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Climate Change: North Atlantic Comparisons

FINLAND

Introduction

3.97 The Second National Communication to the UNFCCC (Finland’s Ministry of the Environment, 1997) and its associated review (UNFCCC, 1999d) provided the basis for the following observations about Finland.

Figure 3.5 Outline map of Finland (shaded)

Climate Impacts and Adaptation

3.98 Three scenarios of temperature and precipitation change were developed for SILMU (the Finnish Research Programme on Climate Change, 1990-1995), based on GCM results over Finland. The central "best guess" scenario predicts a mean annual warming of 2.4°C by 2050. This is about 1.5°C more than the average global warming expected over the same period. Warming is expected to be greater in winter than in summer. Predictions of precipitation are much more uncertain than that of temperature: the central scenario suggests an annual increase of about 30-40 mm by 2050.

3.99 Climatological observations have been made in Finland for about 150 years. In many areas of Europe a warming trend has been observed during this century, while temperatures in the North Atlantic have declined. In Finland the changes have not been very clear. Annual averages based on eight representative weather stations indicate a statistically significant warming of about 0.5°C during this century, but variations from year to year are large.

3.100 The potential effects of the SILMU scenarios on natural ecosystems and economic activities in Finland have been evaluated using a range of approaches, including experimentation, mathematical modelling and expert judgement. The main focus of studies was on land ecosystems, including forests, peatlands and agriculture, and aquatic ecosystems, including inland waters and the Baltic Sea.

3.101 Silviculture is a very important climate sensitive part of the Finnish economy. Annual growth of the forests is expected to increase by over a third within a few decades because of improved forestry practises and higher atmospheric carbon dioxide concentration, higher temperatures and longer growing seasons. The enhancement of growth will be most pronounced in northern Finland. The genetic adaptability of the most important tree species — pine, spruce and birch — is considered exceptionally good, because Finland is located between continental and maritime climates. However, the risk of new pests and insects in a warmer climate should be considered. Similar risks will occur in agriculture, although this sector may otherwise benefit considerably because of longer growing seasons and higher temperatures. Cereal production could expand 250—500 km northward by 2050 and there would be potential for the successful cultivation of new crops like maize in southern Finland.

3.102 The vulnerability of the Finnish coastline to sea level rise is relatively low. Vulnerable land is still rising in response to the removal of ice that existed during the last Ice Age, which more than compensates for the forecast rise in sea level during the next century. This study did not uncover any evidence that more severe storms or other direct climate hazards were considered serious in Finland.

Mitigation of Greenhouse Gas Emissions

3.103 Response strategies to climate change are co-ordinated by an inter-ministerial working group overseen by the Ministry of Environment and guided by a Climate Committee, which comprises representatives of various ministries with sectoral interests in climate change. In addition, regional and local authorities and government agencies are tasked with implementing climate strategy.

3.104 Finland favours use of economic instruments such as its energy/carbon dioxide tax as policy measures to deal with climate change issues. In addition, voluntary agreements with industry coupled with tight building regulations and energy audits provide the main strands of climate policy. The UNFCCC target of stabilising emissions by 2010 at 1990 levels appears unlikely to be reached, because of the growing transport sector and uncertainty in the developing energy sector (UNFCCC, 1999d).

Energy

3.105 Indigenous energy resources consist of peat, hydropower and wood. Finland imports about 70% of its primary energy, including much fossil fuel from Russia. In 1995, the mix of energy supply comprised oil (28.5%), coal (21.1%), nuclear (17.5%), natural gas (10.3%), hydro (3.9%) and other renewables and waste (16.6%). The future energy mix will depend on the development of gas infrastructure linking the Nordic countries and security considerations involved in importing a large proportion of energy from Russia. Fuel switching to natural gas and wood-based products is continuing.

3.106 In 1995, final energy consumption comprised industry (46%), reflecting a relatively high-energy intensity base, space heating (24%), transport (14%), and others (16%). Significant developments in this sector relate to the adoption of an Energy Strategy in 1997, modification of the carbon/energy tax, liberalisation of the Nordic electricity market and membership of the European gas network.

3.107 Over a third of electricity is generated at CHP plants. A further one third of electricity comes from nuclear power. Similarly to Denmark and Sweden, district heating is common and the high efficiencies achieved result in low emissions from the energy system. This CHP network has developed in part because of the large number of forest industry installations.

3.108 The Finnish government adopted a broad national Energy Strategy in 1997 aimed at reducing carbon dioxide emissions. Its objectives were to improve the availability of energy, ensure competitiveness of energy prices, meet international commitments, develop and commercialise energy-saving and renewable technologies. Policies include:

• Promotion of the energy market;
• Promotion of energy efficiency;
• Maintenance of good energy technologies;
• Development of energy production structure to minimise emissions;
• Securing the supply of energy;
• Promotion of renewables.

3.109 Finland’s energy/carbon tax has undergone a series of modifications over its ten-year history coinciding with the liberalisation of the electricity markets and entry into the European Union. At present the tax favours low-emission fuels for heating and encourages energy conservation by general taxation on electricity and fuels. However, the UNFCCC review team suggested that its regulatory impact has become more limited in recent years (UNFCCC, 1999d). Industry informed the UNFCCC review team that they felt the present tax situation was fraught with uncertainty. Tax is applied on consumption of electricity, but differentiates between sectors to protect high electricity users. A carbon tax is levied on fuels for heat generation, with some tax revenue recycled to energy producers such as municipal CHP burning renewables and other renewables schemes.

Transport

3.110 The low population density and distance from primary export markets means Finland is heavily reliant on its transport infrastructure. Traffic has risen by nearly four times since 1970. Railway traffic has increased by about 40%. Road freight traffic consisting of heavy lorries is about 1.5 the European average, reflecting the long distances travelled.

3.111 The trend for growth in the transport sector is expected to increase. Public transport is relatively well utilised, being nearly 1.5 the EC average, and supported by subsidies. Road freight traffic is relatively efficient, reflecting high tonnage per kilometre and full loads.

3.112 Taxation in transport comprises two areas: fuels and vehicles. The fuel levy was Fmk 2.48/l on diesel and Fmk 4.34/l on petrol in 1998. This is usually increased annually. The vehicle registration tax is high relative to others in Europe, slowing the import of more expensive relatively fuel inefficient passenger cars. The UNFCCC team noted the likelihood of reducing this registration tax and increasing the annual car tax instead.

Business

3.113 The commercial and industrial sector in Finland includes intensive energy users. The primary effect of climate change issues is felt through the energy taxation discussed above.

3.114 Voluntary agreements are the main policy instrument used by Government to promote energy conservation and reduced energy consumption by industry and local authorities. These operate in conjunction with the Energy Strategy and Energy Conservation Programme noted above. Individual businesses adopt specific energy conservation targets with their energy use monitored through energy audits.

3.115 The municipalities charge users for sewerage and waste management. The sewerage charge is calculated according to the amount and quality of waste-water produced. The waste management charge is based on the nature, quality and quantity of waste. A waste tax is levied on waste delivered to public landfills and comparable sites.

3.116 There has been a steep decline in municipal landfill sites, with an intended target number of only 50-80 sites in 2005. This is intended to lead to more efficient supervision and environmental management, but will add to the transport costs of delivering waste. The tax rate in 1999 was Fmk 90 per tonne of waste. Private landfills are exempt. Landfill gas recovery is practised on a limited scale and will become mandatory in 2002.

Domestic

3.117 Residential and office buildings account for approximately 75% of the total final consumption of heating energy in Finland. The Government has put in place an Energy Conservation Programme. A basic assumption of the Programme is that promotion of energy efficiency cannot depend on increased state subsidies. The Programme is to be achieved by a mix of:

• Norm (e.g. building codes and energy labelling of equipment);
• Taxation (energy/carbon dioxide);
• Existing subsidies;
• Energy conservation agreements (voluntary agreements);
• Advanced technologies;
• Information dissemination.

3.118 The nature of the Finnish climate has ensured that buildings have always been designed with energy economy in mind. For example, triple glazing became compulsory in the 1970s. The Building Code is being revised with a view to reduce energy consumption in new buildings. New buildings will be equipped of electricity and hot water metering and charging.

3.119 In 1996 a working group on energy audits was constituted which established that 80% of buildings should have energy audits by 2010. For existing buildings there are incentives to carry out audits and investment grants for energy efficiency improvements. Government subsidised up to 20% of the cost if energy efficient measures were implemented. As of May 1998, 15% of building volume had completed energy audits. The annual savings were estimated to be Fmk 500 million over a five-year period and the payback for this investment is 2-3 years (UNFCCC, 1999d). An independent review suggested that efficiency improvements of 20-25% were possible in heating, 6-8% for electricity, and 7-15% in water consumption. The team was told that these improvements were being achieved at limited or nil cost.

Agriculture, Forestry and Fishing

3.120 Finnish agriculture is based mainly on livestock, which comprise about 70% of the total value of Finnish agricultural production and accounted for 2.6% of GDP in 1994. The Finnish farms, almost entirely family run, are typically small; in 1994 the mean farm arable area was about 19 hectares. Dairy farms had, on average, 12 cows, and most of the pig farms were small or medium-sized. Significant changes in the agricultural economy of Finland have resulted from its entry into the EU in 1995. Many smaller farms have stopped production and the mean size of farms has grown. The total livestock numbers and the use of fertilisers are expected to decrease somewhat, but this will only cause a small decline in production because of improved efficiencies.

3.121 In 1995, agriculture accounted for 37% of Finland's methane emissions and 50% of its nitrous oxide emissions. Cultivation and fertilisation of peat soils increase the decomposition of the organic matter in the soils and also enhance nitrous oxide emissions.

3.122 Environmental protection has focused on reducing water pollution, mostly using voluntary measures. Since membership of the European Union, a new agri-environmental programme has been introduced in Finland. Most of the farmers have joined the programme and are paid basic and special subsidies for actions that benefit the environment. The goals are to decrease the pollutant load on the environment, to increase biodiversity and to protect the landscape. Improvements to cowsheds and manure containers, better manure handling procedures and reductions in over-fertilisation should have the additional benefit of reducing greenhouse gas emissions.

3.123 Forest and other wooded land cover 23 million ha or 74% of Finland's total land area. The Finnish economy is deeply dependent on the forest sector, which accounted for 2.6% of GDP in 1994. Finland is the largest per capita exporter of forest products of any OECD country, with per capita exports twice those of Sweden (OECD, 1999).

3.124 In 1995, the annual uptake of carbon dioxide by Finland's forests was 14,700 Gg, equivalent to 26% of national carbon dioxide emissions. Much of Finland's forest has been planted on drained peat-land, and the calculation of its national greenhouse gas inventory accounts for the effect of drainage on carbon dioxide loss from peat and the losses of methane and nitrous oxide. The Finnish Forest Strategy, implemented via legislation, focuses on protection from inappropriate use and negative changes, and promotion of sustainable forest management in private and state forests. The 1997 Forest Act seeks to ensure sustainable forestry and allow for regeneration of forests. It also provides that the regional forest centres, in co-operation with other stakeholders, should prepare regional programmes integrating economic, ecological and social sustainability into wood production plans.

3.125 The 1997 Act on the Financing of Sustainable Forestry allocates government funding to measures aimed at sustainable wood production, the maintenance of biodiversity and nature management projects. Sustainable forestry serves as the main criterion for government grants and loans under the Act. The programme acknowledges that maintaining tree growth and uptake of carbon dioxide is both a long-term and short-term prerequisite if Finland is to fulfil its obligations under the UNFCCC.

3.126 Amongst the OECD countries, Finland has a relatively high proportion of total energy consumption supplied by bioenergy owing to the high volume of wood residue produced and used by the forest industry and its use as a biofuel in district heating plants

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