Helsinski, 23 June 2022
A report published by the Finnish Ministry of Economic Affairs and Employment on 23 June 2022 evaluates the development of international and national funding for the green transition in the coming years and analyses its significance for the renewal of Finnish business and industry.
The report examines public funding as a whole and covers both the national business subsidy system and the EU funding sources. The focus is on the future role of the special assignment companies and agencies in the administrative branch of the Ministry of Economic Affairs and Employment in promoting the green transition and sustainable growth, while also taking their other statutory tasks into account. These companies are Business Finland, Finnish Industry Investment, Finnvera and Green Climate Fund.
According to the report, Finland must promote the funding of green transition in order to achieve the objectives on climate change and biodiversity and to renew the economic structure. Business opportunities related to the green transition are a key driver of companies’ investments in Finland. At the same time, sustainability criteria have become an equal part of the evaluation criteria when making decisions on investments and financing. A majority of the investments in the green transition are purely market driven.
The purpose of public funding is to supplement the private sources by distributing the risk and leveraging funding, especially to constraint areas. The funding ecosystem composed of actors in the administrative branch of the Ministry of Economic Affairs and Employment is already carrying out this task quite well. However, the sustainable financing market is developing fast, which means that the perspectives on the need for public interventions must be constantly updated and, where necessary, the operating models of the administrative branch must be reformed.
The conclusions of the report present the development needs related to financing the green transition from the perspective of the Ministry’s administrative branch. These include developing financial instruments to leverage private funding, integrating EU funding more closely with national funding, identifying activities not part of private funding and the public funding required for them, updating the regulatory environment to support the objective of green transition, and developing competence and cooperation both within companies and the administration of the Ministry of Economic Affairs and Employment.
The report’s findings and conclusions on areas of development in the activities of the administration of the Ministry of Economic Affairs and Employment represent the ideas of the Ministry and a group consisting of representatives of the Ministry’s administration. In support of its work, the group consulted several key players in the financial sector and their business customers. Gaia Consulting Oy has supported the group’s work by compiling material and by producing an overview of three key reference countries.
During the preparation of the report, the geopolitical operating environment changed significantly following Russia’s attack on Ukraine in February 2022. This has led to decisive measures to secure energy supply and to reduce energy dependency on Russia. This change will speed up the replacement of fossil energy with renewable energy sources and can accelerate the green transition too.
In January 2022, ministers Saarikko, Kari and Lintilä appointed a working group to form a comprehensive view of the financing of the green transition. Its purpose is to draw up proposals for financing measures to accelerate the transition in an economically, ecologically and socially sustainable manner. The authors of the report of the Ministry of Economic Affairs and Employment would like the working group on the green transition funding to examine the report’s conclusions and to use them in their work where applicable.