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Carbon neutral Finland 2035 - impact assessments of national policies and measures

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Carbon neutral Finland 2035 - impact assessments of national policies and measures

  1. 1. Carbon neutral Finland 2035 - impact assessments of national policies and measures Tiina Koljonen & Antti Lehtilä, VTT Summer 2022 semi-annual ETSAP meeting, 24th May 2022 24/05/2022 VTT – beyond the obvious
  2. 2. Above 90% of Finns consider climate change as a serious problem 24/05/2022 VTT – beyond the obvious • Launch of the IPCC AR6 WG3 report on 4th May 2022 received high interest by the Finnish media • Ambitious climate policy was a key question in Finland’s last parliament elections in 2019
  3. 3. 5/24/2022 VTT – beyond the obvious  Carbon neutral Finland that protects biodiversity • Finland will achieve carbon neutrality by 2035 • Finland aims to be the world’s first fossil-free welfare society • Strengthening of carbon sinks and stocks in the short and long-term  Tax reform for sustainble development • Reform of energy taxation • Reform of transport taxation  Strengthening Finland’s role as a leader in the circular economy Programme of Prime Minister Sanna Marin’s Government 10 December 2019 New medium term climate policy plan New climate and energy strategy Update of Finland’s climate act EU’s FitFor55 proposal and its impacts for Finland Update of Finland’s bioeconomy strategy Roadmap for energy tax reform Support for the Government in 2021- 2022 with TIMES-VTT
  4. 4. 24/05/2022 VTT – beyond the obvious  The Fit for 55 package: EU legislation to cut EU’s net greenhouse gas emissions by at least 55% by 2030 compared to 1990.  Key areas of action and these have been considered in national assessments • greenhouse gas emissions from all economic sectors => quantitative • greenhouse gas removals by carbon sinks such as forests => quantitative • funding for a just transition => qualitative based on low carbon roadmaps • renewable energy => quantitative • energy efficiency => quantitative • more alternative fuels and more charging stations for electric vehicles • energy taxation => quantitative & qualitative EU’s new climate and energy targets by 2030-2050 defined in the FitFor55 package
  5. 5. 24/05/2022 VTT – beyond the obvious Climate Neutral Finland 2035 – Impact assessments of climate and energy policies 24/05/2022 VTT – beyond the obvious Integrated impact assessments and recommendations Energy security, social impacts, RDI needs Support of Government in their budget negotiations Sectoral analysis (industry, transport, buildings, agriculture, etc.) Quantitative analysis Qualitative analysis Synthesis report Other reports Project start 4/2020 11/2021 National and regional economic analysis Stakeholder workshops: • Kick off 9/2020 • WEM workshop 2/2021 • WAM workshop 6/2021 Energy system analysis, LULUCF Low Carbon Roadmaps Impacts on natural environment, people, etc.(SOVA) 1st round of quantitative analysis June 2021 2nd round of quantitative analysis August 2021 Final quantitative analysis October-November 2021
  6. 6. 5/24/2022 VTT – beyond the obvious Summary of the selected low carbon roadmaps by national industrial federations Federation Mitigation potentials and reduction targets Reported challenges and policies required Fair transition Energy industries Technology industries Chemical industries Forest industries Sawn industries Bioenergy industries Construction industries Transport and logistics Agriculture Food industries Commerce Inputs to the qualitative analysis Inputs to the quantitative analysis
  7. 7. Greenhouse gas mitigation pathways With Existing Measures (WEM) and With Additional Measures (WAM) 5/24/2022 VTT – beyond the obvious WEM WAM -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 90 100 2010 2015 2020 2025 2030 2035 2040 2045 2050 2010 2015 2020 2025 2030 2035 2040 2045 2050 Total emissions balance, Mt CO 2 eq. Other land- use Emissions (including BECCS) Forest land and wood products -80 % -60 %* -70 % min. -90% * GHG mitigation targets in 2030, 2035, 2040 and 2050 (compared with 1990 levels) are set in the new climate act of Finland
  8. 8. 24/05/2022 VTT – beyond the obvious  The new nuclear Fennovoima project with Rosatom has been cancelled.  Russia has cut off the electricity and gas exports to Finland.  A lot of speculation on electricity demand, growth of wind power, … Electricity supply will be nearby fossil free after 2030 but … -10 0 10 20 30 40 50 60 70 80 90 100 110 120 2050 2040 2035 2030 2025 2020 2010 Electricity supply, TWh 2010 WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM Grid Solar Wind Hydro Bio Peat Oil / gas Coal Nuclear
  9. 9. 62% 20% 30% 40% 50% 60% 70% 2005 2010 2015 2020 2025 2030 2035 2040 Renewable energy share in final consumption Eurostat WEM WAM 9  It has been estimated that the FitFor55 renewable target for Finland would be around 60 % in 2030  WEM includes phase out of coal by 2029 and 30 % renewables in road transport  In WAM, also phase out of oil in heating by 2030 and electrification of all the sectors The share of renewables from final energy consumption* *Based on the EC’s calculation rules
  10. 10. 0 50 100 150 200 250 300 2050 2040 2035 2030 2025 2020 2010 Final energy consumption, TWh 2010 WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM Other Electricity Heat Other bio Pulp liquor Wood Peat Gas Oil Coal 10  Estimated FitFor55 energy efficiency target (by EED) 255 TWh in 2030 will be a challenge  In WAM, investments in fossil free steel (SSAB) as well as in blue and green hydrogen in oil refining (Neste) have been considered. Final energy consumption Below final energy consumption doesn’t include international aviation, which is included in the EED
  11. 11. 11  Exogenous fossil fuel and CO2 prices  In WAM, GHG mitigation targets are set while in WEM, investments are optimised ”market based” GHG mitigation in WEM and WAM -10 0 10 20 30 40 50 60 70 80 2050 2040 2035 2030 2025 2020 2010 Greenhouse gas emissions, Mt 2010 WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM WEM WAM Other GHGs Other CO2 Transport CO2 Industrial sectors CO2 Energy sector CO2 Energy sector CO2 12,5 Mt 9,7 Mt
  12. 12. GHG emissions of the effort sharing sector Transport sector has a domestic target of -50 % GHG reduction (compared with 2005 level) by 2030, which is fulfilled in WAM 12 2030 Target -50% 0 5 10 15 20 25 30 35 40 2005 2010 2015 2020 2025 2030 2035 2040 Effort sharing emissions, Mt CO 2 eq. WEM WAM WEM WAM WEM WAM WEM WAM Waste management Agriculture Other products and processes F-gases Other energy- related Space heating Work machines Domestic trans- port excl. air 5,6 Mt 5,2 Mt FitFor55 target for Finland
  13. 13. 5/24/2022 VTT – beyond the obvious  In February 2022, the national research institutes and Finland’s Climate Panel were asked to make a statement of the Government’s policies.  All the statements (including VTT’s) made a conclusion that additional policies are required. Evolution of total GHG emissions with Government’s decisions (WAM-H) (excl. LULUCF) -46.1% (1990) -57.1% (1990) 0 10 20 30 40 50 60 70 80 90 2000 2010 2020 2030 2040 2050 Greenhouse gas emissions, Mt (CO 2 eq.) Statistics WEM WAM·н
  14. 14. 5/24/2022 VTT – beyond the obvious  Realisation of the EU’s energy tax directive would have major impact for Finland (EVDe_1 & EVDe_2) • Includes bioenergy tax • Single energy tax level for energy consumption • Tax level based on energy content and sustainability of fuels (today we have also CO2-tax component) Energy tax roadmap: Comparison of energy tax models with 4 criteria -60 -40 -20 0 20 40 60 80 100 120 GHG reduction Competitiveness Tax proceeds Energy costs Compared to CurPol = 100 Electr Hi-Res Indus Tax+ EVDe_1 EVDe_2 Different scale for GHG emissions
  15. 15. 5/24/2022 VTT – beyond the obvious  The aim is to double the value added of the use of natural resources compared with 2015 level.  In addition, Circular Material Use (CMU) rate should be doubled by 2035 (it was 7% in 2018).  Most of the modelling is done with input-output model but new data is created for the other approaches as well. Next steps: better modelling and analysis of carbon neutral circular economy Example of bioeconomy scenarios aiming at increasing value added of Finland’s bioeconomy
  16. 16. Tiina Koljonen tiina.koljonen@vtt.fi tel. 050 3599549 @VTTFinland @TiinaKoljonen 24/05/2022 VTT – beyond the obvious

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