Finland’s government increases funding for environmentally harmful subsidies despite potential savings

Finland’s centre-right government led by Prime Minister Petteri Orpo has allocated additional funding to subsidies deemed harmful to the environment, even as it implements spending cuts elsewhere, Yle reports.

The budget framework decision includes increased support for peat burning, reduced carbon dioxide taxes on fuels, diesel rebates for professional transport, and regional flights—measures critics argue undermine the country’s climate goals.

The Finnish Association for Nature Conservation condemned the move, noting that billions in savings could have been achieved by cutting environmentally damaging subsidies. Instead, the government expanded funding for fossil peat, regional aviation, and professional diesel use.

“These decisions send the wrong signal,” said Tapani Veistola, the association’s executive director, highlighting that wood-burning tax subsidies alone cost €440 million annually—far exceeding the new allocations.

### Mixed climate signals
Jyri Seppälä, chair of Finland’s Climate Panel, acknowledged some positive elements in the budget, such as continued support for clean industrial investments and energy-efficient building renovations. However, he criticised measures reinforcing fossil fuel dependence, including:
– Extended tax relief on CO₂ emissions from fuels
– Lower vehicle taxes
– Diesel rebates for heavy transport

“These steps suggest the state will intervene whenever fossil fuel prices rise,” Seppälä said, stressing the need to reduce oil dependency across sectors.

The government also earmarked €8 million annually to secure peat supplies for combined heat and power plants, despite market pressures already phasing out its use. A further €10 million was allocated to maintain peat reserves until 2030.

While the budget preserves biofuel distribution mandates—a relief for climate advocates—experts warn that overall policies risk delaying Finland’s 2035 carbon neutrality target.