Background information

Through amendments to the Act on the Promotion of Renewable Fuels in the Transport Sector 446/2007 [Laki uusiutuvien polttoaineiden käytön edistämisestä liikenteessä, or colloquially ‘jakeluvelvoitelaki’], the government of Finland is lowering the targets for the share of renewables in transport fuels as compared to earlier statutory requirements from 2025 onward. The required share is still rising as compared to the 2024 level, but slower than previously ruled.

The government is also implementing a flexibility mechanism to the distribution obligation. During the same process of amendments, the government is implementing changes to national legislation as required by the adoption of the RED III Directive. The Directive sets a target for the renewable share of transport fuels to be 45% by the year 2030.

The aim of the amendments is to lower the cost of transport fuel for end users. The amendments enter into force on 1 January 2025.

Content of measure

The purpose of the Act on the Promotion of Renewable Fuels in the Transport Sector 446/2007 is to promote the use of renewable fuels as a substitute for petrol, diesel, and natural gas in the transport sector. The aim is to greenhouse gas emissions of transport and boost investment in biofuels.

The distribution obligation of renewable transport fuels was lowered temporarily during the living cost crisis of 2022 (See Case FI-2022-28/2962) to 12%. In 2023, it rose to 13,5%. Through an amendment to the Act, the government first froze the 2023 to be applied also in 2024. As per the earlier plan, the share was supposed to rise to 29% in 2025-2026 and to 30% in 2027.

As per the 2024 amendment, the level in 2025 is 16,5% in 2025, 19,5% in 2026 and 22,5% in 2027.

The flexibility mechanism implemented in 2025 entails that distributors can avoid the obligation of biofuel share by using other carbon offsets, such as proven use of biochar. The offsets can be used to compensate for a maximum of 5,5% of the distribution obligation.

Use of measure

As per the government proposal, the proposed distribution obligation levels would reduce the annual fuel costs for households by an average of approximately €58 per year during the period 2025–2027

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Applies to all citizens

Actors and funding

Actors	Funding
National government EU (Council, EC, EP)	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Consulted
Form	Not applicable	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Sectoral or branch level

Involvement

The government has invited several employers’ organisations and business associations, as well as government bodies and non-governmental organisations, to leave a written consultation to the government proposal. No trade unions were among those invited

Views and reactions

In their consultation response, the employers’ organisation The Chemical Industry Federation of Finland [Kemianteollisuus] criticises the government proposal for creating an insecure operating space which deters investment in renewable energy. Furhter, the organisation raises concern that the changes proposed by the government increases the risk that Finland will have to purchase emission reduction units from other EU member states as well as face challenges with the financing conditions of the EU's Recovery and Resilience Facility (RFF), according to which Finland should remain on the emission reduction path

Sources

• 05 June 2024: Government proposal HE 121/2024 [Hallituksen esitys HE 121/2024] (www.eduskunta.fi)
• 26 July 2024: Chemical industry federation consultation VN/11908/2023 [Kemianteollisuuden lausunto VN/11908/2023] (www.kemianteollisuus.fi)