FINLAND: An Introduction to Energy & Natural Resources
Energy Sector
The overarching aim of the Finnish government’s energy policy is to position Finland as a global leader in the transition to a green economy. Finland aims to be a world leader in zero-emission energy systems, the hydrogen economy and other climate and environmental solutions. The share of renewable energy will be further increased and actions will be taken to improve energy efficiency and accelerate the transition to fossil-free transport and heating with an overall aim to become carbon neutral by 2035.
To attract new green transition investments into Finland, in 2024 the government introduced a fixed-term tax credit for investments of at least EUR50 million supporting the climate-neutral economy. The amount of the credit is 20% of the qualifying investment costs up to EUR150 million per group of companies. The investment types qualifying for the credit are investments (i) accelerating the roll-out of renewable energy and for energy storage (eg, production of renewable hydrogen, derivatives thereof, such as e-methane); (ii) related to decarbonisation of industrial production processes and for energy efficiency measures; and (iii) in sectors strategic for the transition towards the net-zero economy (production of batteries, solar panels, WTGs, heat pumps, electrolysers, and equipment for carbon capture usage and storage). Investments into electricity production are not eligible. The application for the tax credit must be submitted in 2025 so that the decision for the tax credit can be given by 31 December 2025.
In order to achieve the above goals, Finland has taken action to further improve the conditions for green investments – eg, by streamlining permitting procedures through a new siting permit which bypasses the lengthy land-use planning procedures, and by granting priority to green investments in permit and appeal procedures.
Finland aims to account for 10% of the EU’s clean hydrogen production and for at least the same percentage of hydrogen use. Whereas the national work to implement RED III is still ongoing, the first industrial-scale renewable hydrogen plant (electrolyser capacity of 20 MW) has started operating, with the aim to increase its capacity to 1 GW by 2031. Furthermore, several significant hydrogen (and derivatives thereof) projects are planned to be commissioned within the next few years. Additionally, the national gas transmission company Gasgrid has been given the task of developing a national hydrogen transmission network and a network in the Baltic Sea region. Based on current regulation, it seems that a significant amount of renewable energy projects will need to be constructed in order to be able to reach the targets for Finnish renewable hydrogen projects. In addition to hydrogen projects, several major data centre projects have been announced in the last few months, which are expected to increase demand for renewable electricity.
Wind power is the biggest renewables production technology in Finland, and, based on investment decisions made to date for new projects, onshore wind power is expected to surpass nuclear energy and become the leading technology in terms of production volume before 2030. According to the Finnish Renewables Association, wind power production increased by 20% in 2024 compared to 2023.
There is strong political will for offshore wind power development in Finland, both in territorial waters and within the Finnish Exclusive Economic Zone (EEZ). According to estimates by Fingrid and Gasgrid, the production capacity of offshore wind will reach 4–9 GW by 2040. Currently, there is one offshore wind farm in operation, and many projects in various phases of project development in Finnish territorial waters. With respect to projects within the Finnish EEZ, a new EEZ Act entered into force in January 2025, which includes provisions regarding a tender process regarding the right to develop projects in areas identified by the government. The government is expected to announce the first areas and the schedule for the first process in the near future.
The development of the solar PV sector continued to accelerate in 2024, and this trend is expected to continue in 2025; several larger projects are currently being planned on former industrial sites and forest-based areas, where projects are often developed as hybrid projects in connection with wind projects.
The increase in electricity production has raised the need to develop reserve and balancing power projects, and the number of BESS projects is increasing steadily. Moreover, the government plans to promote opportunities to build small modular reactors (nuclear), as well as pumped-storage hydropower projects. The government also intends to conduct a study to create a cost-effective capacity mechanism (an auction) that will ensure a sufficient amount of available electricity at all times. Incentives will be created for weather-dependent electricity production to participate therein; otherwise, other measures will be taken to secure necessary regulating power.
Mining Sector
Finland has good potential for minerals required for green transition technology, such as nickel, lithium, cobalt and graphite as well as rare earth metals. This potential has led to increased interest, activity, and investment in mineral exploration. According to reports on the Finnish mining industry published by the Ministry of Employment and the Economy and the Finnish Mining Authority (Tukes) in 2024, the metal ore, carbonate rock, industrial rock and industrial mineral mining (in total, 46.8 million tonnes) reported from 39 mines in 2023 decreased by 6% from 2022. A total of 32.4 million tonnes of metal ore (eg, gold, chrome, copper, nickel, zinc, cobalt and silver) was extracted from nine metallic mineral mines. The total extraction of mines (128.1 million tonnes) increased by 7.3% from 2022. The total investments into Finnish mines (EUR380 million) increased by 26% from 2022. Companies’ investments in ore exploration in Finland (EUR94 million) increased by 16.9% from 2022.
The European Union’s Critical Raw Materials Act (CRMA) came into force in May 2024. CRMA aims to strengthen the EU’s capacities along the different stages of the value chain (extraction, processing and recycling) of the identified critical raw materials and improve the EU’s self-sufficiency in them. According to the CRMA, projects concerning, for example, the production and processing of critical raw materials identified as “strategic projects” are eligible for streamlined permitting processes and easier access to financing. Some provisions of the CRMA are expected to speed up the permit-granting process for critical raw material projects (such as mines).
The mineral potential in Finland includes many minerals listed as critical minerals, such as cobalt, copper and battery-quality nickel. National implementation of the CRMA is currently ongoing; a draft legislative proposal on the implementation was given in November 2024 and the changes are expected to enter into force during 2025. Finland will use the opportunity offered by the CRMA to extend the permitting timelines for strategic projects if the requirements for the extension governed by the CRMA are met.
The new Finnish Mineral Strategy published in December 2024 examines the current state and national goals of the Finnish mineral sector and the safeguarding of industrial raw material supply. Efficient implementation of the CRMA and planning of incentives for the introduction of the best technologies and circular economy solutions are included in the six main objectives identified in the strategy.