The ambitious target was announced in a resolution on the development of the hydrogen industry adopted by the Finnish Government on 9 February. According to the resolution, the Government aims to produce at least 10% of EU’s greenhouse emissions -free hydrogen by 2030, enabling Finland to become a leading European hydrogen power throughout the value chain. This will require massive investments in the Finnish hydrogen sector, as currently, only approximately 140,000 – 150,000 tonnes of hydrogen are produced in Finland annually (accounting for approximately 1.5% of all hydrogen production in the EU), 99% of which is produced from natural gas through steam methane reforming.
The Government anticipates that the fast-growing domestic renewable energy sector, in particular the onshore and offshore wind power sectors, will act as a catalyst for the green hydrogen industry in Finland over the next few years. A continuous growth of the renewable energy production combined with increased investment in electricity transmission capacity will enable a significant overproduction of greenhouse emissions -free electricity compared to the current demand. The Government expects that the prospect of an abundant supply of green electricity over the next decade will spark investments in the Finnish hydrogen sector throughout the value chain. Other competitive advantages for hydrogen production in Finland mentioned in the resolution include the predictability and legal security of the operating environment, in particular with regard to permit procedures and land use planning.
In order to further increase the potential for the production of green hydrogen, the Government resolution includes an extensive list of measures that should be taken in various sectors to create a competitive and predictable investment environment for the hydrogen economy. Such measures include:
- developing both the existing electricity grid, as well as the national hydrogen transmission infrastructure (in respect of which the responsibility for the latter has been allocated to the state-owned transmission system owner Gasgrid Finland Oy and its hydrogen transmission subsidiary);
- ensuring appropriate resourcing of permitting authorities and that green hydrogen projects enjoy priority in the permitting processes as part of the new “fast track” permitting system (please see our previous article on the fast-track system for more information);
- examining Carbon Contracts for Difference (CCfD) or similar cost-sharing agreements as potential incentives that could be used at a national level to foster a low-carbon industry;
- piloting of hydrogen use in traffic and a target of at least of 3% of all fuels to be electrofuels by 2030.
Government resolutions are political statements that guide preparation of matters but have no binding legal effect. Finnish parliamentary elections will take place in April 2023, and it remains to be seen whether, and to what extent, the resolution will be taken into account in the programme of the new government formed based on the results of the election, which will take office in the fall. However, the timing of the adoption of the resolution at the very end of the period of the current Government suggests that the opportunities related to hydrogen economy as part of the green transition have widely been recognised across the political spectrum, and it would consequently be surprising if hydrogen was not among the priorities on the political agenda of the next government as well.
HPP’s market-leading Energy & Infrastructure team will continue to monitor the development of hydrogen-related initiatives, and are to answer any queries that you may have. It should be anticipated that such developments will present significant business and investment opportunities for both domestic and international funds with an interest in the funding, development or operation of businesses focused on this rapidly-developing sector.