Annual Climate Report 2025: Emissions from Finland’s energy production fell sharply, but more action is needed to meet climate targets
The clean energy transition is progressing at a good pace, thanks in part to the emissions trading system. However, reaching Finland’s climate targets will require more action in the effort sharing sector, and especially in the land use sector where emissions increased compared to the previous year.
The Government submitted the Annual Climate Report to Parliament on Friday 27 June. Each year, the Government reports to Parliament on trends in Finland's emissions and progress towards climate targets under the national Climate Act and EU obligations. The report presents emissions from the emissions trading and effort sharing sectors, and emissions and sinks from the land use sector for each land use category.
According to the report, Finland's net greenhouse gas emissions – the difference between emissions and the sinks that absorb them – fell by just one per cent from the previous year. Instant preliminary data shows that emissions in the land use sector increased compared to the year before, and the sector was a major source of emissions. Without the land use sector, Finland's greenhouse gas emissions fell by six per cent.
Emissions are falling especially in energy and heat production within the emissions trading sector, where emissions dropped by 14 per cent from the previous year. Coal use nearly halved and peat use decreased by over a third compared to the previous year. Combustion-based electricity production has decreased, while wind and nuclear power have grown significantly.
“The clean energy transition is already a Finnish success story. It’s important that Finland remains an attractive destination for green investment in the future. For example, our goal is to build new industrial activity around carbon capture and affordable clean electricity to replace the fossil economy,” says Minister of Climate and the Environment Sari Multala.
“But as the Annual Climate Report shows, we need more action to meet our climate targets. This is especially true for the land use sector – and we also need to strengthen the knowledge base so we have the best and most up-to-date information to support climate policy,” Multala adds.
Reaching the climate neutrality target will require major additional action
Under the national Climate Act, Finland aims to be carbon neutral in 2035. This means that Finland’s emissions and sinks must be in balance, i.e. greenhouse gas emissions are equal to the removals or lower. Reaching this climate neutrality target will require major additional action. Sinks must be strengthened and emissions cut, especially in the land use sector where emissions are currently rising. The Climate Act also sets emission reduction targets for the effort sharing and emissions trading sectors for 2030, 2040 and 2050. The Annual Climate Report looks at progress towards these targets over a 15-year period. Combined emissions from the emissions trading and effort sharing sectors must fall by 60 per cent by 2030 and by 80 per cent by 2040 compared to the 1990 levels.
According to the latest policy scenario project – ‘New measures and scenarios for the national energy and climate policy’ – Finland can meet the 2030 and 2040 targets in the Climate Act if all solutions based on carbon capture technologies are taken into account. In the future, carbon dioxide could be permanently captured through geological storage or repurposed for use in products.
Land use sector: Forests have become a net source of emissions
The land use sector comprises land use, land use change and forestry (LULUCF). Forests and soils used to be a major net carbon sink in this sector, but forests have become a net source of emissions because the carbon sink from trees no longer offsets emissions from forest soils. According to the latest greenhouse gas inventory data, the land use sector overall has been a net source of emissions since 2018, and forests since 2021.
The EU’s LULUCF Regulation requires EU Member States to maintain and strengthen carbon sinks and reduce emissions. During the 2021–2025 period, Member States must ensure that no accounted emissions arise from the LULUCF sector. Current estimates show that Finland is falling far short of its 2021–2025 obligations, and there is still some way to go before it reaches the 2030 target.
Without major additional action in the land use sector, Finland will not meet its obligations.
Effort sharing sector: Transport emissions increased, agricultural emissions remained largely unchanged
Emissions from the effort sharing sector fell by around one per cent from the previous year. The effort sharing sector comprises transport, agriculture, building-specific heating, waste treatment and incineration, non-road mobile machinery and F-gases, as well as small industrial and heat plants. The largest sources of emissions in the sector are transport and agriculture. Agricultural emissions remained almost at the previous year’s level.
Transport emissions grew by four per cent from the previous year, because less renewable fuel was distributed. The renewable fuel distribution obligation remains the most significant measure currently affecting transport emissions. It requires fuel distributors to blend a certain share of renewable fuels into the fuel mix.
The electrification of transport is progressing fairly well, and the number of plug-in vehicles in Finland is growing rapidly. In 2024, there were around 285,000 plug-in passenger cars in Finland. Electricity use in road transport rose by 39 per cent. Even so, the shift to a low-emission vehicle fleet has been too slow to keep pace with Finland’s climate targets.
It is uncertain whether Finland will succeed in halving emissions in the effort sharing sector by 2030, as required by the EU. Finland stayed below its EU allocation for this sector in 2021–2023, but instant preliminary data shows that the 2024 allocation was slightly exceeded. Finland needs to speed up emission reductions to meet the targets set for the effort sharing sector.
The development in the land use sector will also affect the ability to meet the obligations in the effort sharing sector. Under the current EU obligations, if the land use sector fails to meet its targets, the shortfall would have to be made up by the effort sharing sector. Finland already has a strict target for the effort sharing sector. Covering the shortfall transferred from the land use sector through measures in the effort sharing sector, such as in transport or agriculture, would be practically impossible given the scale required.
Climate actions to be outlined in upcoming plans
During 2025, Finland will update its Medium-term Climate Policy Plan and its Energy and Climate Strategy, both of which will include additional measures to help meet the targets set out in the Climate Act and fulfil EU obligations.
In 2024, the Ministry of Agriculture and Forestry prepared a package of measures to boost forest growth and strengthen carbon sinks. The Government plans to decide on further land use sector measures as part of the Energy and Climate Strategy.
The plan is to submit the Medium-term Climate Policy Plan and the Energy and Climate Strategy as reports to Parliament in 2025. Their preparation will be based on the latest scenario modelling and impact assessments, including those from the project introducing new measures and scenarios for the national energy and climate policy.
In addition to mitigating climate change, it is also important for Finland to prepare for its impacts and manage related risks in advance. Finland promotes preparedness and adaptation to the impacts of climate change through the National Climate Change Adaptation Plan, as set out in the Climate Act. In 2024, these efforts were advanced across many areas of society. For example, adaptation measures are increasingly recognised as part of comprehensive security and security of supply.
Inquiries
Lyydia Ylönen (political questions)
Special Adviser to Minister Sari Multala
tel. +358 50 476 1341
[email protected]
Outi Honkatukia
Director, Climate and Chemicals Unit
+358 295 250 272
[email protected]