Finland is on track to meet some of the world's most ambitious carbon neutrality targets. This is how it has done it  

Finland may only have a population of 5.5 million, placing it 118th in the global population rankings, but it is a world leader in many measures. It has been named the world’s happiest country for six years in a row and is regularly placed in the top spots in global education rankings. Finland is also now marking itself out as a leader in carbon neutrality.

The country aims to become carbon neutral by 2035, putting it fourth in the world and ahead of every other country in Europe – Austria and Iceland are next, with 2040 targets. The only countries ahead of Finland are Bhutan and Suriname – which are already carbon neutral – and Uruguay, which aims to be carbon neutral by 2030.

Finland already has relatively low fossil fuel use – they made up 36% of its total energy supply in 2021, around half of the 70% average for International Energy Agency (IEA) members. This is because nuclear power provides around a third of its electricity – a share that is likely to rise following its start up of Europe’s largest reactor, Olkiluoto 3, in April. The unit – Europe’s first in 16 years and Finland’s first in more than four decades – is expected to cover 14% of the country’s electricity demand.

But there are still obstacles Finland has to tackle. In 2021, its land use and forestry sector became a net source of emissions for the first time, mainly because of high harvesting volumes and slower forest growth. On top of this, the resulting loss of natural carbon sinks has boosted Finland’s net emissions, increasing the need for emissions cuts in other sectors, the government says.

Finland’s key policies to achieve climate neutrality by 2035 include:

The path to emissions-free electricity will primarily be laid by wind power. Onshore wind will make up a large part of Finland’s growth in renewable electricity generation, and the country will also develop its first large-scale offshore farms, according to the IEA. Finland’s wind power capacity grew by 75% in 2022 alone, the country’s wind power association says.

At the same time, solar power will go from being a minor contributor to the grid to playing a much bigger role. Solar took one of the biggest portions of Finnish public funding for energy investments in 2018-2021, at €37.5 million ($40.2m) – behind only transport and hydrogen, both on €40.2 million ($43m) – and the National Climate and Energy Strategy estimates capacity will jump to 5.3 gigawatts by 2030 from around 1 gigawatt in 2022.

Finland has more forest cover than any other country in Europe, at almost 75% of its total area. As a result, fuels derived from wood are key to its energy mix. These create many climate-warming emissions when burned, which is why the government wants to shift heating and cooling systems towards the use of non-combustion technologies such as heat pumps, waste heat recovery and geothermal energy, the IEA notes.

Finland has committed to a goal of having only zero-emission passenger cars and vans on sale by 2035. It is making strong progress in adopting electric vehicles, the IEA says, but it also points out that it is behind Norway, Sweden, Denmark and Iceland in doing so.

However, there is a need to address freight transport. It makes up 42% of fuel consumption on Finland’s roads and its energy intensity rose between 2005 and 2020. In this area, the government sees hydrogen and hydrogen-based fuels as better decarbonization solutions than electrification.

This is because it is harder for trucks to use electric power compared with lighter vehicles, given the longer distances they have to cover. “Truck batteries can also be heavy and large, affecting the amount of transportable cargo and how far they can travel before they need recharging,” EU research points out. It says that hydrogen’s higher energy density solves the space problem and allows faster refuelling.

Finland will limit the carbon footprint of construction projects under its new Building Act, which comes into force at the start of 2025. The legislation also adds circular economy requirements, with accounting of materials needed on new buildings and buildings to be demolished.

A third of Finland’s emissions are caused by the built environment, according to Matti Mikkola, Managing Director of the Federation of Finnish Woodworking Industries.

Finland is also looking at measures to use more wood in construction, instead of carbon-intensive materials such as concrete, the IEA says. Using wood in construction has the added benefit of keeping carbon locked into the product, unlike using wood as a fuel, Mikkola tells forest-sector website Forest.fi.

Within buildings themselves, Finland is working to boost energy efficiency through measures such as consumer awareness campaigns and smart meters, which are now in place at nearly all of its 3.7 million metering points, the IEA says.

Demand-side changes will be as critical as supply-side transformation to achieve a successful energy transition, the World Economic Forum’s Fostering Effective Energy Transition points out, saying they could drive more than 40% of the reduction in energy-related greenhouse gas emissions over the next 20 years.

Finland is also offering €4,000 ($4,280) subsidies for homeowners to switch from fossil fuel boilers to heat pumps. And a €24 billion ($25.7 billion) renovation strategy aims to cut buildings’ CO2 emissions by 90% between 2020 and 2050 by making sure all repair and maintenance work introduces energy-efficient materials and systems.

“Finland is well placed to reach its [carbon neutrality] goals because of the hard work and investment it has already undertaken in nuclear plants and hydropower,” IEA Executive Director Fatih Birol says. “And the country is a frontrunner in several key energy technologies, such as batteries and heat pumps.”