Podcast recap: Finland is ready for the green transition

Nordic countries have made significant headway toward the green transition, but can they keep up with the U.S. and China? In the latest episode of MuniFin’s podcast, Chief Economist Timo Vesala invited experts to discuss the untapped potential of the green transition and how Finland stands to benefit from it.

The Confederation of Finnish Industries (EK) keeps track of investment plans relating to the green transition in Finland. Compared to last year’s figures, there has been a massive increase from EUR 150 billion to EUR 272 billion in potential investments. While not all these projects will come to fruition, Janne Peljo, Chief Policy Adviser, Climate and Biodiversity at EK, estimated that EUR 58 billion worth of projects could be realised by the end of this decade.

While Finland trails behind Sweden in green transition, Peljo underscored that the country boasts unique assets on a global scale.

“When it comes to energy-intensive investments, our core strength is the availability and affordability of clean electricity as well as a reliable electricity grid. As for hydrogen economy investments, Finland and Sweden are European superpowers in the availability of bio-CO2,” Peljo said.

EU is ramping up green transition efforts

The guests discussed the EU’s strategy to keep up with the competition from clean energy world leaders, the United States and China.

“In recent years, the green transition has been driven more by the economy and technology than political leadership. The United States and China have got a head start while the EU has been lagging in green investments. Recently, EU politicians have emphasised the need for increased competitiveness, expedited permits, and responding to capital needs”, said Jaakko Haikonen, Senior Advisor at The Finnish Confederation of Professionals STTK.

Towards the end of his presidency, President Joe Biden passed a substantial climate package that set new changes in motion. Regardless of the outcome of November’s election, U.S. leadership in clean energy is unlikely to waver substantially, given that the transition is headed by technology and industry efforts rather than politicians. Haikonen also reminded that support for clean energy transcends party lines, with Texas, a traditionally Republican state, leading all other states in this transition.

The next decade will prove crucial

Even though Finland has remarkable potential in the green transition, it is yet to be fully realised. Janne Peljo gave multiple explanations for the stagnation, such as the manufacturing downturn in Europe, inflation, and high interest rates.

To attract foreign investments, Finland is preparing tax subsidies for large industrial investments that promote the green transition. Both Peljo and Haikonen lauded the tax incentives as a much-needed tool to speed up investment decisions and acknowledged the need to ease permit processes.

“We need to expedite technically challenging industrial investments. The faster they happen, the more likely we are to succeed in attracting more of them. We can turn our dependable authorities and political system into a competitive advantage for Finland,” Peljo said.