The role of renewable fuels in reducing transport emissions – Case Finland
Finland has set an ambitious goal to halve domestic transport emissions by 2030 and to achieve completely fossil-free transport by 2045. AFRY Management Consulting examined the role of renewable fuels in achieving the Finnish emission reduction targets.
The climate targets of Finnish road transport cannot be reached without renewable fuels such as liquid biofuels, biogas and synthetic eFuels. Despite rapid electrification, renewable fuels are needed to cut emissions from existing vehicle fleet which renews slowly. They also have a particular role in decarbonising heavy-duty vehicles. Overall, half of the 2030 transport emission reduction target has been planned to be reached with renewable fuels.
Renewable fuels are an effective and straightforward way to reduce road transport emissions since every fuel distributor must blend a specific energy content of renewable fuels in accordance with the annual target of the Distribution Obligation Act. At the beginning of 2022, the distribution obligation was 19.5%, and it is to rise to 34% in 2030. Due to high energy prices, the distribution obligation was temporarily lowered to 12% in the summer of 2022 for the rest of the year. However, renewable fuels have had a moderate impact on pump prices: The overall impact of the distribution obligation on the price of diesel was estimated at ~0.25 euros per litre in early 2022.
Finland is the world leader in advanced biofuels, influenced by one of the highest and most progressive renewable biofuel distribution obligations. Strong forestry and agriculture sectors provide waste and residues for domestic renewable fuel production, which promotes a circular economy and sustainable agriculture. Moreover, the potential for additional wind power provides a competitive edge for eFuel investments. Thanks to long-term political support, Finland has gained unique technology and engineering expertise as well as flagship investments – which promote high-value exports when transport emissions are cut globally.
This report was commissioned by the Bioenergy Association of Finland together with BioEnergo, Gasum, Neste, Nordfuel, Finnish Biocycle and Biogas Association, and UPM.