Annual Climate Report 2023
An Annual Climate Report is prepared each year under the leadership of the Ministry of the Environment. The report examines the general development of greenhouse gas emission trends and the sufficiency of the planned measures in relation to the national climate targets and Finland’s EU obligations. The Annual Climate Report also includes a broad discussion of other climate-related themes. This page provides a concise summary of Finland’s emission trends and the achievement of targets.
Slightly less than half of Finland’s total emissions are generated by the emissions trading sector, mainly energy production and large industrial installations. In 2022, the emissions trading sector accounted for 42% of total emissions. The sector’s emissions decreased by over 6% in 2022. The underlying factors included the halving of consumption due to the rising price of natural gas and the discontinuation of Russian imports.
The rapid phasing out of fossil fuels in electricity and heat production will be accomplished in the coming years. The rate of emission reductions in the emissions trading sector may be faster than anticipated. Investments in the green transition are accelerating, and the transition is expedited by the high price of emission allowances.
The purpose of emissions trading is to make entities that are within the scope of emissions trading responsible for paying for the emissions they generate by purchasing the corresponding number of emission allowances. Over the past few years, the price per tonne of CO2 has been in the range of EUR 70–100. The price used to be around EUR 30, but began to rise sharply in 2021.
In addition to the emissions trading system, emissions reductions in the sector are driven by energy taxation, renewable energy subsidies, measures to improve energy efficiency, and legislation banning the use of coal for energy starting from 2029.
Emission trends in the effort sharing and emission trading sector
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Effort sharing sector: Emissions from transport and agriculture were largely unchanged
The largest sources of emissions in the effort sharing sector in Finland are transport and agriculture. Other significant sources of emissions in the effort sharing sector include the heating of buildings, as well as machinery and waste management.
Emissions from agriculture have remained roughly at the same level since 2005. Transport emissions have decreased by 22% since 2005, and the target is to halve them by 2030. In 2022, transport emissions remained largely unchanged from the previous year.
Examples of the measures aimed at reducing transport emissions include the fuel distribution obligation and accelerating the electrification of transport.
Emissions from agriculture are reported in the effort sharing sector and the land use sector. Emissions in both sectors have remained roughly at the same level since 2005. Reductions in agricultural emissions are sought through sustainable farming practices and sustainable food consumption, for example.
Emissions from non-road mobile machinery have remained largely unchanged over the past few years, but reductions in emissions are expected to be achieved in the coming years due to the distribution obligation and electrification. Emissions from building-specific heating have decreased in recent years as many households have switched from oil heating to other solutions, and the energy efficiency of buildings has improved. Citizens have been encouraged to carry out energy renovations by means of various financial incentives.
Emissions from waste treatment continued to decline in 2022, as waste disposal in landfills has been minimal for several years now. At the same time, emissions from waste incineration have increased in recent years due to the increased energy use of waste. Emissions from F-gases used as refrigerants decreased in 2022, as in the preceding years, due to the increasing use of carbon dioxide as a refrigerant.
Emmission sources in the effort sharing sector
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Land use sector: the carbon sink is well short of the targeted level
The land use sector refers to agriculture, forestry, other land use, and changes in land use. The land use sector was a minor net sink in 2022, having been a net source of emissions for the first time in 2021. The change is mainly due to the harvesting level being lower than in the previous year. The estimate of the size of the carbon sink or net source of emissions will be revised later when the data on harvested wood products, land areas and forest stands is updated.
The achievement of EU obligations and the national target of carbon neutrality require the land use sector’s net sink to be significantly larger. The carbon sink of forests has been on a declining trend for several years.
The size of the forest carbon sink varies substantially from one year to the next, but the sink has declined significantly over the past few years. This is due to increased harvesting and slower tree growth. Forest harvesting levels are affected by the demand for forest products and energy wood.
Forestry practices are governed by means of the Forest Act and the Best Practices for Sustainable Forest Management. Forest policy is guided mainly by the National Forest Strategy, which was revised in 2022. Its aims include increasing forest growth through active and increasingly diverse forest management, strengthening the climate change resilience of forests and controlling risks of damage.
Various projects have been launched since summer 2022 to strengthen the carbon sink of the land use sector.
Development of emissions and sinks in the land use sector
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