3. Finland

Economic instruments have a long history in Finnish environmental policy. Among the different types of economic instruments available, taxes, subsidies and grants appear to be the most widely used even though there are examples of other market-based solutions e.g. the EU ETS. In the period 2018–2021, changes to existing instruments have been made, and a few new instruments have been implemented.

In 2019 the Finnish government implemented a change in the tax calculation basis for light and heavy fuel oil, natural and liquid gas, and hard coal as well as the taxable fuels that replace them; when calculating the carbon dioxide emissions, the emissions during the entire life cycle are considered more clearly than before. The aim of this change was not to tighten the taxation of heating fuels, therefore the value of a carbon dioxide tonne used in the calculation of the carbon dioxide tax on heating fuels was reduced simultaneously. This is further described in section 3.1.1.

As part of the changes in energy taxation in 2019, the government changed the tax reduction for coal, natural gas, bio-oil, and light and heavy oil used in combined heat and power (CHP). The tax reduction was shifted from the carbon dioxide tax to the energy content tax, which considering previous mentioned changes makes it possible to tax hard coal and increase emission control without the total tax burden for CHPs being increased. Table 9 present revenues from environmental taxes, fees, and charges in Finland in 2021, and the total sum of these.

Motor vehicles in Finland are charged with a one-time registration tax and an annual tax, both of which has been revised in the examined period. In 2018 the Finnish government implemented a temporary subsidy for the purchase of an electric car.

The Finnish government also implemented a few new support programmes to complement those already existing. In 2018, a competitive tendering on the production subsidy for renewable energy (so-called premium system) was completed and subsidies were granted for a total of 7 wind power projects. In 2020, the government launched subsidy schemes meant to improve energy efficiency and decrease the usage of oil and coal. Subsidies are granted for renovation projects designed to improve the energy efficiency of residential buildings, and to detached houses that abandon their use of oil heating. Investment support for projects to replace coal as an energy source are also given.

With the purpose to speed up the climate work of municipalities and regions, the government support regional projects and funds national projects supporting the climate work of municipalities. During 2018–2021, approximately 110 local, regional, and national climate projects were funded by grants and procurements.

As a complement to already existing forestry subsidies, a new financial support scheme for afforestation of organic soil and wetlands was prepared in 2020. The subsidy system is intended for private landowners and will remain in force until the end of 2023.

Tax, fee, or charge	Total, EUR million
Excise duty on energy products	4 272
User charge on passenger vehicles	1 134
Excise duty on motor cars	515
Revenue from auction of emission allowances (ETS)	238
Registration fee of vehicles	29
Hunting and fishing licenses	27
Excise on certain beverage packages	18
Tax on waste	3
Total	6 236

Table 9: Revenue from environmental taxes, fees, and charges in EUR million, 2021

Note: Selection on the eight highest revenue generating taxes, fees and charges. Hence, the Total revenue is larger than the sum of these.
Source: Statistics Finland, (2022).

3.1 Energy, greenhouse gases and air pollution

3.1.1 Excise taxes on fossil fuels for energy purposes

Fuel taxes in Finland consist of an energy content tax, a CO₂ tax, and a strategic stockpile fee. The energy content tax reflects the volumetric energy content of the fuel, based on the calorific values specified in the RES Directive (2009/28/EC). These are levied on all fuels based on the same criteria (EUR/MJ) (Nordic Council of Ministers, 2019).

Finland was the first country to introduce carbon-based energy taxation in 1990, at EUR 1.19 per tonne CO₂. The tax rate has increased several times since its introduction. In 2017, the tax rate was set at EUR 58 per tonne for fossil fuels used for energy purposes (Nordic Council of Ministers, 2019). The rate was increased in 2018, but in 2019 the tax rate was decreased to EUR 53 per tonne CO₂. The reason for the decrease was a change in the calculation basis for light and heavy fuel oil, natural and liquid gas, and hard coal as well as taxable fuels that replace them; when calculating one of the carbon dioxide emissions, the emissions during the entire life cycle are considered more clearly than before. If life-cycle emissions are considered without changing the calculation bases, tax levels would rise. As the aim of the amendment was not to tighten the taxation of heating fuels, the value of a carbon dioxide tonne used in the calculation of the carbon dioxide tax on heating fuels was simultaneously reduced (Finlex, 2018). Table 10 presents the tax rate per tonne of CO₂for fossil fuels for energy purposes.

Year	2017	2018	2019	2020	2021
CO₂ tax rate	58	62	53	53	53

Note: The table shows the tax value per ton of carbon dioxide, which is the basis for calculating the carbon dioxide tax on light and heavy fuel oil, hard coal, and natural gas (Finlex, 2018).
Source: Nordic Council of Ministers, NCM. (2019), Finlex (2018), and Finlex (2020a).

Table 10: CO₂ tax rate for fossil fuels for energy purposes, EUR per tonne CO₂

Before 2019 the CO₂ tax for coal, natural gas, bio-oil, light and heavy oil used in combined heat and power (CHP), was halved. The aim was to improve the competitiveness of CHP and to avoid overlaps with the ETS and CO₂ taxation. As almost all taxable coal and natural gas is used in CHP, in practice the CO₂ tax rate for these fuels was halved (Nordic Council of Ministers, 2019). In 2019 the government changed the tax rebate as part of changes in energy taxation. The government argued that the halving of the carbon dioxide tax in the case of combined production weakened the control of emissions from fuels included in the environmentally related tax model in the case of combined electricity and heat production, especially with hard coal and natural gas. The tax subsidy for combined production, was therefore shifted from carbon dioxide tax to the energy content tax. This makes it possible to tax hard coal and increase emissions control in combined production without the total tax burden of increased production (Finlex, 2018).

As previously stated, fuel taxes in Finland consist of an energy content tax, a CO₂ tax, and a strategic stockpile fee. The basis for calculating carbon dioxide tax with respect to heating fuels where, just like stated above, adjusted to enable the consideration of the average greenhouse gas emissions during the fuel's entire life cycle when calculating the carbon dioxide emissions, The results of this can be seen in table 11, which presents a few examples of the taxes and fees levied on fossil fuels for energy purposes. An additional increase in the energy content tax was made in 2021.

Table 11: Taxes and fees levied on fossil fuels for energy purposes, EUR

Product	Tax	2018	2019	2020	2021
Light fuel oil, cent/litre	Energy content tax	10.15	10.28	10.28	12.98
	CO₂ tax	16.54	16.9	16.9	16.9
	Strategic stockpile fee	0.35	0.35	0.35	0.35
	Total tax	27.04	27.53	27.53	30.23
Heavy fuel oil, cent/kg	Energy content tax	8.56	8.56	8.56	11.59
	CO₂ tax	20.08	18.67	18.67	18.67
	Strategic stockpile fee	0.28	0.28	0.28	0.28
	Total tax	28.92	27.51	27.51	30.54
Coal, EUR/tonne	Energy content tax	53.13	52.77	52.77	71.45
	CO₂ tax	149.56	147.81	147.81	147.81
	Strategic stockpile fee	1.18	1.18	1.18	1.18
	Total tax	203.87	201.76	201.76	220.44
Natural gas, EUR/MWh	Energy content tax	7.50	7.63	7.63	10.33
	CO₂ tax	12.28	12.94	12.94	12.94
	Strategic stockpile fee	0.084	0.084	0.084	0.084
	Total tax	19.864	20.654	20.654	23.354

Source: Finlex (2018), Tax Administration (2022b) and Tax Administration (2022c).

When the energy taxation was revised in 2011, an energy tax on peat also came into force. The tax on peat is not based on energy content or CO₂ emissions, as the tax for the other fuels. Peat is used in biomass mixtures, which has been mentioned as a reason for the lower tax rate on peat (NCM, 2019). In 2021 the tax rate was EUR 5.7 per MWh. The taxon peat comes into effect if the use of peat exceeds 10 000 MWh and must be paid on the excess portion (Tax Administration, 2021b).

Since 1998 energy-intensive companies have been able to get a refund of the excise taxes on energy (fuels, district heating, process steam and electricity), if the taxes exceed 0.5% of the value added for the given company (NCM, 2019). However, the tax refund is scheduled to be phased out in stages during the period 2021–2024, leading to the companies no longer being entitled to a refund by 2025. The reduction of the electricity tax to the EU's minimum tax level and the changes in the energy tax refunds, applies to the industry, mining, and professional greenhouse cultivation. The reduction in the electricity tax also applies to electricity that is used, among other things, in agriculture, which is currently carried out by refunding the difference between tax class I and II (Ministry of Finance, 2022).

3.1.2 Excise taxes on electricity consumption

The excise duty on electricity is divided into a lower (II) and a higher (I) category. The lower duty is levied on separately metered electricity used in industrial manufacturing, data centres and professional greenhouse cultivation (Tax Administration, 2021a). The categorisation was introduced to promote the competitiveness of the industrial sector (NCM, 2019). The higher category has been 2.24 EUR cent per kWh since 2015. The lower category was decreased to the minimum EU level in 2021 (Ministry of the Environment, 2021), 0.05 EUR cent per kWh. Table 12 shows the excise tax in 2010, 2014, 2018 and 2021.

Tax category	2010	2014	2018	2021
I	0.87	1.89	2.24	2.24
II	0.25	0.69	0.69	0.05

Table 12: Excise taxes on electricity consumption, EUR cent per kWh

Source: Nordic Council of Ministers, NCM (2019) and Tax Administration (2021b).

3.1.3 Excise taxes on transportation fuels

The components of the energy taxes on transportation fuels are the same as the ones for energy fuels: energy content tax, a CO₂ tax, and a strategic stockpile fee. Both the energy content tax and CO₂ tax were increased on August 1, 2020. Table 13 shows the development in taxes and fees levied on motor gasoline, diesel oil, jet fuel and aviation gasoline (Tax Administration, 2021c).

The taxation of light-fuel oil and diesel oil is differentiated based on their Sulphur content, and for biofuels fulfilling certain sustainability criteria, a lower CO₂ tax is levied. To lower the costs for operation of trucks, and thus the export industry, as well as bus transport, the energy content tax for diesel oil is set at a lower rate compared to what the environmental criteria of the tax would require. However, a vehicle tax component for driving power is used to adjust the total tax burden for diesel powered passenger vehicles (NCM, 2019).

Table 13: Taxes and fees levied on fossil fuels for transport, EUR cent per litre

Type of fossil fuel	Type of tax or fee	2014	2017	2020	2021
Motor gasoline
	Energy content tax	50.36	52.19	53.79	53.79
	CO₂ tax	16.25	17.38	21.49	21.49
	Strategic stockpile fee	0.68	0.68	0.68	0.68
	Total tax	67.29	70.25	75.96	75.96
Diesel oil
	Energy content tax	30.7	32.77	34.57	34.57
	CO₂ tax	18.61	19.9	24.56	24.56
	Strategic stockpile fee	0.35	0.35	0.35	0.35
	Total tax	49.66	53.02	59.48	59.48
Kerosene-type jet fuel
	Energy content tax	54.76	56.76	57.49	57.49
	CO₂ tax	17.99	19.24	23.33	23.33
	Strategic stockpile fee	0.35	0.35	0.35	0.35
	Total tax	73.1	76.35	81.17	81.17
Aviation gasoline
	Energy content tax	49.88	51.7	52.11	52.11
	CO₂ tax	16.1	17.21	20.81	20.81
	Strategic stockpile fee	0.68	0.68	0.68	0.68
	Total tax	66.66	69.59	73.6	73.6

Note: Data for 2020 applies from August 1, 2020.
Source: Tax Administration (2021c).

3.1.4 Economic instruments for renewable energy sources

In 2020 renewable energy sources represented about 40% of energy end-consumption (Official Statistics of Finland (OSF), 2020). The aim set in the National Energy and Climate Strategy to 2030 is to increase the use of renewable energy, increasing its share in energy end-consumption to more than 50% during the 2020s (Ministry of Economic Affairs and Employment, 2022a). To reach the goal, feed-in tariff system was introduced in 2011 (NCM, 2019). The system could approve power plants fuelled with wind, biogas, forest chips and wood-based fuels meeting the prescribed preconditions (Ministry of Economic Affairs and Employment, 2022b). In the feed-in tariff system, an electricity producer will receive a production subsidy (feed-in tariff) for a maximum of twelve years. The subsidy varies based on a three-month electricity market price, or the market price of emission allowances (Ministry of Economic Affairs and Employment, 2022b).

In 2018, a one-time competitive tendering on the production subsidy for renewable energy (so-called premium system) was completed. Subsidies were granted for a total of 7 wind power projects with a combined annual production of 1.36 TWh (Ministry of the Environment, 2021).

3.1.5 Energy and investment aid

Based on its assessment, the Ministry of Economic Affairs and Employment can grant aid for innovative energy projects. “Energy aid” is granted for investments and energy audits. Special aid for new energy technology and large-scale demonstration projects is granted for investments that are over 5 million euros and taking forward future energy technologies. Aid for investments replacing coal in the energy production is granted to projects that enable the substitution of coal with renewable alternatives in the energy production before the end of year 2025 (Ministry of Economic Affairs and Employment, 2022c). “Energy aid” can be granted to investment projects and studies that:

promote the production or use of renewable energy.
promote energy savings or increase the efficiency of energy generation or use.
otherwise promote the transition towards a low-carbon energy system. (Ministry of Economic Affairs and Employment, 2022f).

With the purpose to speed up the climate work of municipalities and regions the government expedited EUR 1 million per year from 2018 to 2021, and a supplementary appropriation of EUR 4 million for 2021. Municipalities and regions are aided in their own projects, and national projects supporting the climate work of municipalities are funded. During 2018–2021, approximately 110 local, regional, and national climate projects were funded by grants and procurements.

In March 2020 the government issued a support programme intended to promote voluntary phase-out of coal use by the end of 2025. Investment support for projects to replace coal as an energy source will be granted between 2020 and 2025. A total of EUR 90 million is allocated to the support programme in the General Government Fiscal Plan (Ministry of the Environment, 2021).

3.1.6 Economic instruments for energy efficiency

Energy efficiency is promoted through actions such as cogeneration of heat and electricity, broad coverage of voluntary energy efficiency agreements and systematic energy auditing (Ministry of Economic Affairs and Employment, 2022d). In addition, the Act on Public Contracts encourages contracting authorities to take environmental considerations into account. Energy efficiency is a highly suitable procurement criterion alongside price and other grounds (Ministry of Economic Affairs and Employment, 2022e). As stated in the previous section, projects which advance energy efficiency are eligible for so called “energy-aid”, which is also granted for renewable energy investments and research (Ministry of Economic Affairs and Employment, 2022f).

Since 2020 subsidies are granted for repair projects designed to improve the energy efficiency of residential buildings. The preliminary appropriation is EUR 40 million per year. In September 2020 the Finnish government launched a subsidy scheme to decrease the use of oil heating in residential buildings. More specifically the subsidy scheme applies to detached houses that discontinue their use of oil heating. A total of EUR 9.44 million was allocated in the 2021 budget and EUR 10 million in the 2021 supplementary budget. In addition, in 2020, EUR 14.9 million was allocated for a subsidy for discontinuing the use of oil heating in municipally owned buildings (Ministry of the Environment, 2021).

3.1.7 Emissions trading

The European Union’s Emissions Trading Scheme (EU ETS) covers about 40% of the CO₂ emissions in Finland (Ministry of Economic Affairs and Employment, 2022g). Auctioning has been the principal method of allocating emission allowances since 2013. By default, just over 50% of the allowances for the trading periods 2013–2020 and 2021—2030 are intended to be auctioned. However, the number of emission allowances available for auctioning will decrease due to the linear reduction factor. The Energy Authority is the auctioneer responsible for the auctioning of allowance on behalf of Finland. (Ministry of Economic Affairs and Employment, 2022h). The Finnish Energy Authority reports that the auctioned allowances were 7.8 million in 2021. This generated a revenue of EUR 409 million.

3.2 Water

In Finland, municipalities have the primary responsibility for water supply and wastewater treatment. The fees or charges are set according to the full cost principle, meaning that the service should be fully financed by the user fees (NCM, 2019). The fee consists of basic rates, metered charges as well as connection fees and charges for connecting new customers. The basic rate price is determined by the services used by the property, the property type, and the floor area of the property (HSY, 2022).

3.3 Waste

3.3.1 Municipal waste charges

Municipal waste charges cover the cost of municipal waste management. The ministry of the Environment (2019) state that waste charges aim to reduce the amount of waste generated and the consequent risks, and to encourage waste recovery. In many municipalities, a smaller fee is charged for waste that is sorted and fit for use, as opposed to mixed municipal waste that is unfit for practical applications.

The waste charge is collected from the property holder or some other holder of the waste. Grounds for determining the waste charge can be found in the waste tariff approved by the municipality (Ministry of the Environment, 2019). A revision of the waste legislation came into force in 2021 (Ministry of the Environment, 2022a), which aims to increase separate collection and recycling (Ministry of the Environment, 2021).

3.3.2 Waste tax

Tax is levied on all waste deposited at landfill sites, provided that its utilisation is technically feasible and environmentally justifiable, and that by imposing the tax, waste can be made more commercially exploitable. As of the beginning of 2016, the waste tax is set at EUR 70 per tonne of waste sent to a landfill. All landfills where waste falling into a taxable waste category is deposited are subject to the waste tax. This covers both public and private landfills, as well as all waste disposal areas. Waste categories with no technical treatment or utilisation alternative to disposal at landfills, or with utilisation options that would do more harm than good is tax exempt. Such categories include, but are not limited to, mineral waste, waste from inorganic chemical processes and hazardous waste deposited at landfills (Ministry of the Environment, 2019). The total revenue from tax on waste was 3 million EUR in 2021, as seen in table 9.

3.3.3 Oil waste charges

The prices of lubrication oils include an oil waste charge. The oil waste charge has stayed unchanged since 2009, at EUR 0.0575 per kilo. The income from these charges is used to cover the costs of managing oil waste and cleaning up soil and groundwater contaminated with oil (Ministry of the Environment, 2019).

3.3.4 Beverage packaging tax

Beverage packaging taxes are currently paid on packaging for alcoholic beverages, beer, soft drinks, bottled water, and certain other drink packages. The ministry of the Environment (2019) states that this form of taxation aims to further encourage the re-use of drinks packages, to reduce the quantities of such materials ending up in landfill, and to prevent litter. The taxation level has since 2005 amounted to EUR 0.51 per litre (Ministry of the Environment, 2019).

The beverage packaging taxes does not apply to packaging covered by approved returnable deposit systems that involve the collection of packaging for refilling or material recycling. The system includes certain types of refillable glass and plastic bottles, as well as aluminium cans. In 2021, the return rates for all glass bottles, plastic bottles and aluminium cans covered by the system were 98%, 90% and 97%, respectively (PALPA, 2022a).

The deposit paid is returned when the bottle with a deposit is returned. The deposits are presented in Table 14.

Type of container	EUR per unit
Cans	0.15
Glass	0.1
Plastic*	0.1–0.4

Table 14: Deposit for glass, plastic and aluminium can beverage containers in 2021

*The deposit for plastic bottles depends on the size of the bottle.
Source: PALPA (2022b).

3.3.5 Producer responsibility in waste management

Producer responsibility refers to companies’ obligation to handle the waste management of products they have imported or manufactured when the products are discarded. It pertains to companies that import or manufacture the following products:

Batteries and accumulators (incl. inside vehicles and electrical equipment)
Vehicles
Packaging
Paper and paper products
Tyres
Electrical and electronic equipment (Ministry of the Environment, 2022b).

3.4 Transport

Motor vehicles in Finland are charged both a one-time registration tax and an annual tax. Both has been revised since 2018. From 2018 a temporary subsidy for the purchase of electric cars has been introduced, which has been prolonged for 2022 and 2023. The overall aim is to increase the sales of electric vehicles from its current level of 20% to 100% by 2030.

3.4.1 Registration tax

The registration tax, or car tax, is a one-time tax levied when vehicles, such as passenger cars, delivery vans and motorcycles, are registered in Finland for the first time. This tax was introduced in the 1950s to raise state revenue (NCM, 2019).

The tax is based on the retail value of the vehicle, but the rate is differentiated based on the CO₂emissions declared by the car manufacturer according to the EU standard driving cycle WLTP. The tax is independent from the driving force of the vehicle, and solely based on emissions, meaning that a fully electric car has been taxed according to CO₂ emissions of 0 g/km.

Where emissions data are not available, the tax rate is based on the weight and the driving force used by the vehicle. The aim of the tax, and the reduction, is to guide consumers towards choosing more energy-efficient car models while speeding up the renewal of the vehicle stock to introduce cars with better fuel efficiency and lower emissions. While the maximum tax rate has been unchanged, the minimum has been reduced from 5% in 2015 to 2.7% in 2019, which has remained on that level (Finlex, 2022).

3.4.2 Annual car taxes

Besides the registration tax, motor vehicles in Finland are also subject to an annual tax (the motor vehicle tax). The tax may consist of a basic tax, a driving power tax, or a combination of these. Petrol passenger cars are only subject to the basic tax, while diesel, electric, hybrid and methane passenger cars are subject to both the basic tax and the driving power tax. Diesel lorries are only subject to the driving power tax. The driving power tax is described later in this section (TRAFI, 2022).

The basic tax is based on the CO₂ emissions declared by the car manufacturer. Until 2019 the emissions declared by the NED test cycle was used, while the 2020 tax also was based on the new WLTP test cycle. If emissions data are not available, or for passenger cars registered before 2001 (or 2002 if the weight of the cars is over 2 500 kg) and vans registered before 2008, the tax rate is based on the weight of the vehicle.

The basic tax was raised significantly between 2013 and 2017. Since then, the tax has remained pretty much the same. However, for vehicles with CO₂ emissions in the lower range, the tax was reduced in 2020. For examples, see Table 15. For cars powered by electricity or hydrogen the basic tax is the minimum amount of tax according to the tax table applied to the car. However, if such a car was put into use for the first time on the day of or after October 1, 2021, the amount of basic tax per day is the minimum tax amount of the tax table increased by 17.80 eurocents (Finlex, 2022).

CO₂ emissions (g/km)	Tax rate (EUR/365 Days)
	2019 (NED)	2020 (NED)	2020 (WLTP)
0	106.11	53.29	53.29
90	153.66	113.88	96.36
120	184.32	151.84	120.81
140	210.24	183.96	142.71
150	225.20	202.21	160.96
170	258.05	243.75	203.67
200	316.09	316.09	283.43
230	380.69	380.69	369.75
Over 400	654.44	654.44	654.44

Table 15: Examples of the basic tax for passenger cars

Source: TRAFICOM (2022).

For vehicles taxed based on weight, the rates have remained unchanged from 2017 to 2022 and ranges from EUR 222.65–632.18 per year for vehicle with a mass of less than 1 300 kg to a mass of 3 401 kg or more.

The driving power tax is levied on vehicles that are powered by some force or fuel other than petrol. The tax rate has since 2013 been 5.5 eurocents per day for every 100 kilograms of weight for passenger cars power by diesel, and 0.5 eurocents per day for electric and petrol hybrids. This tax for electric vehicles has been reduced from 4.9 eurocents per day 2017 to 1.5 eurocents 2020. For cars driven on combination of electric and diesel the tax is 4,9 eurocent and for methane driven cars 3.1. For lorries, the driving power tax is based on the weight, number of axles, and whether it is used for towing a trailer. The tax varies between 0.6–2.2 eurocents per day for every 100 kilograms of weight, which has been the same since 2017 (TRAFICOM, 2022).

3.4.3 Aviation noise charge

A noise charge is collected from jet aircraft which depart and land at Helsinki Airport between 23.00–06.00 LMT. The charge has remained unchanged since 2017. The charge is calculated from noise levels indicated in the aircraft noise certificate, based on take-off noise measurements in accordance with the International Civil Aviation Organization (ICAO). Aircrafts which are unable to show certificated noise levels will be charged at the highest noise rate for the same aircraft type. Charges of less than EUR 10 will not be collected. The maximum noise charge is limited to EUR 3 000 (FINAVIA, 2022).

3.5 Agriculture and natural resources

3.5.1 Agricultural support system

The Finnish agricultural support system is based on the support schemes of the European Union’s Common Agricultural Policy (CAP), which include the EU’s direct payments and the partially EU-funded natural constraint payments and environment payments. The support package is complemented with the Finnish national aid system to account for the special circumstances in Finland (Ministry of Agriculture and Forestry, 2022a). In 2021 a total of EUR 332 million of the state budget funds were allocated to be used for the national aid for agriculture and horticulture. The most significant type of national aid is the so-called Nordic aid, which is aid directed towards the northern regions of Finland. According to the Ministry of Agriculture and Forestry (2022b) the key objective of the Nordic aid is to maintain production in the northern region, to develop the production structures, ensure products’ access to markets and to support environmental protection and the preservation of the rural areas.

The Rural Development Programme for Mainland Finland include, e.g., investment support that aims to help raise the groundwater level with controlled subsurface drainage. Financial aid can be granted for setting up controlled subsurface drainage for 40% of the eligible costs. Additionally, grants can be given for controlled irrigation, and recycling of runoff water. As part of the programme, a five-year commitment for perennial cultivation of organic soil without soil preparation was made in 2014. The amount of aid is EUR 50 per ha per year. To promote biogas production, a national biogas programme was prepared. This includes a nutrient recycling pilot programme 2020–2022 and an investment subsidy for biogas and advanced manure processing methods. The preparation of a subsidy for the production of biogas based on nutrient cycles is still in progress. Investment subsidy for renewable energy investments can be granted, e.g., for the purchase of gas components for tractors. In addition to subsidies, state guarantees can be granted for funding investments in energy production that utilises renewable energy sources. (Ministry of the Environment, 2021).

3.5.2 National Forest Strategy

Finland’s National Forest Strategy, adopted in February 2015, specifies the main objectives for forest-based business and activities. The strategy was updated in 2019. The vision is "Sustainable forest management is a source of growing welfare", and the three strategic objectives to make the vision come true are:

Finland is a competitive operating environment for forest-based business.
Forest-based business and activities and their structures are renewed and diversified.
Forests are in active, economically, ecologically, socially, and culturally sustainable, and diverse use. (Ministry of Agriculture and Forestry, 2022c)

A process is under way to prepare a national forest programme extending to 2035. The need to reform the National Forest strategy arose from the rapidly changing environment where the forest sector operates. The aim of the new strategy is to consider a more comprehensive approach to sustainable development and the role of forests in climate change mitigation and adaptation (Ministry of Agriculture and Forestry, 2022d).

3.5.3 Forestry subsidies

In Finland, forestry subsidies are intended to support the forest management of private landowners. A limited amount of funds is used annually in the state budget. The following types of work can be financially supported: the early tending of seedling stands, young stand improvement and small tree harvesting related to it, the management of swamp forests, forest vitality fertilization, forest research, environmental support, forest nature management projects and afforestation of wastelands. The amount of support varies between different types of work (Finnish Forest Centre, 2022a).

Afforestation support can be granted to finance the afforestation of treeless unproductive lands suitable for silviculture, such as former peat production areas. The amount of aid per hectare varies according to the type of land in the area, the way the forest is regenerated and the tree species to be grown (Finnish Forest Centre, 2022b).

A new financial support scheme for afforestation of organic soil and wetlands was prepared in 2020. The fixed-term Act governing the support scheme came into effect at the beginning of 2021. (Ministry of the Environment, 2021). The subsidy system is intended for private landowners and will remain in force until the end of 2023 (Ministry of the Environment, 2022d).

3.5.4 Forest Biodiversity Programme

The METSO Programme 2008–2025 aims to halt the ongoing decline in the biodiversity of forest habitats and species, and to establish at least stable, or preferably favourable trends in Southern Finland’s forest ecosystems (Ministry of the Environment, 2022c). Forest owners have ended up protecting their forests as permanent conservation areas under the Nature Conservation Act or sold their forests to the State as nature conservation areas. In 2021, the average compensation for permanent protection was just under EUR 6 800 per hectare. The total compensations paid to landowners for measures to protect biodiversity totalled about EUR 43 million in 2021, of which about EUR 33 million concerned permanent protection and EUR 10 million were used for fixed-term environmental subsidy agreements and nature management projects. By the end of 2021, 88% of the target of 96,000 hectares had been reached as the protected area totalled 84,000 hectares. The result for environmental forestry subsidy agreements and nature management projects was 4,500 hectares, which means that 68% of the target of 82,000 hectares are now covered by these. (METSO, 2022).