In addition to comprehensive domestic and EU-level monitoring, Finland’s progress in climate actions has now been assessed from an investor’s perspective with the expansion of the ASCOR framework evaluation to 70 countries in 2024. Countries need to enhance their ambition and accelerate climate action to mitigate climate change. Among high-income countries, however, Finland ranks in the top quarter in terms of both its emission reduction pathways and policy actions.*
How are climate change adaptation and mitigation progressing in different countries? ASCOR (Assessing Sovereign Climate-related Opportunities and Risks) is an initiative and open tool by and for investors who wish to assess sovereigns from a climate change perspective. ASCOR published its first independent assessment of the climate actions of 25 countries in 2023, and in 2024, the assessment was expanded to 70 countries, including the Nordics. The assessed countries now cover a total of 85% of global greenhouse gas emissions and 90% of the world’s GDP. The country-specific assessments are updated annually, with the next round scheduled for late 2025.
The ASCOR tool allows for the examination of sovereign issuers from a risk and opportunity perspective. The tool is divided into three themes – the first focuses on emission reduction pathways, where both historical emissions and future targets are examined. The second theme comprehensively assesses existing policy actions on climate change mitigation, adaptation, and a just transition. The third theme, climate finance, evaluates each country’s participation in international climate finance and the transparency of its climate action costs to taxpayers.
ASCOR does not rank countries but aims to support investors in assessing sovereign climate risks by providing comparable data on how sovereigns are managing their transition, physical and social risks.
Finland’s strengths: an early carbon neutrality goal and comprehensive carbon pricing
In the ASCOR assessment, the areas where Finland stands out are its climate legislation, early carbon neutrality goal, and comprehensive carbon emissions pricing.
Finland’s Climate Act was reformed in 2022. Its key contents include Finland’s goal of becoming carbon neutral by 2035, its emission reduction targets based on the recommendations of Finland’s Climate Panel, and the obligation of strengthening carbon sinks. Of the 70 assessed countries, only 7 have committed to a carbon neutrality goal that is earlier than 2050, and only 2 have a goal that is earlier than Finland’s. The Climate Act also reinforced Finland’s climate policy planning system, which includes 4 plans (medium-term and long-term climate plans, the national climate change adaptation plan, and the land use sector’s climate plan). In other words, the institutional foundation of Finland’s climate actions is strong.
The graph shows the net zero target years for 70 countries assessed against the ASCOR framework on a timeline. Finland’s target is carbon neutrality by 2035. Carbon neutrality means that emissions and sinks must be balanced, meaning greenhouse gas emissions are at most equal to removals.
As part of its approach to carbon pricing, Finland relies on the EU Emissions Trading System and a carbon tax, which Finland was the first country in the world to implement in 1990. While most developed countries have a carbon tax and/or emissions trading system, or a combination of both, their coverage can be low. In the ASCOR assessment, only 9 of the 62 high-income countries have a carbon pricing system that covers more than 50% of national carbon dioxide emissions and whose carbon prices are in line with the targets of the Paris Agreement – that is, exceeding the minimum price per tonne of carbon dioxide, which was USD 75 in 2023. Finland is among these countries.
More is required from sovereigns – Finland’s emission reduction trend comparatively strong
The Paris Agreement’s goal is to limit the rise in global average temperature to below 2 degrees and keeping it below 1.5 degrees. Effective emission reductions are needed to stay within this limit.
The Finnish Government reports on its greenhouse gas emissions to the European Commission and the UNFCCC Secretariat, as required by international agreements. The ASCOR framework uses a different source, so the figures representing historical emissions or emission reduction trends are not the same as those used by the Finnish Government. However, the emission reduction trend is clear. According to the ASCOR methodology, Finland’s total emissions have decreased by an average of -5.7% per year over the last 5 years, which is significantly higher than the average of all assessed high-income countries (-1.9%). For comparison, according to the data reported by Statistics Finland, Finland’s total emissions decreased by an average of 3.6% per year from 2017 to 2022, and by as much as 6.2% per year from 2018 to 2023.
Finland’s greenhouse gas emissions have decreased significantly as of late, especially in energy production, where the use of fossil fuels has been replaced by nuclear, hydro and wind power. Emissions decreased particularly strongly in 2023 – by 10% in all – with the first full year of operation of the Olkiluoto 3 nuclear power plant, continued investment in wind power generation, and a marked increase in hydropower production.
Finland’s greenhouse gas emissions have decreased significantly in recent years, especially in energy production, where the use of fossil fuels has been replaced by nuclear, hydro and wind power.
The 2030 target in Finland’s Climate Act aims to reduce total emissions by 60% compared to the level recorded in 1990. The EU is collectively committed to the goals of the Paris Agreement, and as an EU member state, Finland’s emission reduction pathway for 2030 is set by binding EU legislation, which includes annual emission quotas. In other words, the ASCOR assessment does not provide a country-specific estimate of whether Finland’s 2030 target is in line with the 1.5-degree target. According to the Finnish Government’s latest estimate, the projected emission reduction trend for 2030 is close to the target level, but it will require additional measures, which have been estimated at 1.3 million tonnes of CO2 equivalent.
Countries challenged by international climate financing
International climate financing was a timely topic in 2024 due to the COP29 climate conference held in Baku, Azerbaijan. The conference agreed on a new climate finance target of USD 300 billion, replacing the current annual target of USD 100 billion. This goal must be achieved by 2035.
The ASCOR assessment, however, indicates that only 19% of developed states participate in international climate financing with sufficient contributions relative to their economic size. Finland is not among these nations. Finland supports climate actions in developing states as part of its development financing efforts, which have been subjected to cuts during the current government term.
Achieving the goals of the Paris Agreement will require a reduction in the use of fossil fuels. The ASCOR assessment shows that only a few countries have committed to a deadline for ending their fossil fuel subsidies. Finland also provides indirect subsidies for fossil fuels, such as lower tax rates. However, Finland has also enacted a law that bans the use of coal in energy production by 2029. Finland is poised to phase out the use of fossil fuels in electricity and heat production within the next few years, possibly ahead of schedule.
Finland’s Annual Climate Report 2024: additional measures required, especially in the land-use sector
Detailed, sector-specific information on Finland’s climate actions can be found in the Finnish Government’s Annual Climate Report. It examines the general development of greenhouse gas emissions and the sufficiency of the planned measures in relation to the national climate targets and Finland’s EU obligations. The preparation of the Annual Climate Report is mandated by Finland’s Climate Act.
Finland’s climate goals
Finland’s climate targets are defined by EU legislation and Finland’s Climate Act. Finland’s EU-level commitment is to halve its emissions in the effort-sharing sector – such as transport and agriculture – by 20301. At the EU level, a specific level of carbon sinks has also been agreed for the land-use sector for 2030, and that there should be no net emissions from the land-use sector between 2021 and 2025.
The goal of Finland’s own national Climate Act is to reduce emissions by 60% by 20302 and achieve carbon neutrality by 2035. Carbon neutrality means balancing Finland’s emissions with its carbon sinks.
1 Compared to the 2005 level
2 Compared to the 1990 level
The graph shows the development of Finland’s greenhouse gas emissions from 2005 to 2023. The development is presented both excluding (total emissions) and including (net emissions) the land-use sector. LULUCF stands for land use, land-use change and forestry.
According to the latest Annual Climate Report published in June 2024, Finland needs to take additional measures to achieve its goals. Additional measures are needed across all sectors, and especially in the land-use and effort-sharing sectors.
Finland’s greenhouse gas emissions decreased by 10% in 2023 – and by 19% in the emissions trading sector. The decline in emissions was mainly achieved as a result of the transition to clean electricity production. Finland’s electricity production is already nearly emissions-free.
The effort-sharing sector’s emissions in Finland decreased by 4% in 2023. Emissions decreased in all emission categories, including transport and agriculture, which represent the sector’s largest emission sources. Overall, the effort-sharing sector’s emissions have decreased slowly compared to the emissions trading sector and in relation to climate targets. There is currently uncertainty about whether Finland will achieve its EU commitments for the effort-sharing sector.
In the land-use sector (land use, land-use change, and forestry), Finland is clearly falling short of its EU commitments for 2021–2025. To cover its deficit, Finland can attempt to purchase carbon sink units from other member states. The land-use sector was a source of emissions for Finland in 2023. The carbon sink of forests has been on a downward trend for several years, mainly due to increased logging activities. The Finnish Government is committed to actions that will strengthen its carbon sinks in the land-use sector.
Sources:
– *Table 3.1. in State of Transition in Sovereigns 2024: Tracking national climate action for investors. Transition Pathway Initiative Centre (TPI Centre), November 2024.
– Finland country assessment, ASCOR 2024 (data collected 23 August, 2024)
– Annual Climate Report 2024 (Ministry of the Environment, Finland)
– Statistics Finland: Emissions in the energy sector continued to decrease in 2023 – the land use sector was a significant source of emissions (15 January 2025)
