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Broad-based working group to consider the prospects of the use of peat

Ministry of Economic Affairs and Employment
Publication date 9.4.2020 9.00
Press release

The Ministry of Economic Affairs and Employment has appointed a working group to examine how the use of peat could in a controlled manner be targeted to innovative, higher value-added products instead of using it as fuel. According to the Government Programme, the energy use of peat is to be cut by at least half by 2030.

The working group will also present means to ensure that the change will take place in a way that is fair and just, both regionally and socially, and that does not jeopardise the security of supply in terms of electricity and heat in Finland, including in emergencies.

The working group will examine potential alternatives to energy use from new, innovative ways of using peat. An assessment will also be made on ways to compensate for losses to regional economies and employment in regions where a decrease in the energy use of peat has significant impacts.

The working group is chaired by Agrologist Timo Korhonen, and the organisations represented are the Ministry of Economic Affairs and Employment, Ministry of the Environment and Ministry of Agriculture and Forestry, Bioenergy Association of Finland, Central Union of Agricultural Producers and Forest Owners, Finnish Association for Nature Conservation, Finnish Energy, Finnish Environment Institute, Finnish Peat Producers’ Association, Geological Survey of Finland, National Emergency Supply Agency, Natural Resources Institute Finland, Trade Association of Finnish Forestry and Earthmoving Contractors and University of Eastern Finland. The working group may invite experts to participate in the work on a permanent basis and to give opinions. The term of the working group is until 31 March 2021.

Questions relating to the taxation of peat are discussed in the working group of public officials on the comprehensive reform of energy taxation led by the Ministry of Finance that should complete its work in the beginning of August. The background survey to be drafted by the working group on the use of peat is also likely to discuss the impacts of tax increases, but its task is not to give proposals.

Background survey on trends in energy use of peat based on taxation scenarios to support the work

In the first stage, the working group will lead a background survey to assess the trend in the energy use of fuel peat to 2030 and 2040 with the present policy measures and in a situation where the tax on fuel peat would be gradually raised.

The survey will cover the present peat plants and the requirements set by the incineration technology for the minimum volumes of peat in 2025, 2030 and 2040, and the additional investments needed if peat were no longer used due to market trends or other reasons during the same time periods.

The survey will examine what would substitute for heat production based of peat in the different scenarios and what the impacts of such a trend on the use of biomass for heating would be. An assessment will also be made on the impacts of the different scenarios on trends in greenhouse gas emissions, employment and carbon sinks, and on the production of other peat products and new uses for peat.

Work based on mechanisms of the EU’s emissions trading system and European Green Deal

The reform of the EU’s emissions trading system and inclusion of the market stability reserve have led to a rising trend in the price of emission allowances. The recession caused by the coronavirus epidemic has led to a considerable decrease in the price of emissions allowances, but the rise is expected to continue in future. Besides the rise in the price of emission allowances, the tax increase on fuel peat and possible further increases in future will weaken the competitiveness of fuel peat in the long term.

The European Green Deal published by the European Commission on 14 January 2020 includes a just transition for sectors covered by the mechanism where a transition into a green economy has strong economic and social impacts. The mechanism includes a Just Transition Fund, where support may also be available for regional adaptation caused by the decrease in the use of peat.

Timo V. Korhonen, Agronomist, puh. 050 512 2238 (Chairman of the working group)
Riku Huttunen, Director-General, Ministry of Economic Affairs and Employment, tel. +358 50 431 6518
Petri Hirvonen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 29 504 7048 (expert secretary of the working group)

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