Baltic Energy Market Interconnection Plan GRIP 2017

3.3 Finland

3.3.1 ENERGY POLICY

The previous version of the national energy and climate strategy from 2013 was revised in 2016 by a ministerial working group on energy and climate policy, appointed by the government of Finland. The National Energy and Climate Strategy outlines the actions that will enable Finland to attain the targets specified in the Government Programme and adopted in the EU for 2030, and to systematically set the course for achieving an 80−95% reduction in greenhouse gas emissions by 2050. With minor exceptions, Finland will phase out the use of coal for energy. The share of transport biofuels will be increased to 30%, and an obligation to blend light fuel oil used in machinery and heating with 10% of bioliquids will be introduced. The minimum aim is to have 250,000 electric and 50,000 gas-powered vehicles on the roads. The share of renewable energy in the end consumption will increase to approx. 50% and the self-sufficiency in ener- gy to 55%. The domestic use of imported oil will be halved as planned. The main objectives of the strategy update include ensuring that the national targets in the long-term energy and climate objectives set by the EU are achieved. The main national targets of the strategy are to identify how over 50% share of renewable energy during 2020s is achieved at the same time when use of coal will be abandoned by 2030 and the use of imported oil products will be cut in half from the current level by the end of 2020s compared to the level in 2005. Coal might be used for energy back-up purposes but no new coal-fired power plants will be built. Biogas is mentioned specifically in the strategy and the production and use of biogas will be supported by the state. Additionally, the share of renewable fuels in transportation will be increased in order to reduce greenhouse gas emissions from traffic. Further- more, the government of Finland established in 2015 a series of spearhead projects in several areas of society in order to enhance the competitiveness of Finland and to achieve the general political objectives. One of the spearhead projects is called: “Towards carbon neutral, clean and renewable energy in a cost effective manner”. During recent years the taxation of fuels has also changed remarkably, the taxation is based on two components: energy content based component and CO ² -emission based component. The National Energy and Climate Strategy mentions that Balticconnector pipeline construction between Finland and Estonia enables the opening and renewal of gas markets in Finland. This means that the derogation from gas directive will be aban- doned and gas markets will be fully opened to competition from 2020 onwards. Price regulation of pipeline gas will also be abandoned and a virtual trading point will be established. The target is to create regional gas markets consisting of Finland and the Baltic states. Transmissions system operations will be unbundled from the gas sales part of the company. Regarding the role of natural gas, the strategy targets means that the market share for natural gas will remain, albeit lower than before. Especially the taxation of natural gas for heat production and combined heat and power production has increased 6–8-fold during past five years, while natural gas used in industry is still untaxed. This together with very low electricity prices has caused the use of natural gas in heating and CHP-segments to decrease about 40% during past 5 years. This devel- opment has also raised the question how to preserve the electricity generating capacity in Finland while most of the natural gas based CHP plans are at standstill. The strategy and energy policy have thus far generated some possibilities for natu- ral gas in Finland. Renewable energy targets together with the lack of tax-burden creates possibilities for sustainable biogas production and market development, which has actually boosted the development of biogas sector in Finland in grid-con- nected and offgrid applications. In addition to political incentives to biogas produc- tion and market development, Finland has also allocated some investment subsidies.

BEMIP Gas Regional Investment Plan 2017 |

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