20 Nov 2014

Controversy over Finland's shifting policies on peat

Miika K. writes:*

Finland is the 6th-richest country in the world in peatland. One-third of its area is swamp, from where peat is found. These energy reserves double the energy from oil in the North Sea. Despite Finland’s energy-sufficiency, peat energy spurs controversy and hot debate. Carbon dioxide emission intensity of peat is higher than that of coal and natural gas, let alone damage on animals such a grouse and migratory birds, who live at swamps. Peatlands are also tremendous ‘carbon sinks’, which absorb CO2 from the atmosphere.

At the Finnish political level, peat-discussion revolves around energy self-sufficiency. The alternatives for peat energy are limited – reducing peat could potentially push Finland to import more coal from Russia.

Policy-making with peat is intriguing. Some of the political parties are frantic to amend the definition of peat to a ‘renewable source of energy’, thus making its production easier to support, whereas other political parties use any opportunity to obstruct peat energy.

The Finnish government in 2011-2014 was formed from 6 political parties out of 8 total in the parliament. The populist True Finns (TF) party, which had undergone tremendous success in the elections, avoided responsibility in forming the government and wished to stay in opposition. Consequently, several small parties had to be taken in to form a majority government. The Green Party (GP), whose ideology pertains to environmental protection, was one of the small parties taken on board, and its leader Ville Niinistö became the Minister of the Environment. In order to keep the government from breaking down, the small parties acquired tremendous leverage for policies they cared passionately about.

Niinist√∂ was hard on curbing down peat energy by increasing its taxation from the original 1.90 €/MWh to 4.90 €/MWh. By 2015 the tax would have already been 5.90€/MWh. Simultaneously, swamp-protection areas were expanded. In September 2014, however, the GP left the government due to controversy with nuclear energy permissions. Subsequently, the new Minister of the Environment Sanni Grahn-Laasonen from the National Coalition Party (NCP) brought the recent peat policy to halt within weeks, with the intention to amend it looser and more feasible for companies to adapt. This agitated Niinist√∂, who responded: “never in Finland has a minister of the Environment stopped an already negotiated protection policy”. Moreover, the peat tax is now being continued to reduce from the beginning of 2016 such that the tax returns to the original 1.90€/MWh.

The case with Finnish peat policies presents a dilemma. The government’s swift policies may have been advantageous for environmental protection with the tremendous leverage by the GP. The policies, however, were toothless once the GP left the government.

Bottom line: We must now contemplate: do we crave hasty and ‘quick-remedy’ environmental policies, which can be quickly set-up and altered by anyone in power? Or should we rather prefer the sturdy decision-making processes that ideally produce robust policies, although slowly? In the case of peat policies, for example, two consecutive governments’ approval could be required to alter, as well as bring about, a protection policy.

* Please comment on these posts from my environmental economics students, to help them with unclear analysis, other perspectives, data sources, etc.