Insights | April 27, 2018

Finnish ban on coal affects planned renewable energy support scheme

The Finnish government has prohibited the use of coal in energy production beginning in 2029. In addition, the government will also prepare an incentives package for district heating companies that commit to phasing out the use of coal in 2025. The incentives package is meant to accelerate government efforts to reduce greenhouse gas emissions and mitigate climate change.

The EUR 90 million incentives package will support investments in energy technologies to replace coal. This will affect the renewable energy sector because the coal phase-out incentives package will be financed by reducing the proposed competitive tendering scheme for renewable energy from 2 TWh to 1.4 TWh. For more information on the proposed renewable energy support scheme, please refer to our previous reflections article “What you need to know about the proposal for a new Finnish renewable energy support scheme“.

According to Minister of Environment Kimmo Tiilikainen, the redirecting of support from renewable electricity to renewable heating is justified because currently only 36 percent of district heating uses renewable energy sources while nearly 80 percent of electricity production is already carbon-emission free.

According to the Ministry of Economic Affairs and Employment, the proposed readjustments to the planned renewable energy support scheme will not require any changes to the Government Bill on support for renewable energy based on competitive tendering, which has already been submitted to Parliament. The legislative proposal to ban the use of coal for energy will be submitted to Parliament during the autumn session.

Article was co-authored with Anu Sillanmäki.