapour emissions) was responsible for 74 per cent of 2019’s emissions.

The industrial processes and product use sector accounted for 10 per cent of total emissions in 2019. Compared to 1990, these emissions have increased by 2 per cent. According to preliminary data, emissions included in the sector’s emissions trading system in 2019 decreased by more than 3 per cent from 2018, and emissions not included in emissions trading by 10 per cent. Correspondingly, emissions from the metal industry decreased by 13 per cent due to a decrease in steel production and emissions from the chemical industry increased by 2 per cent due to an increase in hydrogen production. Emissions from the mineral industry decreased by 6 per cent from the previous year.

Emissions from agriculture increased by one per cent to 6.6 million tonnes of CO2-eq compared to the previous year. Considering that the previous year was a poor agricultural production year and there was decline in livestock numbers, emissions did not return to the previous level, as the amount of organic matter added to soil by a good production year increased soil nitrogen oxide emissions and the number of livestock continued to fall. Compared to 1990, emissions from agriculture have fallen by almost 11 per cent. The main reason for the decrease in emissions is the reduction in the use of commercial fertilisers. The structural change in agriculture, an increase in farm sizes and the decrease in livestock numbers have also contributed to the reduction in emissions.

Emissions from waste treatment continued to decline by 5% from the previous year, representing 1.7 million tonnes of CO2 equivalent in 2019. The waste sector’s emissions have decreased by more than 63 per cent from what they were in 1990. The actions required by the Waste Act and the Landfill Directive (1999/31/EC) have significantly impacted on the cut in emissions from 1994 onward. Recovery of landfill gas has increased. After the depositing of biodegradable municipal waste in landfills was banned in 2016, for the most part, only unexploited strata will be disposed of in landfills.

According to the Government’s Annual Climate Report, the present reduction targets for greenhouse gas emissions set for both 2020 and 2023 are likely to be reached by implementing the measures included in the Climate Change Policy Plan for 2030. However, further action and strengthening the measures that are already implemented will be needed to reach the target of a carbon-neutral Finland by 2035. The new actions needed to achieve the target will be examined as the new Energy and Climate Strategy, the Mid-term Climate Change Policy Plan and the climate programme for the land use sector are prepared in 2020 and 2021. In order for Finland to attain the target of carbon neutrality, the emissions may at most be equal to the sinks in 2035.

Comparison with other countries

Finland’s status compared to other EU Member States in achieving the 2020 EU emission reduction target can be examined in a European Environment Agency (EEA) publication, Trend and projections 2019. According to this, Finland is one of the ten countries in which reaching the 2020 target requires taking additional measures. In the case of many other EU Member States, their relative difference to the EU-set targets are larger, either upwards or downwards. A newer report on 2020 will be published soon.

Nevertheless, achieving the objective set in the Paris Agreement will depend on the world’s largest emitters, China and the United States. The EU accounts for less than 10 per cent of global emissions.

Negative emissions from land use sector increased, emissions from energy sector decreased, emissions from industry also slightly shrunk

Figure: Development of greenhouse gas emissions by sector (Source: Statistics Finland)

The indicator describes the development of greenhouse gas emissions by main source. In addition, the figure shows the annual negative emissions from the land use, land-use change and forestry sector. Calculating the sum of emissions and negative emissions, i.e. sinks, enables monitoring the achievement of the carbon neutrality target.

Finland’s current situation and recent development

As a whole, emissions are declining, and according to the preliminary spring data of Statistics Finland, the total greenhouse gas emissions in 2019 amount to 52.8 million tonnes of carbon dioxide (CO2-eq).

Emissions have returned to a declining trend and sinks have increased from the previous year. This means that, compared with the previous year, emissions decreased by 6 per cent, and the decrease was most strongly influenced by a reduction of carbon and peat consumption. Emissions not included in emission trading, including sectors such as agriculture and transport, decreased by 2 per cent but exceeded the EU-set emissions quota by 0.2 million tonnes CO2-eq. More recent data will probably be available by the end of 2020. A decrease in forest felling from the record level in 2018 resulted in stronger sinks.

Other observations related to the indicator

Annual variation in carbon sinks is clearly visible in the graph, as the annual variation in the scope of forest felling caused by supply and demand is reflected in the sink of a given year.

Timber reserves growing, timber removal decreased from previous year

Figure: Standing timber growth and removal. (Source: Natural Resources Institute Finland)

Forests are one of Finland’s key natural resources. The indicator describes a simple balance sheet analysis of the growth and total removals of standing timber in millions of cubic metres. This provides a rough overall picture of any change trends in this renewable natural resource. The indicator should be examined on a relatively long time series, as the forest lifecycle is long, while the economic exploitation of forests varies according to needs, such as economic cycles. The figure shows how standing timber has been growing and decreasing for various reasons in the period between 1940 and 2019. In 1940, timber growth exceeded removal by nearly 10 million cubic metres. In the 1960s, standing timber removal briefly exceeded growth, but since then, Finland has significantly strengthened its standing timber reserves every year. 

Finland's current situation

Based on the present,12th, inventory (measurement period 2014–2018), the growth of Finland’s standing timber currently amounts to 108 million cubic metres, which is almost twice as high as the growth 50 years ago. The data on the growth of Finnish forests is updated more slowly than data on the exploitation of forests, which is already available in the following year. The growth data are based on national forest inventories, which measure the actual growth after the previous inventory.

Finland's recent development

During the previous 50 years, the timber reserves have increased every year, as the annual growth of trees has exceeded the removal rate. Systematic measurement and monitoring of the volume and growth of standing timber in nationwide national forest inventories (VMI) began in the early 1920s. Based on the inventories, the annual growth of the trees on forest and scrub land remained fairly steadily around 55 million cubic metres until the end of the 1960s. Timber growth started to rise sharply at the turn of the 1960s and 1970s, which had been preceded by a few years in which use rates exceeded growth. Based on the present,12th, inventory (measurement period 2014–2018), the growth of Finland’s standing timber is now 108 million cubic metres, which is almost twice as high as the growth 50 years ago. Average growth per hectare is 4.7 cubic metres per year in the whole country.

Forest management has improved the growth, and climate change has also had an increasing impact on forest growth.

At the end of the 1960s, the volume of standing timber was approximately 1,500 million cubic metres. Based on NFI12 measurements (2014–2018), the volume of the standing timber totals at 2,475 million cubic metres, 90% of which is located on land used for wood production. Over the past 50 years, the volume of the standing timber has increased by around one billion cubic metres and is now almost 1.7 times higher than in the 1960s.

The removal rate of standing timber has primarily increased. In 2018, the removal rate increased to a new record, 94 million cubic metres, as a result of a cyclical peak in the forest industry. At the same time, the energy consumption of black liquor, produced as a side stream in pulp production, increased by 8%. In 2014–2018, the standing timber removal rate was on average nearly 86 million cubic metres of which private forests accounted for 84 per cent. While the sensitivity of forests to different weather and climate risks has increased, storms and other damage have contributed to only a minor part of the removal rate in recent years.

Other observations related to the indicator

In the future, active and sustainable forest management will also be required to ensure that trees continue growing at the same rate as currently, which will also safeguard future carbon sequestration. The indicator describes Finland’s most significant renewable natural resource and its renewal rate, but does not describe all forest assets. A favourable development of the biodiversity of forest nature will continue to require the conservation and protection of forests in the future. In order to ensure the health, growth and carbon sequestration capacity 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 over 40 per cent of final energy consumption, Finland ranks second among EU Member States

Figure: Distribution of renewable energy by source. (Source: Statistics Finland)

The share of renewable energy in the final consumption of energy has been selected as one of the indicators for sustainable development. The annual ratio is supplemented with a figure on the distribution of renewable energy, which shows the development of renewable energy sources in Finland. The graph also shows a sudden drop in the amount of waste liquors originating from the forest industry during the financial crisis. Data concerning 2019 are preliminary data.

There is an intention to increase the use of renewable energy in order to reduce greenhouse gas emissions and to promote the development related to new energy technologies. 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.

Finland’s current situation

The use of renewable energy increased by 2 per cent in 2018 compared to the previous year. According to preliminary data, the increase in 2019 would seem to continue. Wood-based fuels remained Finland’s largest energy source and accounted for 27 per cent of Finland’s total energy consumption in 2018. The consumption of wood-based fuels increased by a total of 3 per cent. The greatest increase concerned the use of black liquor, which grew by 8 per cent due to increased pulp production. The use of wood-based fuels has never been as high as this. Hydropower production, which depends on the water supply situation, decreased by 10 per cent, but it was partly compensated for by wind power, which increased by 22 per cent. In relative terms, the use of solar power increased most, 63 per cent, but its share of total energy consumption remains small at 0.3 per cent. The share of biofuels in transport has also increased in recent years.

Renewable energy sources were used to cover nearly 37 per cent of total energy consumption and about 40 per cent of final consumption in 2018. In 1990, renewable energy accounted for only 18 per cent of total consumption. Its share has been increasing steadily since then, and the growth has accelerated in the 2010s.

Finland uses the second largest share of renewable energy of the EU Member States with 41 per cent. The only country ahead of Finland is Sweden (54.6%). Finland is also second in its share of renewable transport (14.9%) after Sweden (29.7%). Final data about the 2019 share will probably be available in January 2020.

The goals set for renewable energy at the EU level are determined as the relative share of renewable energy of the final energy consumption. This differs from the total consumption of energy in that the energy transmission and conversion losses have been subtracted from the rate. The EU defines its renewable energy targets in relation to the total final consumption of energy. In this way, the share of renewable energy sources in Finland was over 40 per cent in 2018. Starting in 2014, Finland has exceeded its target of using renewable sources for 38 per cent of its final energy consumption.   

Finland’s binding target under the EU’s Renewable Energy Directive (2009/28/EC) is 38 per cent in 2020. According to the revised directive (REDII, EU 2018/2011), the Member States must together reach a target of at least 32 per cent by 2030. The revised directive does not set mandatory national targets for Member States. Instead, each Member State will set these themselves, and progress in achieving these targets will be monitored with reporting specified in the Regulation on the Governance of the Energy Union and Climate Action. In its national energy and climate plan submitted to the EU, Finland has set the target for using renewable energy for at least 51 per cent of its final energy use in 2030.

Finland’s recent development

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, albeit energy efficient, industry in the country.

The growth in the volume of renewable energy has slowed down in the EU area in recent years. Eleven Member States (incl. Finland) have already reached their 2020 target. Of the remaining 17 Member States, ten are on or ahead their guideline 2017–2018 trajectories set out in the RED I directive. The remaining seven Member States lagging behind their emissions trajectories and thus falling short of their 2020 target.

For more information about the updated situation in the EU, see: https://www.eea.europa.eu/themes/climate/trends-and-projections-in-europe

Business Finland innovation funding promoting resource efficiency and carbon neutrality in the period 2008–2020

Figure: Business Finland funding for resource-efficient and carbon neutral solutions. (Source: Business Finland)

Business Finland provides funding for research, product development and various business development needs as well as services for internationalisation, the creation of networks and the discovery of partners. The indicator represents one concrete investment by the public authorities to the development of climate neutral and resource-wise solutions. In practice, innovation funding and other services supporting international growth broadly promote the goals of sustainable development.

Finland’s current situation

Business Finland is currently running five major programmes at the core of resource-efficient and carbon-neutral solutions: Smart Energy Finland, Bio&Circular Finland, Batteries from Finland, Sustainable Manufacturing Finland and Smart Mobility Finland. All Business Finland programmes, including other than those that directly promote resource-efficient and carbon-neutral solutions, have identified the goals of the 2030 Agenda and incorporated them into the framework conditions guiding the programmes.

Network and ecosystem projects that promote resource-efficient and carbon-neutral solutions are at the centre of funding. In 2020, the innovation funding of these projects will exceed EUR 200 million, which means that the growth that began in 2016 will continue.  

Finland’s recent development

The promotion and development of resource-efficient and carbon-neutral solutions has been strongly at the heart of the Business Finland strategy. In the period 2008-2020, Business Finland launched a total of 17 programmes in the region that have proactively challenged companies and created innovation networks.

Between 2008 and 2015, around 40 per cent of the funding by Business Finland (formerly known as Tekes) was allocated to projects promoting resource efficiency and carbon neutrality. In peak year 2010, this funding amounted to roughly EUR 280 million. At that time, allocation of funding to energy and environmental projects was used as a follow-up indicator. During the same period, the share of research funding for projects promoting resource efficiency and carbon neutrality was around 40 per cent, while corporate funding accounted for about 60 per cent.

In 2016, Business Finland’s innovation funding was cut by 140 million euros, which resulting in redirecting the focus of the activities to small and medium-sized enterprises instead of research and large enterprise projects. The cut significantly affected the funding that promotes energy and environmental objectives, as innovation activities in the sector are highly research-based and the capital intensity of the sector means that large enterprises play a significant role in driving innovation activities. Several major technology programmes also ended at the same time.

Since 2016, innovation funding has grown slightly, and in recent years, Business Finland has also been aiming its funding services to research groups and large enterprises. 

Other observations related to the indicator

It can be said that other Business Finland funding also supports the Sustainable Development Agenda. On the other hand, not all investments in the public sector in areas such as resource-efficient and carbon-neutral research and development are visible in this indicator. However, no comprehensive review focusing on this issue is available.

Soil material accounts for biggest annual use of natural resources measured in masses

Figure: Natural resource consumption based on the Raw Material Consumption analysis. (Source: Finnish Environment Institute, in Finnish)

The indicator illustrates the domestic consumption of natural resources, from which the share of exports and related hidden flows has been removed and the share of imports has been added. The indicator’s unit of measurement is a mass-based analysis of all material extracted from nature in millions of tonnes. The various environmental impacts of the different use categories are not directly connected to the indicator.

Finland’s current situation

The use of natural resources is examined as part of material flow statistics. As there is no annual statistical data available on the total consumption of raw materials, the analysis is based on a 2015 report on the use of natural resources in national consumption.  Less detailed statistics, taking the significance of exports and imports poorly into account, are more widely available internationally. The total raw material consumption (RMC) includes not only the implementation of domestic raw materials but also the so-called hidden flows contained in the import and export of raw materials.
The clearly most used natural source is various soil materials, which are used, e.g. in roads and other infrastructure and construction and whose use amounts to around 100 million tonnes per year.

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. Particularly in the north, roads must be properly protected against ground frost.

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. In addition, some of the material use of round wood is also recovered as energy produced from the by-product flows of production, including as energy from wood chips 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.

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 this issue 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.

Using natural resources as an indicator is limited by its mass-based nature: it only provides an indirect picture of the environmental impacts of the use and does not take into account the diversity of resources; their scarcity, renewability or replaceability. RMC also fails to address the importance of water.

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 modelling carried out in research projects (ENVIMAT, MATPOT). There is need for more regular monitoring based on the RMC breakdown of the consumption of natural resources, particularly related to the monitoring of changes in the use of different material categories.

However, observations on the use of natural resources in masses at the level of the total economy provide no information about the resource efficiency, specific power or energy efficiency of agents, which would often serve as 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 lifecycle emissions and possibilities for repairing, reusing and recycling a product, or using it for a long-term.

Erja Fagerlund, Ministry of Economic Affairs and Employment