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Finland to bring forward coal end date to 2029

12 Apr 2018 15:15 (+01:00 GMT)
Finland to bring forward coal end date to 2029

London, 12 April (Argus) — Finland's government will legislate to ban the use of coal in energy generation a year earlier than planned in 2029, and launch a subsidy scheme to incentivise firms to stop using the fuel by 2025, environment minister Kimmo Tiilikainen has said.

The policy will "significantly reduce the emissions from heating," Tiilikainen said.

The government will propose legislation for the 2029 phaseout to parliament in its autumn session.

It also plans to divert funding from renewable power generation to set up a €90mn fund to support investments to phase out coal use in the heating sector. The fund will be available to energy firms that commit to ending unabated coal-fuelled generation by 2025, and will be split equally between renewable CHP generation, and other new technologies to replace coal use.

"The incentives package will be financed by lowering the required annual production, proposed for the tendering scheme for renewable electricity, from 2TWh to 1.4TWh," Tiilikainen said.

Redirecting support from renewable power to heat is justified on the grounds that nearly 80pc of Finland's power production is carbon-neutral, while only 36pc of its district heating uses renewable sources, he added.

Finnish district heat generation in 2017 was comprised of 36pc from biomass and biofuels, 23pc from coal, 14pc from peat, 10pc from natural gas and 17pc from other sources. The coal phaseout will likely boost heat generation from sources including gas, biomass, waste and geothermal.

The government proposed in January bringing forward its coal phaseout deadline to 2025 from 2030. But a study commissioned by the energy ministry into the impact of coal phaseout options found that a 2025 end date would have "significant economic effects".

A 2025 phaseout could cost firms €190mn from 2024-33 in heat production costs and "premature replacement investments" at coal-fired facilities, compared with €14mn of costs under a 2030 ban, the study said. District heating and industrial sites in Helsinki, Vaasa, would incur the highest costs under a 2025 ban, it added.

Finland already planned to publish legislation this year for a carbon tax and the government is now pushing for a 2019 start for the policy, to help gas-fired plants compete with coal.

Finland has three coal-fired power plants. Based on 2017 emissions data, their closure would reduce demand for EU ETS allowances by 3.1mn.

And two new large-scale nuclear units are both due to begin operating in Finland before 2025, which will help replace its retiring coal-fired power capacity.

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