Finland plans to become Europe's first carbon negative economy

A combination of natural advantages, technical know-how and smart investment are helping Finland reach its clean energy goals, going beyond climate neutrality
The offshore wind farm in Tahkoluoto, Finland | Suomen Hyotytuuli

By James Jackson

James is a freelance journalist covering news, business and the green transition in central and eastern Europe for publications like the Telegraph, BBC, Sunday Times and others.

18 Oct 2023

It is a windy day near the coastal town of Pori, in the expansive Gulf of Bothnia that stretches 725km between Finland and Sweden. 

We are on a boat headed to the Tahkoluoto offshore wind farm to observe the group of 11 turbines. At a maximum height of 155m, these are neither particularly large nor productive, generating 157 gigawatt hours (GWh) of power a year. But these towering steel structures are expected to be key to Finland’s clean energy transition. 

With cities flooded and forests on fire, the threat of climate change seems more present in Europe than ever before. Experts say that rapid carbon reduction and sequestration methods are necessary to meet the commitments made as part of the 2015 Paris Agreement to reduce CO2 emissions to reach net-zero by 2050. 

Finland, a Nordic country of 5.5 million people which prizes social consensus and equality, and frequently tops international rankings for its citizens’ happiness and quality of education, is well on track to hit that target. Using a combination of its own natural advantages, technological development and savvy investment, Finland is also set to meet its own, more ambitious goal of zero carbon emissions as early as 2035, which could also play a role in efforts to help the rest of Europe decarbonise through investments in pioneering clean energy and innovative heating technology, as well as clean hydrogen. 

Zero-emission electricity is already more than 90 per cent of our electricity mix today

The wind farm near Pori is a case in point. As well as being Finland’s first offshore wind farm, Tahkoluoto is the first wind farm in the world in icy waters. Our host for this excursion – Toni Sulameri, CEO of energy company Suomen Hyötytuuli’s – points to abrasion marks on the base of the turbines made by the winter’s bitter ice. Using a gravity-based steel foundation designed to reduce the pressure and vibration caused by this ice, the conical shape of the shaft steers the sea ice – which is constantly moving – so it doesn’t hit the foundation directly. 

“It’s not such a problem for us, Finns are used to ice,” he laughs. The ice gets so thick that you can sometimes make the 1km journey out to sea on foot during the depths of winter, so the company has to use the local port’s icebreaker vessel to chart a path out for maintenance. 

This site is just a proof of concept, funded by state subsidies. But with help from a nearby steel foundry, the company is building another 40 turbines across an area of 128 square kilometres further into the Gulf of Bothnia. At double the height of the pilot turbines, they scale up impressively and will collectively be able to produce 1,800 to 2,600 GWh a year, up to 200 times more at barely double the cost per turbine. “It’s a business-driven point of investment,” Sulameri says. 

And planned investment in wind energy across the country is huge, with €58bn currently planned in offshore and another €53bn in onshore wind. In 2022, Finland built 2,430 onshore wind installations, increasing its total by 75 per cent in just one year and building more than every other EU country, except their neighbour and friendly rivals Sweden. 

Suomen Hyötytuuli’s tech could be useful for any country with icy water coastlines, vastly increasing the areas where offshore wind can be feasibly built for countries such as Canada, Russia and the Baltics, though it will be especially attractive for the Swedes. 

“The Bothnia area between Finland and Sweden has great potential as it has quite shallow waters and cheaper installation than in the North or Baltic sea,” Finland’s climate and energy minister, Kai Mykkänen, tells The Parliament.  

It’s not the only form of renewables that Finland has an advantage in. Onshore wind capacity is expected to be huge in a few years. “As you can imagine, we have much more area per capita than in Germany or Denmark or central Europe. There is more space for wind power,” Mykkänen explains.  

Seventy-five per cent of the easternmost Nordic country is covered in forest, and although its surface area is larger than that of the United Kingdom, its population is 13 times smaller. This means there is far more space for onshore wind equipment to be built far away from cities and villages, which makes planning and construction much easier.  

Increasing wind energy production is a central part of Finland’s strategy for decarbonising. “Electrification is the keyword,” Jukka Ruusunen, CEO of the national power grid Fingrid, tells The Parliament. With the lowest electricity prices in Europe in the second half of 2022, the country is clearly already making progress. 

Finland wind farms
An offshore wind farm in Tahkoluoto, Finland | Suomen Hyotytuuli 

Ruusunen describes Finland’s target for carbon neutrality by 2035 as “not even very complicated”. He says: “All the processes that you can electrify, you should electrify. It does not cost a lot of money.”  

Finnish industry appears to be completely on board with the clean energy transition. In the last decade, Finnish businesses have lowered their greenhouse gas emissions by 33 per cent while the country’s economy has grown. “Combining these has been subject to a lot of discussion, but we’ve shown that it’s possible,” says Ulla Heinonen, director of green growth at the Confederation of Finnish Industries. 

Mykkänen adds: “Doubling clean energy production is our main climate action and our main industrial action of this decade – it’s the main engine to accelerate our speed towards carbon neutrality in 2035 and to secure our competitive edge in industry.” 

Mykkänen uses the term “clean” rather than “green” energy on purpose. A third of Finland’s energy mix comes from nuclear energy, and Olkiluoto 3, Europe’s largest nuclear power plant, came online near Helsinki in April, just one day after Germany stepped away from nuclear energy by turning off its remaining reactors. OL3, as the new reactor is known, is Finland’s first in four decades. It is relatively uncontroversial and even got endorsement from the country’s Green party.  

Although Finland’s energy production is set to double as a result of the planned investments in offshore and onshore wind energy, energy consumption is also set to rise by 50 per cent as electric vehicles and heat pumps become more common, according to .  

A surplus of energy production isn’t enough on its own – you need to get it from where it is produced to where it is needed. For that you need a smart and strong grid. Many countries struggle to get energy from production sites to population centres, with bottlenecks in the middle, Ruusunen says. “A lot of new generators are needed and, as you cannot store electricity, you have to transmit it through a transmission line,” the Fingrid CEO explains. 

But building a transmission line takes years. The urgency with which Fingrid approached this problem in advance is apparent. “If you are late, then you are probably 10 years late, and 10 years is way too late in this process,” Ruusunen says. “The planet is suffering today; we do have not much time. Sitting and waiting is not the best solution.”  

And while many central European countries have been struggling with replacing imported fossil fuels, in particular Russian gas and oil since the country’s full-scale invasion of Ukraine, Finland and the Nordics more generally have a head start.  

Mykkänen says: “We have basically already replaced coal, which is what we’ve been doing during the last 10 years. Zero-emission electricity is already more than 90 per cent of our electricity mix today.”  

Hydro power – energy generated from flowing water – has also long been part of the energy mix, but it has been difficult to expand while protecting Finland’s rivers. 

Though Finland currently still gets its uranium, needed for nuclear power, from Russia – a sore point in Europe’s strategic autonomy – this is to end soon, thanks to a contract with American company Westinghouse, which manufactures nuclear fuel in Sweden, the United Kingdom and the US. 

When it comes to cleantech – the sector which combines all carbon-reducing technologies such as renewable energy and electric vehicles – Finland is a leading location, boasting the third-highest number of cleantech deals per capita in the European Union in 2022, and the sixth-highest number in total, with government subsidies and business accelerators credited for the growth. 

As you can imagine, we have much more area per capita than in Germany or Denmark or central Europe. There is more space for wind power

“How can we make the green transition here in Finland and how can we then have these solutions exported to other countries?” Heinonen, from the Finnish business association, asks. This is also a question for business: the cleantech market is forecast to be worth $650bn (€608bn) a year by 2030 – more than three times today’s level – according to analysis from the International Energy Agency. 

But, like all countries, Finland has its own particular needs. One of the first things that comes to mind when you think of Finland has to be saunas. The country has 2.4 million, more than one for every two people. And with a winter that can see temperatures drop to -50C, staying warm is vital.  

It’s why innovation in this sector is an important pathway to reducing greenhouse gas emissions – and Finland seems to be in a good position as the European champion of heat pumps, with sales growing by 50 per cent last year with almost 200,000 sold, according to the Finnish Heat Pump Association. This puts the country ahead of any other in Europe, with 70 heat pumps per thousand households, with most of these air-to-air, using electricity to take cold air outside and heating it up. There is also a growing number of pumps that take heat from the ground. The pumps could even be used to power saunas – though traditional Finns might baulk at that.  

Because there are days when it can be very cold but not windy in Finland, demand on the power grid can be very high. District heating, where hot water is pumped through whole neighbourhoods, is an efficient way to heat buildings en masse. It is also relatively easy to make carbon-neutral, as the water can be heated with waste heat from industrial processes or electric heaters.  

Ninety per cent of Helsinki’s district heating is produced in combined heat and power plants, which can be run with clean electricity or indirectly-electric hydrogen – a clean fuel generated by separating hydrogen from water using electricity. Approximately 70 per cent of municipalities and cities in Finland produce district heating with renewable energy sources and waste heat.  

One of these sources of heat are data centres, a growing industry in the country, which produce a lot of heat that is normally wasted. US tech company Microsoft has built a data centre that will provide about 40 per cent of the warmth for district heating for Espoo and Kauniainen, two towns to the west of Helsinki, saving 400,000 tonnes of CO2 annually. 

 Finland's first geothermal heating plant, meanwhile, started operating in a suburb of Helsinki in 2023, with an expected heat supply of 2,600 megawatt hours (MWh) per year linked up to the district heating grid. And the Steady Energy company is even planning to provide district heating with small modular nuclear reactors (SMRs) that could be online by 2030, having just raised €2m in seed funding. 

Finland is also in a good place to be competitive in the race for green hydrogen, a potentially huge economic benefit of electrification. Created by using electricity to break hydrogen molecules apart from water by electrolysis, hydrogen is useful for storing renewable energy for industrial processes and sectors that are tougher to decarbonise because of high and constant energy requirements, such as steel manufacturing. 

“If you are talking about hydrogen industry or defossilising of industrial production, the first necessary requirement is having plenty of cheap clean electricity available in the market,” Mykkänen points out. The country having only one energy pricing zone – compared with four in Sweden and five in Norway – gives Finland an edge over its Scandinavian neighbours as producers and consumers will not have to pay wildly varying prices depending on where in the country they are. 

Fingrid CEO Ruusunen also hopes they can turn a problem associated with the production of hydrogen into an economic solution. “When you produce hydrogen, it produces a lot of heat. Where do you put it?” Ruusunen asks. “Put it to heat the houses and sell it so that it’s not waste, but becomes a product you can sell and make your process more competitive.” 

Hydrogen production is a key pillar of the EU’s Green Deal plan to become climate-neutral by 2050, and the Finnish government has committed to creating 10 per cent of the European bloc’s hydrogen, 1m tonnes. Construction of the country’s first industrial-scale hydrogen plant started close to the Tahkoluoto icy windfarm in January and is being built to be connected to the EU’s future hydrogen pipeline networks. With an estimated value reaching €120bn, it’s a potentially huge market to get into. 

Hydrogen, just like Finland’s forests, can be useful for carbon sequestration, which is necessary to get from carbon neutral to carbon negative, actively reducing the greenhouse gasses in the atmosphere. “You can turn CO2 from problem to solution, from emission to raw material, which we then use together with hydrogen” to produce ammonia and synthetic cement, says Mykkänen. If the CO2 comes from Finland’s forests, it is considered carbon neutral. “The technology is quite mature and used in several Nordic countries,” he adds. 

With plenty of space, wind, forests, and not many people, it’s clear that Finland was dealt a good hand in the fight against climate change – and it seems they’re playing it well.