Government presents plan to halve transport emissions by 2030

The working group for fossil-free transport, led by the Ministry of Transport and Communications, has given their recommendations on how domestic greenhouse gas transport emissions can be reduced by half by 2030, and entirely nullified by 2045.

The working group has also studied methods by which international marine and aviation transport emissions could be reduced in Finland.

The recommendations are divided into four modes of transport: road, rail, water and air. They concern alternative power sources, the energy efficiency of vehicles and the transport system, and the pricing and taxation of transport.

"I thank the entire working group for their thorough work. It has demanded all their time, thought and cooperation. It's great that we're all committed to a common goal, to halve transport emissions by 2030," says Timo Harakka, the Minister of Transport and Communications.

"The final report and recommendations of the working group create a good basis for continuing the preparation of the roadmap for fossil-free transport at the Ministry of Transport and Communications. Although the working group's term is ending, the dialogue will continue," says the working group's chairperson Sabina Lindström, Director-General.

Transport causes a fifth of Finland's emissions. Road transport accounts for 94% of emissions in domestic transport. Maritime emissions are about 4% and domestic aviation emissions are about 2%.

Air transport is part of the EU emissions trading scheme. Rail transport accounts for less than one per cent of the transport emissions.

According to the baseline projection of transport-related greenhouse gas emissions, transport emissions will decrease by approximately 3.2 million tonnes by 2030 with the current actions. A further 1.55 million tonnes of carbon dioxide must be cut from road transport to halve emissions from the level of 2005.

Summary of the working group's recommendations concerning road transport:

1. Biogas and electric cars

The government proposal says that, in order to halve greenhouse gas transport emissions by 2030, fossil fuel consumption must be cut by half during the same period.

According to the working group, the overall energy consumption of transport must be reduced, and the scope of the law concerning the obligation to distribute must be expanded to biogas and synthetic, for example electric, fuels.

At the same time, gas-operated car targets must be revised upwards. The popularity of gas-operated heavy goods vehicles could be advanced by procurement support for heavy-duty vehicles.

Policy instruments for production, consumption and distribution infrastructure are required to promote the use of biogas in transport.

"We must ensure that gas-operated private cars and vans will be taken into account in future in the EU's threshold legislation concerning vehicle manufacturers so that the supply of vehicles remains stable," the government said in a press release.

"Finland's electric 2030 car target should be revised to as many as 700,000 cars, of which the majority will be fully electric. The popularity of electric cars should be promoted with economic policy instruments such as changes in vehicle taxation, fixed-term procurement support or an emissions trading scheme for transport."

The proposal also calls for improving the infrastructure for recharging electric cars especially in housing cooperatives and rural areas, where the market-based construction of recharging infrastructure may not be as efficient as in densely populated areas.

2. Incentives for zero-emission tech and fuels

According to the proposal, consumers, companies and the public sector "must be encouraged to invest in zero-emission technology and fuels."

According to the working group, key methods to renew the car fleet include a stronger pricing of carbon in transport than currently, possible changes to taxation, and other economic policy instruments such as scrapping rewards and procurement support.

"When the sale of new low-emission vehicles is accelerated, there will be enough low-emission vehicles in the used car markets, which low-income households can also afford," the group says.

The zero-emission target in heavy-duty vehicles can be promoted by introducing procurement support for electric heavy goods vehicles, for example. When promoting electric transport, attention must be paid to the ecological and social sustainability of battery production.

3. Efficiency of the transport system

The proposal also says energy efficiency of the transport system "must be improved so that private vehicle kilometres no longer increase after 2020 compared to the level of 2019."

Freight transport must also improve the efficiency of its energy consumption and transfer from roads to rail and water. Public transport, walking, cycling and other sustainable modes of transport must significantly increase their share of travel kilometres by 2030.

According to the working group, the most significant ways to enhance the transport system are solutions such as the coordination of transport and land use, sustainable infrastructure investment, the coordination of sustainable travel services, and the utilisation of digital technology and automation.

Adding support for public transport is one of the options the working group recommends.

The working group reminds that the operating prerequisites for public transport must be taken care of even in exceptional circumstances, because the coronavirus has driven passengers away from public transport and caused a funding crisis.

4. Transport pricing and taxation

The working group considered several different methods for pricing to reduce transport emissions. These include an emissions trading scheme for domestic transport, an increase in fuel taxation, the removal of the reduced tax rate for diesel, and road and rush-hour fees.

"Based on the literature and expert assessments, an emissions trading scheme and increase in fuel taxation would be the most efficient ways to reduce emissions," the government says.

The final report recommends a more indicative pricing of carbon than currently if the other options are insufficient to reach the emission reduction target in transport. In an emissions trading scheme for transport, the government would auction distribution rights for petrol and diesel. Their limited quantity could increase the price of fossil fuels in the long run.

According to the working group, an increase in fuel taxation may be an alternative to the emissions trading scheme.

The Ministry of Finance is currently renewing the taxation and fees concerning sustainable transport, which aims to reduce transport emissions. The working group will give its recommendations in the spring of 2021.

The working group emphasises that the potential increase in fuel prices should be compensated for low-income households, residents of rural areas, and companies in the export market.

"If the emissions trading scheme or other pricing mechanism is to be introduced, we must first ensure that the system is fair. In practice, this could be ensured with varying income transfers or tax reductions. In addition to compensation, the government should support and promote the fair transfer to zero-emission transport throughout Finland," the working group added.

Next steps

The preparation of the roadmap for fossil-free transport will continue at the Ministry of Transport and Communications based on this report and impact assessments.

Decisions in principle concerning the reduction of greenhouse gas emissions in road transport (a draft for the roadmap for fossil-free transport), aviation, as well as sea and inland waterway transport, will be open for comments at the end of the year.

Decisions in principle should be made at the start of 2021.