Investment incentives to promote rapid phase-out of coal in energy production
On 19 March 2020, the Finnish Government issued a decree on investment aid for projects accelerating the replacement of coal in energy production. The aid is intended to promote voluntary phase-out of coal use by the end of 2025. Coal-based power and heat generation will be banned in Finland as of 1 May 2029
“The investment aid will provide an incentive to rapidly phase out coal as a source of energy, as laid out in the Government Programme, and it will also make it easier for Finland to achieve carbon neutrality in energy generation,” explains Mika Lintilä, Finland’s Minister of Economic Affairs.
The purpose of the aid scheme is to ensure that as many coal-fired power plants as possible will replace coal as energy source with more environmentally friendly solutions by the end of 2025 so that Finland can reduce its greenhouse gas emissions. Under the decree, a total of EUR 90 million, or EUR 30 million each year, will be made available as investment aid in the period 2020–2022.
“I urge plant owners to proceed with their plans so that the projects to replace coal can be launched without delay, and I believe that most of the companies still using coal will seize this opportunity,” notes Lintilä.
Under the scheme, aid can be granted to projects that promote the production or use of renewable energy, saving of energy, or more efficient generation and use of energy. Priority will be given to projects based on other technologies than combustion. Projects based on combined heat and power generation come in the second place in the priority list and thirdly separate heat production. Novelty value and replicability of the chosen technology will also be considered when evaluating the projects.
The investment aid will help Finland to achieve the objectives set out in the National Energy and Climate Strategy for 2030. It will also allow Finland to work towards a low-carbon energy system, introduce renewable energy sources and to promote a healthy living environment. In addition to reducing greenhouse gas emissions, phasing out of coal will also cut emissions of such pollutants as sulphur dioxide and heavy metals.
The applications must be submitted through Business Finland but they will be processed in the Ministry of Economic Affairs and Employment
Investment aid for phasing out coal may be granted to companies and organisations (including municipalities). The aid may be up to 30% of the eligible project costs. Appropriate level of funding is considered based on project evaluation. If the project contains new technology, the aid may be up to 40% of the costs related to this technology. The project may not be started before the aid application has been submitted.
The aid applications are submitted using Business Finland’s electronic system but they will be processed in the Ministry of Economic Affairs and Employment. Specific application form for this aid scheme need to be used when submitting the application.
Applications can be submitted throughout the year 2020. Processing of the applications will start immediately and the first grant decisions can be made in May 2020. Applications and any attachments are to be submitted in Finnish or Swedish.
Tuula Savola, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7133
Markku Mäkelä, Product Manager, Business Finland, tel. +358 339 2516
Kati Veijonen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7170