Act on Electrification Subsidy for Energy-Intensive Industries enters into force

The Act on Electrification Subsidy for Energy-Intensive Industries (that is, industries that use large amounts of energy) will enter into force at the beginning of July. The objective of the subsidy is to accelerate the transition of industrial production towards more carbon neutral operations.

The Act on Electrification Subsidy for Energy-Intensive Industries was approved by Parliament on 15 June 2022 and the President of the Republic on 22 June 2022. The subsidy will compensate industry for the indirect costs caused by emissions trading that affect the price of electricity. The purchase of emission allowances incurs costs to electricity producers using fossil fuels, which is transferred to the pricing of electricity production in the wholesale market as plants using fossil fuels have to be used.

The objective of the subsidy is to prevent so-called carbon leakage, i.e. a situation where companies transfer or set up production outside the EU and its emissions trading system. The subsidy also aims to safeguard the competitiveness of industry and steer it towards more carbon neutral production.

The Act will enter into force on 1 July 2022. 

Half of subsidy must be used to develop carbon neutral measures 

The amount of subsidy is based on the price of emission allowance and the operator’s electricity consumption or generation. At least half of the subsidy granted must be used for development measures that promote carbon neutrality. In this way, the subsidy acts as an incentive for industry to seek and implement solutions that promote carbon neutrality.

Of the indirect costs, 25 per cent will be reimbursed to the beneficiaries each year. However, the annual costs of the subsidy scheme cannot exceed EUR 150 million.
  
The subsidy may be granted to operators in 2022−2026. The Energy Authority is responsible for the official duties laid down in the Act, including decisions on granting the aid.

Inquiries:
Juhani Tirkkonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 062 140 
Juho Korteniemi, Chief Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 054 
Eriika Melkas, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 134