Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Abstract

Finland has pledged to cut net greenhouse gas emissions to zero by 2035 and has sectoral targets for deploying electric vehicles, phasing out coal generation, and oil-based space heating. Fiscal policies at the national and sectoral level could play a critical role in achieving these objectives. Carbon dioxide emissions are already priced significantly in Finland but prices vary substantially across fuels and sectors. The paper discusses a reform to both scale up, and progressively harmonize, pricing while using revenues to address equity issues. It also discusses the potential use of revenue-neutral feebate schemes to strengthen mitigation incentives for the transportation, industry, building, forestry, and agricultural sectors.

A Principal-Agent Approach for the Effective Design of a Renewable Energy Incentive for a Heavily Subsidized Residential Sector: The Case of Qatar

“…As a result, with subsequent reforms in 1997, 2008, 2011, and 2013, Finland has reduced 23% of its total emissions in 2020 compared to 1990 [12]. Being an early adopter of the carbon tax, Finland has pledged to be carbon neutral by 2035 [13]. Similarly, in 1991 Sweden became the second country to impose a tax on carbon emissions and has successfully decreased its emissions by 27% between 1990 and 2018 [14].…”