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Legislative proposals: coal ban in 2029, more transport biofuels and more biofuel oil for heating and machinery

Ministry of Economic Affairs and Employment 18.10.2018 13.33 | Published in English on 19.10.2018 at 10.38
Press release
Legislative proposals: coal ban in 2029, more transport biofuels and more biofuel oil for heating and machinery

The Finnish Government proposes that coal-fired power and heating generation be banned as of 1 May 2029. It submitted the coal ban bill to Parliament on 18 October 2018. The Government also proposes measures to promote the use of transport biofuels and biofuel oil for heating and machinery.

“The Government has today submitted to Parliament bills that all have the same goal: more determined and accelerated action for climate change mitigation. We want to be among the first countries to phase out coal, because it would be an important climate step for Finland, and we were one of the co-founders of the international Powering Past Coal Alliance,” says Minister of the Environment, Energy and Housing Kimmo Tiilikainen.

The coal ban is part of Finland’s National Energy and Climate Strategy to 2030. Our far-reaching energy policy aims to phase out the use of fossil fuels in energy generation and move towards an emission-free energy system. Coal would be the first fossil energy source to be banned in energy production.

The Finnish Government aims to achieve a low-carbon energy system, promote the use of renewable energy sources and ensure a healthy living environment.

The coal ban would cut carbon dioxide emissions in Finland by approximately one million tons a year. It would also reduce other emissions, such as sulphur dioxide and heavy metal.

The aim of the relatively long transition period is to ensure the reconciliation of different kinds of public and private interests. Coal-fired power generation is already declining, and by the time of the 2029 ban, it would be down to 3.4–4.3 TWh. The ban would have cost implications chiefly in the district heating networks in Vaasa and Helsinki, where measures to replace coal would have to start earlier than currently planned. The estimate is that other coal-fired power plants in Finland would be replaced before 2030. Multifuel power plants would replace coal with other fuels.

The costs of premature decommissioning of existing equipment would be around EUR 38 million and the additional costs of replacement investments would be around EUR 14–23 million. Under the Finnish Constitution, the state will not be liable for increased costs associated with the coal ban, but the Constitutional Law Committee of Parliament will probably reassess the matter.

More biofuels in transport and biofuel oil for heating and machinery

Today, the Government also submitted its proposals on fuel distribution obligations. The obligation to distribute biofuels would be tightened gradually in the 2020s. The obligation to distribute transport biofuels would be increased as of 2021, from 18% to 30% by 2029. Similarly, the obligation to distribute advanced biofuels would be tightened from 2021 onwards, reaching 10 percentage points by 2030.

The proposed distribution obligations could reduce emissions by 50% by 2030 when combined with other targets in the National Energy and Climate Strategy (i.e., 250,000 electric cars, 50,000 gas cars and better energy efficiency).

Distributors of light fuel oil would be assigned a new obligation to replace some of the light fuel oil used in heating, machinery and stationary engines with biofuel oil as of 2021. This obligation would be increased gradually from 3% in 2021 to 10% in 2028.

The obligations regarding biofuels and biofuel oil are part of the implementation of the National Energy and Climate Strategy and the Medium-term Climate Change Policy Plan to 2030. Their aim is to reduce emissions, increase the use of renewable energy sources and decrease the use of imported oil.

Inquiries:

Vilhartti Hanhilahti, Special Adviser to the Minister of the Environment, Energy and Housing, tel. +358 40 836 4823
Anja Liukko, Senior Legal Advisor, Ministry of Employment and the Economy, tel. +358 29 506 2078