Etla Economic Research released its first ever CO2 emissions forecast: Carbon neutral Finland by 2035 is under threat

The required average speed for greenhouse-gas-emission reduction in Finland is 7.6 percent a year if the government’s carbon neutrality target is to be met, according to Etla’s first emissions forecast released on January 21, 2020. The government aims for Finland to become fully carbon neutral by 2035. Based on the emissions forecast, Etla estimates that the target will not be met unless additional measures are taken. The key to reducing emissions is technological development and the abandonment of fossil fuels. In the future, Etla will produce a five-year forecast for the development of Finland’s greenhouse gas emissions in connection with its biannual economic forecast.

As a result of climate change, the EU is aiming for carbon neutrality by 2050. Finland pledges to be more ambitious: carbon neutrality in Finland should be achieved by 2035. In practice, this means that the sum of greenhouse gas emissions and the natural carbon sink must be zero in 2035. In 2018, Finland’s greenhouse gas emissions were 56.4 million tons of carbon dioxide (CO2) equivalent and the carbon sink was –9.8 million tons. The net emissions thus amounted to 46.6 million tons.

In light of the calculations now published by Etla, there is a long way to go and the carbon neutrality target will be tough to reach.

According to the emissions forecast, the average speed needed in reducing greenhouse gas emissions in Finland is 7.6 per cent per year assuming a constant carbon sink. To achieve this, a major technological change is needed in the energy and utilities sector, production methods and household consumption.

Greenhouse gas emissions will continue to decline, but that will not be enough

According to a recent study by Ville Kaitila of Etla , “CO2 Emissions in Finland 2019‒2023 and the Carbon Neutrality Objective” (ETLA Briefs 84), Finland’s emissions will decrease on average by less than two per cent annually up until 2023 unless the decline in the emission intensity of production strengthens or the carbon sinks increase. Without accelerating technological development and/or increasing carbon sinks, Finland will therefore not achieve its carbon neutrality goal.

The biggest sources of greenhouse gas emissions in Finland are energy production, agriculture, transport, household personal transport, metal processing, paper industry, water and waste management, and oil refining. In 2017, they accounted for 83 per cent of total greenhouse gas emissions. Production accounts for 88 per cent of emissions and household consumption for 12 per cent. Technological change is therefore a key factor in reducing emissions, emphasizes Ville Kaitila.

– The measures taken by the biggest emitters will be emphasized in achieving the national targets, because it is important for Finland to significantly reduce overall emissions,” he says.

Etla calculates the emissions forecast for five years into the future

As the first economic forecaster in Finland, Etla will also regularly assess–as part of the biannual Etla Forecast–the development of Finland’s greenhouse gas emissions over the next five years. In addition to the emissions forecast, Etla will also calculate what the emissions development needs to be if the carbon neutrality goal is to be reached.

The emissions projection is based on industry-specific production forecasts, household consumption and technological development. The forecast makes three alternative assumptions that describe the possible evolution of the emission intensity of output (value added) in the future.

– Emission intensity in the production of different industries is not constant. Total emissions have fallen markedly, even though GDP has risen. This is due to both technological development and changes in the production structure, Kaitila argues.

Etla will focus more on climate change – a new researcher joins the team

Etla will focus more on climate change and its economic impact in the future. At the same time, the research team will be strengthened. Jussi Lintunen, Ph.D., has started as a new researcher at Etla in January 2020, and his research topics focus particularly on climate policy and carbon sinks. Previously, Lintunen has worked at the Finnish Natural Resources Institute (Luke), the Finnish Forest Research Institute (Metla), and the University of Helsinki.

– Climate change is a serious threat and is affecting everyone, including the economy. Adapting to climate change requires technological development and deliberate reductions in CO2 emissions, but not intimidation. At Etla, we want to make sure that our research and forecasting work also considers climate change and its economic impact. That is why we are also strengthening our research team and expertise, says Aki Kangasharju, CEO of Etla.

 

Kaitila, Ville: “CO2 Emissions in Finland 2019‒2023 and the Carbon Neutrality Objective” (ETLA Briefs 84)

 

More information:

Managing Director Aki Kangasharju, Etla, p. 050-583 8573, aki.kangasharju@etla.fi

Researcher Ville Kaitila, Etla, p. 050-410 1012, ville.kaitila@etla.fi

Researcher Jussi Lintunen, Etla, p. 040-514 1385, jussi.lintunen@etla.fi