OECD Environmental Performance Review of Finland 2021: Launch presentation by Rodolfo LACY

1. Rodolfo Lacy
OECD Environment Director
13 December 2021

2.  EPRs are part of a OECD
family of systematic peer
reviews
 Recommendations to
help advance the
sustainable development
agenda
OECD Environmental Performance Reviews
 Independent assessment
of Finland’s progress
towards environmental
goals

3. The REVIEW PROCESS
July 2020 2021
Virtual
REVIEW MISSION*
POLICY MISSION
to discuss main findings and
recommendations at high level
DISCUSSION
at the OECD
Today’s
INFORMATION COLLECTION
18-22
January
11
June
*Peer reviewers: Norway, Switzerland, and the United Kingdom
13
October
LAUNCH
EVENT

4. Finland topped the SDG Index ranking in 2021
Note: The full title of each SDG is available here: https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoal.
Source: Sachs et al. (2021), The Decade of Action for the Sustainable Development Goals, Sustainable Development Report 2021, Cambridge University Press, Cambridge, https://dashboards.sdgindex.org/

5. Air quality is excellent…
Source: OECD (2021), OECD Environment Statistics (database)
0
5
10
15
20
25
30
2021 WHO guidelines
WHO guidelines
… but PM
from road dust
and small-scale wood
burning should be better
controlled
µg/m3
MEAN POPULATION EXPOSURE TO PM2.5
in OECD countries

6. Finland has a high treatment efficiency of wastewater
Source: OECD (2021), OECD Environment Statistics (database)
POPULATION CONNECTED TO
TERTIARY WASTEWATER TREATMENT PLANTS
0
10
20
30
40
50
60
70
80
90
100
% percentage
85%

7. Water bodies are mainly in good
ecological condition
…but coastal waters are under pressure
Source: SYKE (2019), Assessment of the Status of Finland’s Waters, Finnish Environment Institute.
It is necessary to
introduce new
measures to
improve nutrient
management
ECOLOGICAL STATUS
2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Rivers Lakes Coastal waters
ECOLOGICAL STATUS
2019
High
Good
Moderate
Poor
Bad

8. Finland has a low-carbon energy mix
Renewable sources, especially biofuels (74%), account for a large and increasing share
Finland achieved
its renewables and energy
efficiency targets; it will phase out coal by 2029
and at least halve peat use by 2030
38%
78%
TOTAL ENERGY SUPPLY by source 2020
red boxes indicates fossil fuels
74% Biofuels
12% Hydro
6% Wind
5% Liquid biofuels
Source: IEA (2021), IEA World Energy Statistics and Balances (database).

9. GHG emissions declined
and need to drop faster to achieve carbon-neutrality by 2035

10. Finland is a car-dependent country
524
633
0
100
200
300
400
500
600
700
EU-28
Finland
Source: EC (2020), EU Transport in Figures - Statistical Pocketbook 2020; Finnish
Transport Agency (2018), SUMPs in the Finnish Context.
The roadmap
on fossil-free
transport
suggests
distance
driven should
not increase in
the 2020s
Distribution of
one-person
journeys
by mode
2016
MOTORIZATION RATES, 2018
Cars/1000 inhabitants
79%

11. New cars are less carbon intensive
thanks to effective vehicle taxes and subsidies to purchase EVs…
AVERAGE CO2 INTENSITY
of newly registered passenger cars and
shares of new car registrations by fuel
g/km
Source: Eurostat (2021), Average CO2 emissions per km from new passenger cars (database); FICAS (2021), “Passenger car fleet by fuel type”.
0
10
20
30
40
50
60
70
0
20
40
60
80
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
New car
registrations (%)
CO₂ emissions (left axis) Hybrid cars Electric cars

12. …but policies to reverse car dependency should
be at the core of climate action
 Remove policies that encourage car ownership
(e.g. tax-free parking at the workplace)
 Enable the introduction of congestion charges in Helsinki
and other urban areas facing congestion problems
 Reallocate road space to public transport
and active mobility
 Continue to develop multi-modal networks
 Steer spatial planning to increase
accessibility and better co-ordinate
transport across neighbouring
municipalities

13. Finland’s progress in improving energy efficiency of
buildings was lower than in other countries
2019 ENERGY CONSUMPTION
of space heating with climatic corrections
koe/m2
0 2 4 6 8 10 12 14 16
Latvia
Hungary
Czech Republic
Estonia
Austria
Luxembourg
Poland
Germany
Finland
Denmark
Lithuania
Switzerland
France
Slovak Republic
European Union
United Kingdom
Sweden
Ireland
Netherlands
Source: Odyssée-Mure (2021), Energy Efficiency (database).
More emphasis needed on deep retrofits
Increased use of non-combustion
technologies would reduce the need for
woody biomass to fuel district heating

14. Municipal waste generation has increased
less municipal waste goes to landfills but recycling has progressed slowly
WASTE DISPOSAL
 Develop regulatory and
incentive measures for
the 2021 Strategic
Programme to Promote
a Circular Economy
 Weight-based pay-as-
you-throw system with
differentiated fees for
sorted waste
 Implementing the
Plastics Roadmap

15. INTENSITY OF FOREST RESOURCES RATIO
2019 or latest available year
Source: OECD (2021), "Forest resources", OECD Environment Statistics (database),
0
10
20
30
40
50
60
70
80
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6 Intensity of forest use
% of forest in land area (right axis)
Finland has the largest forest cover in OECD
and a high intensity forest use
 Expand the area of
protected forests
 Strengthen and expand
programmes to support
landowners in protecting
biodiversity on their
land/forest
% %

16. 12% of species and 48% of habitats are threatened
especially mires, forests and semi-natural grasslands
Source: Finnish Environment Institute (2019), Threatened Habitat Types in Finland 2018; Suomen lajien uhanalaisuus (Red List of Finnish Species 2019).
0% 20% 40% 60% 80% 100%
Baltic Sea
Coastal habitats
Inland waters and
shores
Mires
Forests
Rocky habitats
Semi-natural grasslands
& grazed woodlands
Alpine habitats
Total
More efforts are needed
to halt biodiversity loss
 Develop a comprehensive biodiversity action
plan to 2030 with measurable targets
 Develop indicators to track progress and impact
 Ensure availability of sufficient financial
and human resources
 Extend the use of economic instruments
to raise finance for biodiversity
HABITATS CLASSIFIED AS THREATENED
by habitat type, % share, 2018

17. The green transition is at the core of the
National Recovery Plan
Source: Ministry of Finance, webpage, https://vm.fi/en/finlands-recovery-and-resilience-plan .
 Accelerate the
implementation of green
budgeting procedures
 Continue to allocate
resources for the green
transition until 2026 and
possibly beyond
 Establish a sound
monitoring framework to
track implementation and
effectiveness of the
recovery plan

18. Finland is among the green innovation leaders
Source: OECD (2021), "Patents in environment-related technologies: Technology indicators", OECD Environment Statistics (database).
GREEN PATENTS
% share of total applications
0 10 20 30 40 50 60 70 80 90 100
Korea
Denmark
Japan
Germany
Sweden
Austria
Finland
Switzerland
Israel
United States
GREEN PATENTS
applications per capita
Finland

19. …but public R&D budget for environment and energy is
relatively modest; most R&D spending is in businesses
 Increase R&D spending as
planned;
 Increase and better target
environment-related R&D
support to SMEs;
 Assess the effectiveness of
public procurement for
innovation 0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
ENVIRONMENT-RELATED AND ENERGY R&D BUDGETS
percentage of total government R&D budgets, 2019
or latest available year
Source: OECD (2021), Government budget appropriations or outlays for R&D (database).

20. The green industry is large and growing,
driven by energy resources management
Source: Eurostat (2021), Environmental goods and services sector (database).
GROSS VALUE ADDED
from market output of the environmental economy, 2018
Percentage share of GDP
0.00 1.00 2.00 3.00 4.00 5.00 6.00
Finland
Estonia
Austria
Denmark
Switzerland
Latvia
Luxembourg
Czech Republic
Portugal
Netherlands
Spain
Poland
Lithuania
Sweden
United Kingdom
Germany
Italy
France
Slovenia
Belgium
Ireland
%

21. Effective tax rates on CO2 emissions
from energy used in road transport are high and increasing…
AVERAGE EFFECTIVE TAX RATE
on CO2 emissions in the road sector,
top 10 countries in OECD Europe

22. …less than half of CO2 emissions are priced
above EUR 60, especially in sectors using a lot of biomass
SHARE OF EMISSIONS PRICED ABOVE EUR 60/tCO2
by sector, Finland, 2018
Source: OECD (2021), “Environmental policy: Effective carbon rates”, OECD Environment Statistics (database).
0
10
20
30
40
50
60
70
80
90
100
All sectors Road Off-road Industry Agriculture
& fisheries
Residential
&
commercial
%
Including emissions from the combustion of biomass
Excluding emissions from the combustion of biomass
There is scope for more ambitious
carbon pricing
Set a trajectory of future effective
carbon prices to 2030
Address misalignments in energy taxes:
• phasing out the preferential tax
treatment of peat and fuels used in
agriculture
• increasing the energy tax on diesel
• exploring energy and carbon
taxation of solid biofuels

23.  Finland should turn its ambitious strategies into
effective and coherent action
 It can tap into abundant renewable resources,
a sound environmental policy framework, its
experience with using economic and voluntary
instruments, and a strong innovative capacity
 Integrated policy packages are needed to
encourage behavioural changes and steer the
economic recovery from the COVID-19 crisis
towards the green transition
KEY MESSAGES

24. THANK YOU