Finance Ministry official criticises preparation of EU climate policy
Raimo Sailas, a top official at the Finnish Ministry of Finance, has sharply criticised what he sees as poor preparation of the climate policy of the European Union.
"It is truly a cause for concern that decisions of very great economic significance are made on the basis of such weak background work", said Permanent Secretary Sailas on Tuesday at a gathering of an association of Finnish economic journalists.
Sailas was referring to a decision made in March by the European Council, in which the EU countries committed themselves to increasing the proportion of renewable energy to 20 per cent. In calculations put forward as a basis of the decision, Finland's potential share of renewable energy was said to be as high as 45 per cent.
"There had been calculations that Finland could use tidal and wave energy. This is the level of background work by the Commission", Sailas blasted.
Tidal and wave energy can be utilised primarily on the coasts of oceans. The waves in the Gulf of Finland will not yield much energy, and there are no tides to speak of on any of Finland's coasts.
At present Finland gets 25 per cent of its energy from renewable sources, which is one of the highest proportions in the EU. The figure is attributable to the pulp industry, which generates a large proportion of the electricity that it uses from substances produced in its own processes.
Sailas feels that a realistic goal for the proportion of renewable energy in Finland would be no more than about one third, and even that would require tough measures.
Climate policy took centre stage in a report on the strategy of economic policy, which was published by the Ministry of Finance on Tuesday.
The report calculates the implications that the March decision by EU leaders to reduce greenhouse gas emissions by 20 per cent from the 1990 level by 2020 would have for Finland. If other Western countries join in the effort to cut emissions, the EU will seek a reduction of up to 30 per cent.
The European Commission calculates that efforts at cutting emissions will reduce regional GDP in 2020 by about three per cent from the level that it would have been if there were no efforts to reduce greenhouse emissions. The calculations are based on the assumption that all industrialised countries would have committed themselves to cutting emissions, and that the more prosperous developing countries would also have taken action on the matter.
According to the Finance Ministry's report, the impact would be much greater on Finland than on the EU countries on average. Just keeping emissions at the 1990 level would already have a greater impact on the Finnish economy than a 20 per cent reduction would have on the EU countries on average. The Finnish economy is especially vulnerable to emission cuts, because the climate is cold, the industrial base is very energy-intensive, and the location of the country is fairly remote.
Emission cuts of 20 per cent would reduce Finnish GDP in 2025 by 3.4 per cent compared with a situation in which there were no reductions. This could mean the loss of 40,000 jobs, if the country is not able to adapt to the changes.
The costs incurred by the EU would be significantly lower if the EU were to allow the acquisition of emission quotas from Third World countries by financing investments that cut greenhouse gas output in those countries. Cutting emissions in developing countries is much cheaper than in the EU, where the cheap means have largely been already implemented.
The Government Institute for Economic Research (VATT) calculates that Finnish GDP would be reduced by just one or two per cent if Third World projects were taken into account.