Environmental Damage Fund

The aim of the Fund is to ensure that the environmental obligations of various operators are as far as possible fulfilled without financial intervention by the State. The Fund protects the position of the party suffering damage in the event of environmental damages. The aim in awarding grants is to contribute to good response capabilities.  

The funds for the payments from the Environmental Damage Fund are collected as tax-like environmental liability contributions from operators that may cause environmental pollution. Environmental liability contributions are collected as annual or one-off payments.

The obligation to pay environmental liability contributions is based on the operators’ activities involving a risk of causing environmental pollution. In practice, the obligation to pay applies to all activities that under the Environment Protection Act (527/2014) are subject to a permit or notification or that have to be registered. The obligation also applies to operators causing a risk of environment pollution in Åland.

The amount of the environmental liability contribution is determined by the Centre for Economic Development, Transport and the Environment for South Ostrobothnia that serves as the authority responsible for collecting the contributions.

More information about environmental liability contributions (in Finnish) is available at: 

• Lisätietoja ympäristövahinkomaksuista | ymparisto.fi

The collection of environment liability contributions starts in 2025.

One-off payments will be collected for the first time in 2025. The first annual payments will be collected in 2026, with the payments targeted to the operations in the previous year.

The limit for the assets of the Environmental Damage Fund is EUR 30 million. When the assets exceed this, the collection of environmental liability contributions is suspended. The collection is restarted when the assets of the Fund are below EUR 15 million. 

The assets of the Fund have been determined by taking into account the earlier environmental liability incidents where state budget funding has been needed, and the volume of the Oil Pollution Compensation Fund and the scope of compulsory environmental damage insurance that will be abolished. 

Without major incidents, the limit of EUR 30 million in assets will be reached in about ten years. 

Two kinds of compensations can be paid from the Fund: compensations to parties suffering damage and compensations for prevention and restoration costs incurred by the authorities. 

Provisions on compensations to parties suffering damage are laid down in section 13 of the Act on the Environmental Damage Fund (1262/2022). The compensations from the Fund payable to parties suffering damage are primarily determined by legislation concerning environmental liability, including the Act on Compensation for Environmental Damage (737/1994), Maritime Act (674/1994) and Damages Act (412/1974). 

Provisions on compensations for prevention and restoration costs incurred by the authorities are laid down in section 15 of the Act on the Environmental Damage Fund. For example, compensations can be paid to rescue authorities for the costs of preventing oil and chemical spills from ships, to municipalities for the costs of post oil spill recovery measures, and to state supervisory authorities for the costs of measures that are necessary to prevent or restrict environmental pollution referred to in section 182 a of the Environmental Protection Act.

In all situations, the Fund is the last resort option for paying the compensations. 

The Fund has the right to recover the compensations it has paid from the party established as liable for compensation if it turns out that such a solvent party responsible for the damage can be found. 

Compensations can be paid from the Fund for damage and for prevention and restoration costs if 

1. compensation cannot be collected in full from the party that under other law is liable for the costs of the damage or the party responsible for the prevention and restoration costs; or
2. the party liable for the damage or responsible for the prevention and restoration costs under other law cannot be established.

A further condition for paying compensation is that the compensation for damage or the prevention and restoration costs are not paid in full from a security lodged by the liable party or party responsible for the costs, a statutory or voluntary insurance policy or another compensation scheme laid down by law. The above conditions for paying compensation must be fulfilled in all situations where compensation is payable.

Situations where compensations are paid from the Fund may arise e.g. in connection with bankruptcies where compensation cannot be collected from the party causing damage, the bankruptcy estate or the possessor of the waste or area. 

Securities include the financial guarantee for waste treatment operations under the Environmental Protection Act and the collateral for termination of mining activity and certain exceptional circumstances under the Mining Act (621/2011).

The statutory insurance policies include e.g. the motor liability insurance. The liable party may also have various kinds of voluntary insurance policies that can be used in compensation situations referred to in the Fund. 

Other compensation schemes refer to cases where the compensations are processed and paid by another party or authority, such as the State Treasury. The Environmental Damage Fund does not change the liabilities laid down in other acts. 

The maximum compensation for damages caused by a single pollution event or other similar incident and the prevention and restoration costs is EUR 30 million.

The Environmental Damage Fund is not used to prepare for exceptionally high pollution risks or damages where state budget funding may be needed.

Compensation from the Fund is applied for with a written application addressed to the Board of the Environmental Damage Fund.

Provisions on the deadlines for and content of the application for compensation are laid down in section 17 of the Act on the Environmental Damage Fund and in the Decree on Compensations and Grants Referred to in the Act on the Environmental Damage Fund (571/2024).

Within the limits of the funds transferred from the state budget, grants from the Fund can be awarded for covering part of the acquisition costs of equipment used for the prevention of environmental damage in rescue operations.

Grants can be applied for by the rescue services of wellbeing services counties and the City of Helsinki and by the Government and municipalities of Åland.

The grants are financed by an appropriation to be transferred from the state budget. Parliament approves the appropriation for the Fund annually in connection with the state budget preparations. Assets of the Fund collected as environmental liability contributions are not used for grants.

The application period for the grants is between 1 January and 30 June. Applications for the grants are submitted online at Applyforgrants.fi.