EU climate policy

The climate policy of the European Union guides the policy measures to mitigate climate change, both in the EU as a whole and in individual Member States. The EU climate policy is based on the United Nations Framework Convention on Climate Change, the Kyoto Protocol to the Convention, and the Paris Agreement on Climate Change.

EU aims for climate neutrality by 2050

The EU is committed to reducing its net greenhouse gas emissions by at least 55 per cent by 2030 and by 90 per cent by 2040, compared to 1990. In addition, the EU as a whole aims to achieve climate neutrality, i.e. a balance between the emissions and removals regulated by the EU legislation, by 2050. These are also the commitments that the EU has declared for the purposes of the Paris Agreement. The climate targets to 2030, 2040 and 2050 are included in the Regulation on the European Climate Law. 

Targets divided among the emissions trading, effort sharing and land use sectors

Now the core elements of the EU climate policy are the emissions trading system (EU ETS) and the national obligations of the Member States that cover the sectors excluded from the general emissions trading system (the effort sharing sector) and the land use sector (LULUCF). 

The Emissions Trading Directive, the Effort Sharing Regulation and the LULUCF Regulation guide the efforts to reduce the EU’s net emissions towards its climate targets and, at the same time, Finland towards reaching the national carbon neutrality target for 2035.

General emissions trading aims to reduce emissions by 62 per cent by 2030

Since 2005, the general emissions trading system (EU ETS) has served as the EU’s main policy measure to reach its climate targets. The aim of the general emissions trading system is to reduce emissions in the EU by 62 per cent from the level in 1990 by 2030. The system functions at the EU level, which means that the emission reduction target has not been divided into obligations for individual Member States. The general emissions trading system covers large industrial, electricity and power plants, aviation within the European Economic Area (EEA) and, as from 2024, maritime transport emissions from large passenger or commercial cargo vessels.  It covers about 35 per cent of the EU’s greenhouse gas emissions (excluding the land use sector).  

New emissions trading for fuel distribution to begin in 2028 

In addition, a new emissions trading system for the distribution of fossil fuels (ETS2) that is separate from the EU’s general emissions trading will become fully operational in 2028. As stated in the Directive, this will cover carbon dioxide emissions from fuels for road transport, building-specific heating, most non-road mobile machinery, and energy production and industrial plants excluded from the general emissions trading system. In Finland the system also covers emissions from non-road mobile machinery of the agricultural and forestry sectors and from heating. In the same way as the EU’s general emissions trading system, emissions trading for the distribution of fuels is an EU-level policy measure to reduce emissions.

Emissions from sectors covered by emissions trading for fossil fuel distribution are also included in the effort-sharing sector, and the purpose of ETS2 is to make it easier for Member States to meet the obligations concerning this sector.

Social Climate Fund supports the most vulnerable people

The emissions trading system for the distribution of fossil fuels is also related to the new Social Climate Fund, where the key aim is to promote a socially just transition to climate neutrality. The particular aim of the Fund is to support those in the most vulnerable position with measures and investments concerning energy efficiency of buildings, decarbonisation of heating and cooling of buildings, and access to zero- and low-emission mobility and transport. Funding will be made available for the period 2026–2032. 

• Social Climate Fund - Ministry of the Environment 

Finland to halve emissions from the effort sharing sector by 2030

The effort sharing sector comprises building-specific heating, non-road mobile machinery, transport, waste management, part of emissions from agriculture and F-gases, which together account for about 65 per cent of the EU’s greenhouse gas emissions. The target for the EU level is to reduce greenhouse gas emissions from the effort sharing sector by 40 per cent by 2030 compared to the 2005 level. The EU target has been divided into obligations for Member States. By 2030, Finland should reduce emissions from the effort sharing sector by 50 per cent from the 2005 level. 

Certain flexibilities are allowed for Member States to meet the obligation for the effort sharing sector, such as the transfer of a small number of emission allowances from emissions trading to the effort sharing sector. It is also possible to save some of the surplus of the annual emission reduction units to the coming years or purchase emission reduction units from other Member States. The purpose of the Medium-Term Climate Plan is to reduce emissions from Finland’s effort sharing sector. 

• Medium-Term Climate Plan - Ministry of the Environment 

Net sink of the land use sector to be preserved 

The aim of the LULUCF Regulation concerning sinks and emissions from land use, land use change and forestry for the period 2021–2025 was that emissions from the different land use categories would stay within the given reference values and that removals through afforestation would be equal to emissions caused by deforestation. During the period 2026–2030 the EU’s carbon sinks should be strengthened so that the removals reach the level of -310 million tonnes of carbon dioxide equivalent in 2030. As a contribution to this target, Finland must increase carbon sequestration and reduce emissions to achieve a total decrease of 2.9 Mt compared to the level in 2016–2018, which corresponds to about -11.3 Mt in 2030.