Finnish forest giant UPM received €140 million in state aid over six years despite consistent profits

Finnish forestry company UPM has received €140 million in state subsidies between 2020 and 2025, making it the largest recipient of business support in Finland during that period, according to data from the Ministry of Economic Affairs and Employment. The findings, reported by national broadcaster Yle, reveal that the company secured funding despite remaining profitable and paying dividends throughout the same years.

UPM, one of Europe’s largest paper and pulp producers, stated that the subsidies were essential for maintaining international competitiveness. The funds were primarily allocated to offsetting emissions trading costs, supporting electrification projects, and developing renewable diesel for vehicles. According to Stefan Sundman, UPM’s vice president of corporate relations, the subsidies helped cover expenses related to electricity, raw materials, personnel, and transportation.

“We’ve built electric boilers, acquired bio-based fuels for our plants, and advanced renewable diesel production,” Sundman said. He argued that while UPM could operate without subsidies, every measure to improve competitiveness—including state aid—played a role. The company also highlighted its tax contributions, paying approximately €3.7 billion in taxes and tax-like fees over the six-year period.

Sundman emphasized that subsidies helped sustain existing jobs and industrial operations in Finland, forming the backbone of the national economy. However, critics argue that such support primarily props up outdated industries without fostering innovation or efficiency.

Researcher: Electrification subsidies were poorly designed

Maria Wang, a senior researcher at the Research Institute of the Finnish Economy (Etla), criticized the electrification subsidies granted to energy-intensive industries like UPM. According to Etla’s analysis, the subsidies—totaling €150 million annually since 2021—failed to significantly improve productivity, revenue, or energy efficiency among recipient companies.

“This was not a well-designed or implemented subsidy,” Wang said. “It may have even reduced incentives to cut consumption, since it compensated companies for electricity costs—despite Finland already having low electricity prices. Many recipients also produce their own electricity.”

Wang noted that the link between the subsidies and new investments or technological development remained unclear. While she welcomed the subsidy’s upcoming expiration this year, UPM warned that competing nations, such as Germany, offer far larger electrification supports—potentially undermining Finland’s relative attractiveness for industrial operations.

Government prepares new investment subsidies

The criticism comes as Finland’s government, facing rising national debt, has distributed roughly €7 billion in business subsidies to 121,000 companies between 2020 and 2025. Despite recent budget cuts in other areas, authorities are now drafting new investment incentives for businesses, though details remain undisclosed.

UPM’s dominance in subsidy rankings stems from its status as Finland’s largest electricity consumer, with its energy subsidiary ranking as the country’s second-largest power producer. The company’s consistent profitability and dividend payments have fueled debate over whether such substantial public support remains justified.