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Minister of the Environment and Climate Change Krista Mikkonen: Budget brings welcome boost to climate work

Ministry of the Environment
16.9.2020 17.30
Press release

Minister of the Environment and Climate Change Krista Mikkonen is very happy with the outcome. “The government budget session has decided on a number of concrete steps towards a carbon-neutral Finland. This package will give the much-needed boost to emission reductions and support the recovery of the natural environment. At the same time we will ensure a just transition and the future prospects of Finland’s business sector by supporting the transition into a green economy by around one billion euros from the EU recovery package.”

The Government aim is for Finland to be carbon-neutral and the first fossil-free welfare society by 2035. Many of the measures included in the 2021 Budget support the achievement of this target.

The tax on peat is almost doubled as part of the raise in the taxes on heating fuels. Together with researchers, a floor price mechanisms will be constructed for peat to ensure that the use of peat will decrease by at least a half by 2030.

“The phasing out of the energy use of peat is now really getting started. In the UK the use of coal has been successfully reduced by a similar mechanism. It is self-evident that peat will have no role in climate-friendly energy production of the future.”

Just transition is the key - taxes on climate emissions, support for sustainable solutions

A just transition is ensured for the peat sector by using part of the Just Transition Fund (JTF) of the EU to support alternative investments, operators and employees in the peat industry and regional economies.

“In major structural changes we must make sure that the transition is just for all parties. We will support peat industry operators in facing the change and invest in the diversification of the economic structure of the regions affected. Similarly, we are offering support for households in switching away from oil heating now that the taxes on heating fuels will be rising,” Minister Mikkonen says.

The emissions trading compensation system for the industrial sector will be replaced by a subsidy for electrification to support low-carbon investments. Electrification of the industrial sector is promoted by lowering the electricity tax to the minimum rate allowed by the EU right in the beginning of 2021. The energy tax rebate system of the industrial sector that partly supported the use of fossil energy will be phased out by 2024.

“In the industrial sector financial support will be targeted to climate measures, away from the use of fossil fuels. This is part of the just transition by which jobs will be created in Finland in a sustainable manner while at the same time reducing climate emissions. We want to improve Finland’s competitiveness in the long term, which means that leaps towards carbon-neutrality will be needed in the industrial and business sectors. Many companies have already adopted climate sustainability as their guiding principle and taken important measures to reduce emissions.”

“By the decisions made at the government budget session we will more even faster on our path towards a carbon-neutral Finland. However, it is clear that these decisions alone will not be enough to halt climate change or even to achieve climate neutrality in Finland, but they provide a good foundation for future efforts.”

Strong focus on halting the decline in biodiversity also in future

Besides climate change mitigation, the Government will continue its historical efforts to halt the decline in biodiversity. In 2021 the funds allocated for nature conservation will again be EUR 100 million higher than in the beginning of the government term.

“The ecological crisis is as acute as the climate crisis. The recent news is, again, that right now is the crucial time in terms of saving the earth, nature, animal species and ecosystems. Failure in halting the loss of biodiversity will also make it much more difficult to mitigate climate change,” Minister Mikkonen says.


Climate issues: Riikka Yliluoma, Special Adviser, tel. +358 295 250 091, [email protected]

Natural environment: Antti Heikkinen, Special Adviser, tel. +358 295 250 231, [email protected]