The resource-wise economy and carbon neutral society 2021
Greenhouse gas emissions are decreasing and the share of renewable energy was at a record-high level in 2020

13.1.2022 12.55 | Published in English on 18.3.2022 at 15.07
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Finland is advancing in accordance with its carbon neutrality targets. The share of renewable energy has reached another record high, as 44.6 per cent of total final consumption of energy comes from renewable sources. Anniversary of forest growth monitoring; 100 years of National Forest Inventory! In addition, the demand for carbon-neutral and resource-efficient innovation subsidies is exceptional in 2020, the year of COVID-19.

Greenhouse gas emissions decreased by 9 per cent compared to 2019

Total greenhouse gas emissions without LULUCF. (Source: Statistics Finland **2020 preliminary data)

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

The indicator describes the development of climate emissions in Finland, including the emissions from 1990 to 2020. Greenhouse gas emissions are a key indicator of climate change mitigation, and the indicator has a strong international analytical basis, making the various gases commensurate. In the second figure, the land use sector (LULUCF) has also been included in the greenhouse gas emissions with other emission sources.  

Finland’s current situation and recent development

In 2020, Finland's total greenhouse gas emissions amounted to 48.1 million tonnes of CO2 equivalent (CO2e). Emissions decreased by 9 per cent compared to the previous year. The factors contributing to the reduced emissions in 2020 included the warm winter, recent changes in electricity production and a decline in transport performance, in which the COVID-19 pandemic also played a role. Since 1990, Finland's emissions have decreased by 32 per cent (23.1 million tonnes of CO2e).

Based on the information obtained so far, Finland will meet its emission reduction commitments under the EU and Kyoto Protocol for the entire period 2013–2020. However, the ambitious goals for the future require more investments and successfully implemented measures. The same applies to other EU countries. However, the EU is a pioneer in setting climate objectives. The EU has set the target for the Union's common emissions trading sector at a 43 per cent decrease on 2005 levels by 2030. According to the Commission proposal of July 2021, the new target for the emissions trading sector would be a 61 per cent decrease by 2030.

Finland's country-specific emission reduction target for the effort sharing sector is a 39 per cent decrease on 2005 levels by 2030. In the new proposal, the Commission proposes 50 per cent emission reductions for Finland by 2030.

Other observations related to the indicator

The indicator is in accordance with Finland's commitments and does not take into account the emissions caused by the manufacture and consumption of imported products. On the other hand, exports outside the EU are also excluded.

The progress made by the EU and Finland can be viewed in more detail and compared using, for example, the publication Trends and Projections in Europe 2021 (EEA Report No 13/2021), according to which Finland made significant progress in 2020 on the path towards achieving its climate objectives.

Timber growth has been monitored for 100 years 

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 year 2021 marked the 100th anniversary of monitoring the state of forests in Finland, using a statistical sampling method covering the entire country, the National Forest Inventory (NFI). The latest results are from the 13th national forest inventory round (NFI 13).

Finland’s current situation 

The volume of forest resources in Finland is 2.505 billion cubic metres, which is 30 million cubic metres more than in the previous NFI round (2014–2018). The annual drain of growing stock, including both felling and natural loss, is 83% of the growth during the period 2014–2020. The average volume of growing stock on forest land is 122 cubic metres per hectare.

The mean annual growth of growing stock per hectare is 5.1 cubic metres. In regional terms, Kanta-Häme has the largest mean growth in growing stock, 8.5 cubic metres per hectare of forest land. In Lapland, the mean growth remains at 2.1 cubic metres per hectare.

According to the updated National Forest Strategy 2025, in 2025 the annual growth of growing stock in commercial forests would be 110 million m3, 115 million m3 in total, while the annual roundwood removals would amount to about 80 million m3. In addition, the natural drain will be approximately 14 million m3 (logging residues, naturally died roundwood).

Finland’s recent development 

From the beginning of the 1970s, the annual growth rate of trees has been clearly above the drain. Towards the end of the 2010s, the gap has narrowed slightly due to the increased maximum felling volumes for industrial use and the slightly declining forest growth rate. In 2020, the figure fell from the previous year's increased level. As regards growth, the latest estimate is from 2017.

Compared to the previous inventory, the annual growth of trees has decreased (107 => 103 million m3). There has been a decrease in pine growth, whereas spruce growth has increased. During the growth inventory period of NFI13 (2014–2020), the tree-ring index was at a lower level than the long-term average. Annual variation in the tree-ring index is caused by environmental factors, such as temperature and precipitation, tree seed production and forest damage.

In the last 10 years, the standing stock of live trees in Finnish forests, calculated as the difference between growth and drain, has been increasing by approximately 18–24 million m3/year. In Finland, the annual growth of forests has more than doubled since the 1950s.

Comparison with Sweden

As our neighbouring country, Sweden is very similar to Finland in terms of its climate and vegetation, and its forests do not make an exception in this respect. Over the past 90 years, the Swedish forest resources have doubled, and more than half of the land area is currently covered by forests. Sweden is the third most forested country in the world as far as the proportion of forest of the land area is concerned. It is only surpassed by Finland and Japan. In Sweden, the volume of trees is currently increasing by 123 million m3/year, whereas five years ago the growth was 130 million m3. The volume of growing stock is 3.6 billion m3 (in Finland 2.5 billion m3). In Sweden, forests are utilised more intensively than in Finland; in Sweden almost 94 per cent of the growth is felled, while the Finnish rate is approximately 70 per cent.

Other observations related to the indicator

Natural drain is illustrated by the volume of dead wood, for example. The amount of dead wood that is important for forest biodiversity has continued to increase in Southern Finland. The average volume of dead wood in Southern Finland is now 4.9 cubic metres per hectare of forest land.

In Northern Finland, the reduction in dead wood volumes observed earlier in both protected areas and commercial forests has stopped. In Northern Finland, the average volume of dead wood is 7.7 cubic metres per hectare.

Share of renewable energy in total consumption of energy rose to 44.6 per cent

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

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.

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. 

Finland’s current situation

Finland is one of the world’s leading users of renewable sources of energy. A key objective of promoting renewable energy is to reduce greenhouse gas emissions and to decouple from the energy system based on fossil fuels. The use of renewable energy also increases energy self-sufficiency and employment and supports technological development in the sector. In 2020, the share of renewable energy continued to grow, amounting to 44.6 per cent of gross final energy consumption. 

The most important renewable energy sources used in Finland include bioenergy, especially forest industry side streams and other wood-based fuels, hydropower, wind power and geothermal heat.  Bioenergy is also produced from biodegradable wastes and side streams from agriculture, communities and industry that are not recycled. Other production methods based on renewable energy have also increased significantly in recent years. The amount of wind power in particular has grown rapidly, even though its share still remains far behind that of bioenergy. The share of solar electricity is growing especially in sites where own production replaces electricity purchased from the grid.

Finland clearly exceeded the target set in the EU's Renewable Energy Directive for increasing the use of renewable energy. Finland's binding national target was to raise the share of renewable energy of the total final consumption to at least 38 per cent by 2020. When calculated this way, the share of renewable energy in Finland rose to over 44.6 per cent in 2020. The share of total consumption was 39 per cent.

In line with the national energy and climate strategy for 2030, the aim is to increase the use of renewable energy so that its share of final energy consumption will increase to above 50 per cent in the 2020s.

Although the share of renewable energy increased to 44.6 per cent, its use decreased by 2 per cent in 2020 compared to the previous year. Warm weather and the decline in the production of energy-intensive industries were particularly reflected in the consumption of wood-based fuels, which decreased by 6 per cent. However, wood-based fuels are by far Finland's most significant energy source, accounting for 28 per cent of total energy consumption. Wood-based energy is produced from wood processing side streams, such as bark, sawdust and waste liquors from the pulp industry, as well as from various residues and small wood from felling and forest management. Black liquor produced as a by-product of pulp production accounted for 44 per cent of wood-based fuels.

Hydropower production increased with the improved water situation. Compared to the previous year, hydropower production increased by 28 per cent from the previous year. The year 2020 was also more favourable from the perspective of wind power production, as its production increased by 32 per cent, to which the introduction of new wind power plants also contributed. The use of solar energy increased even more than that of the sources above, i.e., by 43 per cent. Despite the brisk growth in recent years, solar energy accounted for about one per mille of total energy consumption.

Other observations related to the indicator

The Renewable Energy Directive has made it easier for different Member States to reach their targets and, at the same time, for the EU to reach the common target by allowing statistical transfers. It allows Member States to transfer the surplus of renewable energy in another Member State towards reaching their own target. Accordingly, Finland has sold part of its statistical surplus of renewable energy to Belgium. Even after the transfer, the proportion of renewable energy in Finland’s end consumption remained high (43.9%).

COVID-19 pandemic increased innovation funding for resource-efficient and carbon-neutral solutions 

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

The indicator represents one concrete investment by the public authorities to the development of climate neutral and resource-wise solutions. Business Finland provides funding for research, product development and various business development needs as well as services for internationalisation, creating networks and finding partners, of which the share used for resource-efficient and carbon-neutral solutions has been included in the indicator.

Finland’s current situation

2020 was an exceptional year in every way. The COVID-19 pandemic increased the demand for innovation funding and, on the other hand, brought additional resources for Business Finland. Funding promoting the focus area natural resources and resource efficiency increased to EUR 306 million in 2020. Of the total, 75 per cent was targeted for R&D projects carried out by companies and 25 per cent for projects carried out by research organisations. Most of the activities focused on ongoing programmes promoting the green transition: BioCircular Finland, Smart Energy Finland, Smart Mobility and Batteries from Finland, and Sustainable Manufacturing Finland.

At the end of 2020, Business Finland launched a leading company competition, with an aim to challenge leading Finnish companies to increase their R&D investments in Finland and to put together internationally competitive ecosystems around them, so that the organisations involved would also increase their R&D activities for their part. The competition supports the Government's objectives of raising R&D investments to 4 per cent of GDP and developing Finland into the world's best environment for innovation and experimentation by 2030. A total of six projects were launched through the leading company competition (Fortum&Metsä Group, Neste, Nokia, ABB, Kone and Sandvik). The objectives of all six leading company projects and ecosystems are very much at the core of sustainable development and green transition.

Finland’s recent development 

In 2008–2015, around 40 per cent of the funding by Business Finland was allocated to projects promoting resource efficiency and carbon neutrality. In the peak year 2010, this funding amounted to roughly EUR 280 million. Back then, the indicator monitored was the allocation of funding to energy and environmental projects. 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 EUR 140 million, which resulted in redirecting the focus of the activities to SMEs and growth companies instead of research and large company 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.

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.

Other observations related to the indicator

Business Finland has been assigned a very important role in the implementation of Finland's sustainable growth programme through the European Union's RRF funding (Recovery and Resilience Facility). Within the programme, it is possible to allocate funding for measures supporting climate change mitigation and carbon neutrality.

It should be noted, however, that without RRF funds, funding channelled to customers through Business Finland would fall by nearly EUR 90 million in 2022 compared to this year. In practice, this means that Business Finland's declining basic resourcing will be temporarily compensated from RRF funding.

New data expected on the consumption of natural resources

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 and recent development 

The latest data on the indicator is from 2015. Therefore, it is not easy to assess Finland's current situation and recent development. 

The greatest consumption of natural resources continues to be related to soil materials, needed particularly for construction. Many investments also require soil materials, even new wind power plants. Finland differs from many other EU countries in that these metal ores can also be extracted from domestic sources. The wall rock from mines is heavy, and in Finland mining activities are reflected in the indicator, unlike in countries where there is no mining activity. The mineral resources are distributed unevenly around the world.

The open data sources of Eurostat - European statistics, however, provide some estimates based on other indicators, such as the circular economy rate, which illustrates the share of recycled materials in relation to consumption of all natural resources.

From this point of view, in 2020, the EU's share of recycled materials of consumption increased slightly to 12.8 per cent. The countries with the highest recycled materials rates were the Netherlands (31%) and Belgium (23%), whereas in Finland the share was only 6.2 per cent. In 2020, the average circular economy rate for metals within the EU was 25 per cent, for non-metallic minerals (including glass) 16 per cent, and for paper and other biomass 10 per cent.

The statistical practices used are not necessarily entirely uniform, but due to economic structures, the circular economy rate is not linked with the recycling rate, which measures how large a share of domestically used materials ends up in recycling.

For example, almost 94 per cent of the paper and cardboard consumed in Finland was recovered in 2020. As most of the paper produced in Finland has been exported, a significant share of the paper produced here ends up in circulation elsewhere. For the whole of Europe, the recycling rate of paper was around 74 per cent in 2020. In its 2020 Circular Economy Programme, Finland has set targets for, among other things, reducing the use of non-renewable natural resources in accordance with the RMC material consumption indicator, for doubling the circular economy rate of materials from 2015 to 2035, and for doubling resource productivity during the same period.

Other observations related to the indicator

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.

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.

Due to differences in economic structures, observations on the use of natural resources at the level of the total economy provide no information about, for instance, the resource efficiency, specific efficiency or energy efficiency of industrial operators. They would often provide considerably more transparent and comparable indicators at the level of individual actors. 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.