Legislative proposal to moderate rise in distribution obligation levels to Parliament

On 23 September 2024, the Government submitted to Parliament a proposal for an act amending the Act on the Promotion of the Use of Renewable Fuels in Transport. According to the proposal, the rise in the levels of the statutory distribution obligation and additional obligation would be more moderate.

In addition, a flexibility mechanism would be included in the set of tools by which the distribution obligation can be fulfilled. Through this mechanism, the distributor could fulfil the obligation by financing other alternative emission reduction measures in Finland, first in the effort-sharing sector and later in the land use sector as well. 

The main objective is to bring the legislation concerning the distribution obligation in line with the Programme of Prime Minister Petteri Orpo’s Government.

“Starting next year, we will be making a long-term effort to increase the share of renewable fuels, thus reducing the dependence on fossil fuels in the Finnish transport sector. Besides this, we will further develop the legislation on the distribution obligation by introducing a new flexibility mechanism that will enable to make use of alternative emission reduction measures. We will also introduce a specific obligation level for synthetic fuels based on renewable electricity and hydrogen (RFNBO) to boost investments,” Minister of Climate and the Environment Kai Mykkänen says.

The amendments will also implement the national provisions required by the Renewable Energy Directive (RED III). The new provisions based on the Directive will ensure that the Finnish transport sector will reach the renewable energy targets under the Directive in 2030.

In line with RED III, renewable transport electricity supplied through publicly accessible recharging points could also be used to fulfil the general distribution obligation. 

This proposal concerns the 2025 budget proposal and is intended for consideration in connection with it. The proposed acts are scheduled to enter into force on 1 January 2025.

According to the legislative proposal that will amend the distribution obligation, the rise in the levels of the obligation in 2025–2027 from the level in 2024 (13.5%) would be more moderate than according to the present act. Next year the obligation would be 16.5%, in 2026 it would be 19.5% and in 2027 it would rise to 22.5%. Between 2028 and 2030 the level would rise from 31% to 34%. The additional obligation for advanced renewable fuels in 2026 and 2027 would be 4 percentage points. 

New obligation concerning minimum percentage for synthetic renewable fuels from 2028

As from 2028, there would be an obligation concerning the percentage of synthetic renewable fuels of non-biological origin. In 2028–2029 the minimum share of these RFNBO fuels would be 1.5 percentage points and as from 2030 it would be 4 percentage points. Renewable intermediate product hydrogen used at refineries could also be used to fulfil the obligation.

This more ambitious obligation concerning the minimum percentage of RFNBO fuels is considered to promote the development of the domestic hydrogen economy, the capture and further processing of carbon dioxide and new investments in Finland. 

Inquiries: Nicoleta Kaitazis, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7067