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High-flying Finland anxiously awaits renewables targets

With the European commission drafting proposals for meeting the EU’s 2020 renewable energy target, member states are trying to anticipate and influence their final shape. Charlie Dunmore looks at the status of discussions in Finland
Depending on who you speak to, the prevailing mood of the current debate on renewable energy in Finland ranges from lively discussion to outright panic.
At about 28 per cent Finland already has one of the highest renewable shares in total energy consumption of any EU member state (see figure 1). But most progress to date
has been driven almost exclusively by a well-developed market for bioenergy, based on the use of readily available forest-based biomass. Other sources of green energy such
as wind, solar and biofuels account for a very tiny fraction of the Finnish total (see figure 2).
If the European commission hands Finland a challenging renewables target for 2020, many voices are already asking how the country will meet its goal, and what effect it will have on other energy and industrial sectors.
Much of the uncertainty in the debate is a result of the way EU burden-sharing targets are negotiated. The commission has pledged to define national targets in cooperation with member states before tabling its proposals at the end of January. But according to observers in Brussels, substantive discussions with the commission have been limited to large EU countries such as the UK, Germany and Spain.
Bilateral meetings between the commission and other national governments are taking place, but as one Finnish official explained to ENDS, this provides member states with a limited view of the overall picture. “It’s like we’re shadow boxing with the commission, with each one trying to guess what the other is going to do,” she said.
Finland’s trade and industry ministry has responsibility for renewable energy policy, and coordinates the government’s negotiations with the commission. Mirja Kosonen, senior adviser on renewable energy at the ministry, says the final outcome of the negotiations is still far from clear. “There is no draft proposal available, and we have been getting our information piece by piece from the commission,” she said.

Target negotiations
In an attempt to glean more information, Finnish energy ministry officials have been in regular contact with colleagues in other Nordic countries. As a result, some details have emerged of the commission’s approach to setting targets.
The commission has informed member states the 20 per cent EU renewables target in 2020 will be based on final energy consumption. In March, EU leaders called for a binding 20 per cent share of renewables in “overall EU energy consumption”.
Some in Finland interpreted this as a reference to primary energy consumption, explained Ms. Kosonen. Indeed, a UK government briefing paper from August stated: “There are differences in the achievability of the target if it is defined as final energy consumption as opposed to primary consumption”. The former definition “can be used to make achievement of the target easier”, the paper added.
In 2005, the commission estimated the share of renewables in primary energy consumption at around 6.5 per cent, while Eurostat figures for the same year show that the renewable share in final energy consumption was significantly higher at 8.5 per cent.
Countries with large amounts of nuclear capacity will welcome the commission’s decision all the more, as the high heat energy losses caused by nuclear generation are discounted from the total when based on final consumption.
The majority of Finland’s discussions with the commission have centred on the method that will be used to calculate national targets, according to Ms Kosonen. “They have told us that the calculation will include some weighting based on GDP per capita – the higher the GDP, the higher the target.”
To reach the 20 per cent target by 2020, the EU must raise its renewables share by 11.5 percentage points from the current level of 8.5 per cent. Many predict that the commission will use this figure as a baseline for all EU countries, and then reduce or increase each national target by one, two or three percentage points depending on the country’s relative GDP per capita (see figure 3).
This approach is based on the ‘ability to pay’ principle, but richer EU countries whose share of renewables already exceeds 20 per cent, such as Finland, could argue that this approach penalises them for taking early action. “When you have a high percentage of renewables already, a flat rate increase [of 11.5 percentage points] would mean very high additional costs for us”, said Ms Kosonen.
There is a chance that the commission could include other weighting criteria such as historical effort or renewable energy potential, but this has yet to be confirmed.

Support schemes
One question that has sparked fierce debate in some quarters is what the commission intends to propose in terms of support schemes for renewables.
Proponents of renewable ‘green certificate’ trading between EU states have long argued in favour of a mandatory harmonised EU-wide trading scheme. But much to their chagrin, subsidy-based ‘feed-in tariffs’ have so far proved more effective in promoting the expansion of green energy.
EU energy commissioner Andris Piebalgs has given strong hints he is in favour of proposing an EU trading scheme for green certificates in the January package, but he has also pledged that the commission “won’t jeopardise any scheme where it works.”
Most observers predict a compromise that will establish a voluntary EU trading scheme for countries that wish to use it, while leaving others free to continue offering feed-in support.
The debate is less intense in Finland, where government support for renewables has been limited to up-front investment subsidies and tax breaks. But the government is developing a feed-in support scheme for biogas, and many expect this blueprint to be extended to other renewables in the near future.

Finland’s future
While it is too early to anticipate the target Finland can expect to be given, several experts told ENDS that they expect a tougher obligation than most EU countries.
Kaisa Kosonen of Greenpeace Finland told ENDS: “Lots of countries are calling for modest targets, but they can’t all get them. The commission has to look at potential. Finland has huge forests and a long coastline, and hasn’t even started to develop wind energy yet.”
Jari Ihonen, a leading figure in Finland’s wind power sector, predicts that Finland’s 2020 target will be close to 40 per cent, compared with 28 per cent today. “The energy industry in Finland sees this as unrealistic. But we can achieve at least half of the growth very cheaply, for example by promoting heat pumps and biomass. Then we can meet the rest with more expensive technologies such as wind and biogas.”
Mr Ihonen believes that “all the signs” point to a rapid expansion in Finland’s wind energy sector. One of Europe’s largest wind companies WPD has just opened its first office in the country, and has reserved what are considered to be the best two offshore sites for future development.
Kaisa Kosonen adds that despite positive growth in the use of heat pumps over the last few years, Finland’s installed capacity remains just one tenth of its high-achieving neighbour Sweden. “We already have a lot of combined heat and power generation, but there’s still potential there too, especially for small scale use,” she said.
Back at the ministry of trade and industry, Mirja Kosonen highlighted another objective that would contribute towards Finland’s renewable target. “An important element in all the scenarios is increased energy efficiency. This will reduce total energy consumption and increase the relative share of renewables, making the target easier to realise,” she said.
But many in the country remain unconvinced about the merits of a renewed green energy drive, not least those working in the energy-intensive pulp and paper sector. They fear that a high national renewables objective will create extra competition for biomass resources and push up electricity prices. According to Mr Ihonen, up till now the sector has employed the “hedgehog defence” – based on opposing everything in the hope of getting a lower target.
Other opposition comes in the form of Finland’s nuclear energy sector. The industry and its supporters in government argue that nuclear power is the cheapest route to meeting the other target being prepared by the commission – to reduce EU greenhouse gas emissions by 20 per cent by 2020. They worry that the higher Finland’s renewables obligation, the less room there will be for new nuclear capacity.
Despite all the arguments and counter-arguments in Finland and across the EU, the final decision on the content of the January proposals rests with the commission. Only then, when it has suggested renewable energy and emission reduction targets for each member state, will the real negotiations begin.

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