Environment at a Glance Indicators

Finland

This country profile features selected environmental indicators from the OECD Core Set, building on harmonised datasets available on OECD Data Explorer. The indicators reflect major environmental issues, including climate, air quality, freshwater resources, waste and the circular economy, biodiversity, and selected policy responses to these issues. Differences with national data sources can occur due to delays in data treatment and publication, or due to different national definitions and measurement methods. The OECD is working with countries and other international organisations to further improve the indicators and the underlying data.

Context

Finland is highly integrated into the global economy with a prominent industry sector, in particular wood and paper products, and manufacture of electronic and optical products. After a long period of lacklustre economic performance following the 2008-09 financial and economic crisis, robust economic growth resumed in 2015-16. Gross domestic product (GDP) growth remained healthy until the COVID-19 pandemic, albeit lower than the OECD average. Nevertheless, GDP per person remains above the OECD and OECD Europe averages.

Finland is one of the most sparsely populated and “rural” countries in the OECD. The density per square kilometre varies, however, from 2 inhabitants in northern Finland (Lapland) to 185 in the south (Helsinki-Uusimaa). The Finnish population, which enjoys a generally high level of well-being, has a deep relationship to nature and the countryside. Energy intensity is high due to the cold climate, long distances and some heavy industry.

Finland is the most northern country in the European Union. Over one third of its land extends north of the Arctic Circle. Nearly three-quarters of land are covered by forests, which support a strong forestry industry. Known as the country of thousand islands, Finland also has vast freshwater resources, in addition to a long coastline along the Baltic Sea and many of Europe’s peatlands. Finland is one of the most wetland-rich countries in Europe. In addition, the country also endows chromium, iron, copper, lead, zinc, nickel and peat. Finland has almost no domestic fossil fuel resources. It has a relatively clean energy mix, largely due to the country’s leading role in producing bioenergy from residues of the forest industry.

Finland is a unitary state with strong local governments. It has 19 regions, which have important responsibilities in spatial planning and education. The Åland region (with a majority Swedish-speaking population) is autonomous with its own competence in environmental matters, including legislation and implementation.

Climate change

GHG emissions peaked in 2003 and have since been declining. They stabilised around 2015 levels in recent years, reflecting the resurgence of the economy since 2015. The COVID-19 pandemic outbreak and associated reduction in activity and consumption led to a further decline of emissions in 2020.

Emissions decreased in all sectors but agriculture. The energy industry and manufacturing sectors showed the largest declines due to a shift from fossil fuels and peat to low-carbon energy carriers (electricity, biofuels). Other factors that played a role include the 2008 financial crisis and stronger policies (e.g. carbon pricing, and renewable support and mandates). The land use, land-use change and forestry (LULUCF) sector has been historically a net sink in Finland, except in 2021, when it turned to be a small emitter. Forests (trees and soil) absorb a significant proportion of CO₂ emissions. Yet absorption decreased in 2014-18, mainly because of higher harvest levels in the forestry sector and a decrease in forest tree growth. Finland is one of the few OECD countries that achieved absolute decoupling of both production-based and demand-based (footprint) CO₂ emissions from real GDP since 2010. In 2020, they declined by 11%, due to the Covid-19 pandemic and the associated restrictions put in place to contain its spread.

Per person intensities of both production-based and demand-based (footprint) CO₂ emissions are above the OECD Europe average.

Energy mix

Both the energy intensity of the economy and energy consumption per person are high due to the cold climate, a low population density and a relatively large share of energy-intensive industries.

Finland has a low dependence on fossil fuels, thanks to nuclear power and a significant domestic production of renewable energy. The share of renewables has increased steadily over the past decade, mainly driven by more use of solid biomass but also of wind power and biodiesel. Most renewable energy is generated from bioenergy (solid and liquid biofuels), produced from wood residues from Finland’s large forest industry.

Air quality

Air emissions

Emissions of major air pollutants have significantly declined. Emissions of sulphur oxides (SOx) fell due to more stringent EU regulations and a shift towards cleaner fuels. Nitrogen oxides (NOx) emissions declined due to improved vehicle technology. Emissions of fine particulate matter (PM_2.5) and carbon monoxide (CO) fell in the early 2010s before levelling off in the second half of the decade. Finland reached its 2020 Gothenburg Protocol objectives for SO₂, NOx, non-methane volatile organic compounds (NMVOCs) and ammonia (NH₃) emissions.

NOx and CO emission intensities are high due to Finland’s relatively old vehicle fleet and to the higher share of coal, peat and biomass burning.

Emission reductions went on par with air quality improvements. Air quality in Finland is among the best in the OECD and is nearly uniform across the territory. Population exposure to PM_2.5 concentrations remains however above the new guideline value of 5 µg/m³ recommended by the World Health Organization.

Freshwater resources

Finland is rich in water resources. Inland waters cover a tenth of the country’s surface area and shorelines extend over 336 000 km. More than half of the population live within 500 m of a river, lakeshore or seashore. Renewable freshwater resources available per person are among the highest in the OECD. Water abstraction intensity is low in international comparison.

Finland has a high treatment efficiency of urban wastewater. Most (85%) wastewater is treated in plants with tertiary (“advanced”) treatment. The remaining 15% of the population rely on independent wastewater treatment due to the large number of sparsely populated areas of the country.

Waste, materials and circular economy

Municipal waste

The generation of municipal solid waste per person is high and continues to increase. Finland has seen a massive shift from landfilling to incineration in the last decade, stimulated by a ban on landfilling of organic waste and the tax on the landfilling of reusable waste.

Material consumption

Material productivity has improved, but remains low. Domestic material consumption (DMC) decreased sharply after the 2008-09 economic crisis but increased significantly afterward. As in most OECD countries, non-metallic minerals account for the largest share of DMC, driven by construction materials. The share of fossil energy materials has decreased while that of metals more than tripled since 2000.

Biodiversity

Nearly all of Finland is in the boreal coniferous forest zone. Finland is a country of wet habitats and many European wetland habitat types are primarily found in the country. Roughly two-thirds of Finland’s land area was originally mire. However, two-thirds of this former mire area have been substantially altered during the 20th century, mostly through drainage for forestry and, to a lesser extent, agriculture. The decline and degradation of habitats is the single largest pressure for species. In addition to mires’ drainage, intensive forestry and associated reduction of old growth forests and large trees, as well as decreasing amounts of dead and decaying wood also led to the degradation of forest and woody habitats.

Finland hosts approximately 48 000 animal and plant species, representing about 30% of total species described for Europe. The latest assessment of 2019 showed that every eighth species is threatened (12% of assessed species) and 1% is regionally extinct, an increase compared to the previous assessment of 2010. The highest proportion of threatened species is found among birds, and reptiles and amphibians. The majority of threatened species live in forests and in various rural biotopes including those resulting from traditional agricultural practices. Farmlands cover only 9% of Finland’s terrestrial area, but host up to 18% of the country’s threatened species.

Protected areas

Finland declared to have achieved the Aichi target of conserving at least 17% of its terrestrial areas and inland waters by 2020. This share includes statutory protected areas on state-owned and private land (protected by government resolution), sites reserved for nature conservation in the process of being officially established, and sites under “other effective conservation measures” (not considered in the above graphic). Marine protected areas coverage is above the Aichi target of 10%. This includes Natura 2000 sites and Ramsar sites. About 8.2 % of the country’s land is covered by protected areas that have had management effectiveness assessments and the same is true for 3.8 % of the EEZ. Protected Area Management Effectiveness (PAME) evaluations, can be defined as: “the assessment of how well protected areas are being managed – primarily the extent to which management is protecting values and achieving goals and objectives" (Hockings et al. 2006).

Policy instruments

This section shows selected policy instruments based on data available for most OECD countries and does not provide a complete overview of countries’ policy mix to achieve their environment-related objectives. Interpretation should consider the country specific context.

Environmentally-related taxation

Finland’s level of taxation is among the highest in the OECD, which partly explain the fact that environmentally related taxes as a share of GDP are well above the OECD and OECD Europe averages. Revenue from environmentally related taxes decreased during the 2008-09 financial crisis, recovered in 2011 and has been declining since 2016 (3.1%), to 2.4% of GDP in 2022. The increase of nominal rates of energy taxes offset the effect of a decrease in taxable energy consumption and the shift to cleaner fuels, which are taxed less. Revenue from energy taxes as a share of GDP is projected to further decline (by 0.6 percentage points by 2030) with electrification and a massive switch to biofuels.

As in most OECD countries, energy taxes raise most (roughly two-thirds) of environmentally related tax revenue. Transport-related taxes account for the remaining third, which is a high share compared with most other OECD countries. As in many other countries, environmental taxation on pollution or resource use is negligible in terms of revenue.

Government support to fossil fuels and effective carbon rates (ECR)

Finland implicitly supports the consumption of fossil fuels through favourable tax treatments, such as reduced energy tax rates to lower the cost of energy consumption in industry, transport and agriculture sectors. The two largest measures are the Reduced energy tax rate on diesel used for transport and the Reduced energy tax rate for light fuel used in mobile machinery (with transport fuel rates as its benchmark). Recently, the government set a target to halt the use of oil heating in all local and central government properties by 2024. In 2022, the single largest expense was targeted assistance to households and a temporary reduction in the VAT rate on electricity from 24% to 10%..

Like many other EU countries, Finland puts a price on GHG emissions via energy and carbon taxes, and participation in the EU Emissions Trading System (EU ETS). Overall, slightly over 40% of GHG emissions are priced and 13% are priced above 120 EUR/tonne of CO₂. These shares increase to almost 90% and 25% respectively, when excluding emissions from the combustion of biomass, meaning that most emissions from biomass are not taxed.

Technology and innovation

Finland is a leader in investing in clean energy technology but government budgets for environment-related R&D accounts for a relatively low share of total government R&D. This reflects the fact that most R&D spending occurs in the business sector.

Despite a drop in public and business R&D expenditure, Finland remains slightly above the OECD average in terms of share of environmentally-related in total patent applications. The absolute number of patent applications is also relatively high, given the small population.

Environment-related Official Development Assistance (ODA)

Finland’s development co-operation prioritises the rights and status of women and girls; sustainable economies and decent work; quality education; peace and democracy; and climate change and the sustainable use of natural resources. Finland’s total official development assistance (ODA) (USD 1.6 billion) increased in 2022 due to in-donor refugee costs. It represented 0.57% of gross national income (GNI). In 2020-21, Finland committed 28.6% of its total bilateral allocable aid in support of the environment and the Rio Conventions (DAC average of 34.3%), up from 23.8% in 2018-19. Nine percent of screened bilateral allocable aid focused on environmental issues as a principal objective, compared with the DAC average of 11.3%. Twenty-seven percent of total bilateral allocable aid focused on climate change overall (the DAC average was 29%), up from 20.9% in 2018-19. Finland had a slightly greater focus on mitigation (21.1%) than on adaptation (19.5%) in 2020-21. Five percent of total bilateral allocable aid focused on biodiversity (compared with the DAC average of 6.5%), up from 3.6% in 2018-19.

References and further reading

GoF (2019), Sixth National Report to the Convention on Biological Diversity, Government of Finland, Helsinki, https://chm.cbd.int/database/record?documentID=243215

OECD (2023), "Finland", in Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/2dcf1367-en.

OECD (2022), OECD Economic Outlook, Volume 2022 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/62d0ca31-en.

OECD (2021), OECD Environmental Performance Reviews: Finland 2021, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/d73547b7-en.

IEA (2018), Energy Policies of IEA Countries: Finland 2018, Energy Policies of IEA Countries, IEA, Paris, https://doi.org/10.1787/9789264308220-en.

UNEP-WCMC (2024), “Protected Area Profile for Finland”, the World Database of Protected Areas, www.protectedplanet.net