Finland - Policies and Legislation

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As a member of the European Union (EU), Finland is committed to EU environmental targets and the Kyoto Protocol. The main targets are to reduce national greenhouse gas (GHG) emissions to the same level as 1990 and ensure that 38% of the total produced energy comes from renewable sources by 2020.

Transport causes about 20% of Finland's GHG emissions. Of the substances known as traditional emissions, such as NOx, sulfur dioxide, and others, transport accounts for 20–60%, depending on the compounds.

For road traffic, the accepted targets for 2020 average CO2 emissions of new cars should be 95 g/km, a reduction from the current average emissions levels of 150.1 g/km for new cars sold between January and May 2010.

An average new-car GHG emissions level of 120 g/km should be reached in 2012.  Finland aims to achieve these targets by improving vehicle technologies and increasing the use of biofuels. Beginning in 2010, the standard 95 octane gasoline has been 95E10 with 10% ethanol.

Climate strategy ILPO

In 2009, the Ministry of Transport presented its climate strategy “ILPO” (from the acronym of the program name in Finnish) for the year 2020 to realize these CO2 target reductions from road traffic. The strategy assumes that biofuels will make up 20% of the energy sources in transport in Finland in 2020. Biofuels are considered to be carbon-neutral when calculating the CO2 emissions from transport.

In addition to the implementation of biofuels, ILPO calls for a 2.8-million-ton reduction in CO2 emissions (around 20%) for transport as compared to the business-as-usual scenario. Some 80% of the additional reductions are expected to come from the replacement of the passenger car fleet with more energy-efficient vehicles. No specific targets for hybrids or electric vehicles have been set.

The first ILPO follow-up study was presented in 2010. ILPO stipulates a fleet replacement rate of 7% per year, or about 150,000 new vehicles annually. Although car sales increased slightly from 2009, only around 112,000 new cars were sold in 2010. New measures to stimulate fleet replacement at the higher rate specified by ILPO with low-emission vehicles will be needed to achieve stated targets.

Biofuels and electric vehicles

Plug-in vehicle being charged. Bioenergy is supplied by forests.

Since January 1, 2008, a national law has required fuel distributors to provide biofuels to the market. A mandate was deemed more cost-effective than a system based on incentives. The national target states that 2% of all vehicle fuels should be biofuels in 2008, growing to 4% in 2009 and 2010.

The biofuels obligation law was amended in December 2010 and is progressive: biofuels must make up a 6% share of energy for transport from 2011 through 2014, followed by a linear increase from 8% in 2015 to 20% in 2020. The preamble states that the 20% obligation in 2020 will predominantly be met by fuels eligible for double-counting according to the EU Directive 2009/28/EC. For all of the EU nations, Directive 2009/28/EC sets a minimum requirement of 10% of renewable energy (biofuels and renewable electricity) in transport by 2020. In the case of Finland, due to the progressive biofuels obligation law, electric vehicles will not be needed to meet the 2020 requirement for renewable energy in transport. Currently, no “acceleration plan” is in place for electric vehicles.

Vehicle taxation

Purchase tax based on CO2 emissions as of 2008

  • purchase tax 12.2…48.8 %

  • cut-off points 60 and 360 g CO2/km

  • The Ministry of Finance is considering full tax exemptions for early EV demonstration projects

Annual tax based on CO2 emissions as of 2010

  • annual tax 20…600 €

  • cut-off points 66 and 400 g CO2/km

New taxation system for transport energy as of 2011

  • energy component

  • CO2 component

  • effects on local emissions

Electric vehicles will receive credits in all respects.