Finland’s nuclear and renewable power strengths provide a solid foundation for reaching its ambitious climate targets, IEA review says

Finland has one of the world’s most ambitious carbon neutrality targets and is in a strong position to achieve them given its already low reliance on fossil fuels. But to fully reach its climate targets while ensuring energy security and promoting a sustainable economy, greater efforts are needed to speed up the deployment of solar and wind, and to wean transport and industry off their reliance on oil and gas, according the IEA’s latest policy review.

Since the Agency’s last policy review in 2018, Finland has updated its Climate Change Act to include a legal requirement to reach carbon neutrality by 2035, along with binding targets to reduce all greenhouse gas emissions by between 90% and 95% by 2050.

Thanks to its fleet of nuclear plants and high shares of electricity generation from biomass, hydro and wind power, Finland already has a low reliance on fossil fuels. In 2021, fossil fuels covered 36% of its total energy supply, well below the IEA average of 70%. Among IEA member countries, only Sweden has a lower share of fossil fuels in its energy mix. Finland has no domestic fossil fuel production and imports all its crude oil, natural gas and coal.

Finland plans to achieve carbon neutrality by maintaining a high share of nuclear energy, increasing the role of renewables in power generation and heat production, improving energy efficiency, and electrifying sectors such as industry and transport. Bioenergy also plays a key role in Finland’s climate and energy policies: forestry biomass is currently a key source of electricity and heat, and biofuels are set to play a central role in supporting the transport sector’s clean energy transition.

“Finland’s ambitious targets to reach carbon neutrality by 2035 underscore the country’s leadership on climate and energy issues,” said IEA Executive Director Fatih Birol. “Finland is well placed to reach its goals because of the hard work and investment it has already undertaken in nuclear plants and hydropower – and the country is a frontrunner in several key energy technologies, such as batteries and heat pumps. At the same time, Finland still has a high level of energy consumption in relation to the size of its economy, showing the opportunity for energy efficiency to help improve energy security and reduce emissions in sectors such as transport and industry.”

Nuclear energy plays a key role in Finland’s energy sector and is central to the government’s goals to achieve carbon neutrality and reduce energy import dependence. Nuclear amounted to 33% of total electricity generation in 2021, and this figure is expected to rise to more than 40% with the planned start of commercial operations at the Olkiluoto 3 reactor in 2023 – the first new nuclear plant in Europe in 15 years. Finland is also a global leader in nuclear waste management and disposal. The Onkalo nuclear waste disposal facility, under construction near Olkiluoto, is expected to start operating in 2025 and will be the world’s first permanent disposal facility for spent nuclear fuel.

Much of Finland’s growth in renewable electricity generation is expected to come from onshore wind, along with development of its first large-scale offshore farms. Solar PV, so far only a small source of power, is also set to expand rapidly. Wood fuels are seen playing a major role in the near term, but the government wants heating and cooling systems to shift in the long term to non-combustion technologies such as heat pumps, waste heat recovery and geothermal energy.

Finland’s relatively large heavy industry sector and the high heating demand from its cold climate are the main reasons for the high energy intensity of its economy and energy consumption per capita. This makes energy efficiency a key pillar of Finland’s strategy to hit its climate goals, reduce energy costs and boost energy security.

In 2020, Finland ranked fourth among IEA member countries for government budget allocations on energy R&D as a share of GDP and there is a push to develop new and emerging energy technologies to drive energy transitions in hard-to-decarbonise sectors and end-uses, especially industry and heavy transport. For instance, the government sees low-emissions hydrogen and hydrogen-based fuels as better solutions than direct electrification for heavy road transport, maritime transport and aviation.

Finland’s government sees critical mineral production and the battery supply chain as promising areas for economic development that also support energy transitions. Finland has large deposits of cobalt, nickel, lithium, graphite and other critical minerals – and is home to the only company outside China supplying cobalt for lithium-ion batteries. Finland is also active across other parts of the battery supply chain, from manufacturing of batteries and chargers, to battery recycling.