Finland’s final Recovery and Resilience Plan (RRP) was presented by the Ministry of Finance on May 26, 2021 after prolonged discussions with the Commission. The most considerable changes to the first draft were the details on the milestones and the targets of the plan, as well as the selection criteria for funded projects. The plan is part of a larger Green Growth Programme in the context of Finland’s 2035 carbon neutrality target, that also includes measures additional to the RRP. The expected total sum to be received through the EU Recovery and Resilience Facility (RRF) is €2.1bn, roughly 1 % of Finland’s GDP. This report summarizes of the climate implications of the RRP and its contributions to the green transition. Due to the structure of the RRP, case-by-case analysis was not practical for some investments and thus they were analysed at an aggregate level. Overall, Finland’s recovery measures have the potential to make a very positive contribution to the green transition.
Green Spending Share
We find that Finland’s draft recovery plan (RRP) achieves a green spending share of 42%, above the EU’s 37% benchmark. Furthermore, we find that 5% (€0.1bn) may have a positive or negative impact on the green transition depending on the implementation of the relevant measures, illustrating the importance of further scrutiny during the further planning, review and implementation of the recovery measures. According to the government, the plan’s climate spending share is 50%. The divergence between these assessments can likely be explained by the fact that we were forced to assess wider components instead of individual measures in some cases due to missing information, which has led to less positive overall assessments.
This report was written by Rasmus Sihvonen (The Finnish Innovation Fund Sitra) and Felix Heilmann (E3G). We are grateful to Oras Tynkkynen, Tatu Leinonen and Antonios Sfakiotakis (The Finnish Innovation Fund Sitra) as well as Jacqueline Klingen and Helena Mölter (both Wuppertal Institute) for providing valuable inputs.
The plan takes a wholistic approach to a long-term climate transformation and the funding is allocated on a wide spectrum, and our analysis confirms that it will likely exceed the EU’s 37% requirement on climate spending. In addition to sectors such as energy, buildings and mobility, the plan covers education, RDI and digitalization – all of which play an important role in the green transition.
The national criteria for green recovery that were established in summer 2020 emphasized the importance of finding and using the synergies between climate change mitigation, adaptation, and enhancing biodiversity. Intentions to improve the condition of natural environment are expressed in the RRP and some the positive synergies are captured in the promotion of circular economy, but these issues do not receive significant investments. Planned direct investments to one of the sectors most relevant for the topic, the land use sector, remain relatively small at €30m.
Bioeconomy plays an important role in Finland’s economy due to the forest industry being among the largest in the country. Becoming a leader in bio-products is highlighted as a target in the RRP but in light of this the planned investments of overall €30m are surprisingly little. Bio-products are also mentioned as one of the RDI investment candidates, but there are no further details on direct funding.