Strategies and costs for reducing CO2 emissions in Finland

In this study cost-efficient measures for the abatement of energy-related CO2 emissions in Finland are analyzed, and the direct costs of such measures are estimated. The time frame considered is the period up to the year 2010. Furthermore, the probable impacts of an energy/CO2-tax on the Finnish energy system are worked out, and an attempt is made to assess the effectiveness of a tax scheme as an economic instrument for achieving CO2 emission targets. The primary methodological tool in the analyses has been the model of the Finnish energy system developed at the Technical Research Centre of Finland (VTT) within the project. The model facilitates the search for cost-efficient emission control strategies over a period of several decades. Structural and technological changes in the energy system, e.g. fuel and technology substitution, new technologies, efficiency improvements, and energy-saving measures have been allowed for in the model. The results of the analyses show that achieving the target of returning the CO2 emissions to the 1990 level by the year 2000 would be very difficult and costly in Finland. In the case of a nuclear moratorium it would be reasonable to delay the target by ten years. Even in the delayed cases achieving the target would require extensive structural changes and substantial energy-saving measures in the absence of additional nuclear energy. Coal use would have to be severely restricted, whereas the use of biomass and natural gas should be more than doubled compared to the 1990 levels. According to the results, a CO2 tax would clearly be a more efficient instrument than a tax based on the energy content of a fuel