Finland could lower quotas for renewable hydrogen and derivatives and instead increase fuel taxes to generate additional revenues, the country's finance ministry has said.
The government could consider reducing the quotas for renewable fuels of non-biological origin (RFNBOs) in the transport sector "to the EU minimum level," the ministry said in a document setting out numerous options for increasing taxation.
Finland's current legislation obliges fuels suppliers to meet a minimum 1.5pc RFNBO share in 2028-29 and 4pc from 2030 onwards. The 2030 quota is the highest set by any EU member state and far above the 1pc minimum required by Brussels.
Finland could also lower the combined quota for advanced biofuels and RFNBOs which is set at 10pc for 2030, nearly double the 5.5pc EU requirement, the finance ministry said. And the government could consider minimising the contribution of renewable electricity to wider renewable fuels obligations, it said.
These measures could limit increases in pump prices stemming from use of more expensive fuels, the ministry said. The government could then instead increase fuel taxes by around €300mn ($334.7mn) at 2030 levels, with the same effect on final consumer prices.
The ministry document "assumes that taxation will have to be increased… due to the extensive adjustment needs facing Finland's public finances".
As long as the larger renewable fuels obligation is kept unchanged, the proposed changes would not increase transport sector emissions, the ministry said. Instead, biofuels that are not considered advanced under EU rules would have to meet a larger share of the obligations.
Non-advanced biofuels are cheaper than advanced biofuels or RFNBOs, but potential supply constraints by feedstock limitations in the medium to long term have prompted policymakers to support development of alternatives.
The planned 4pc quota for 2030 could require roughly 45,000 t/yr of renewable hydrogen equivalent, but a reduction to 1pc would cut demand significantly.
Under existing legislation, fuel suppliers will face penalties of 5.5¢ for each MJ of RFNBO that they fall short of the mandates, equivalent to around €6.60/kg of hydrogen based on the lower heating value of 120 MJ/kg.
