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Statement: Dissolving first thinning arrears and utilizing energy peat are means of ensuring security of supply in the coming years | Oulun

09.03.2022 / Last updated 00:00

Russia's reprehensible attack on Ukraine has ushered in a new era in Europe. The strained global political situation also affects Finland, which for years has imported some of its energy needs from Russia, and raises questions about ensuring Finland's security of supply of energy. The energy companies operating in urban environments believe that in order to ensure the energy needs of the coming winters, Finland must advance self-sufficiency and security of supply quickly, even through increased bioenergy production. Dissolving first thinning arrears in reforestation and extending the use of energy peat for the next few years are quick ways to do this.

Full use of forestry side streams

About one-fifth of Finland's energy chips are imported from Russia, and it is the general perception that the discontinuation of energy imports from Russia will not cause immediate problems for Finland. However, in rapidly changing circumstances and in a strained global situation, it is necessary to look beyond the next few months and prepare measures to secure Finland's energy needs for the next heating seasons.

The energy companies operating in urban environments believe that fuel wood imported from Russia can be replaced, among other things, by increasing the production of domestic fuel wood especially by attending to first thinning arrears. According to the National Forest Inventory (NFI), there are almost half a million hectares of Finland's reforestation with arrears to be tended to. In addition, there are almost one million hectares of first thinning arrears, and low-grade timber harvesting subsidies (Kemera aid) can be granted for some of this area. In 2020, a record amount, 1.8 million cubic meters, of wood was imported from abroad for energy use, and forest chips accounted for 24% of the imports, which Bioenergia ry considers to be a strategically high share. An amount corresponding to nearly twenty years’ worth of imported chips can be harvested responsibly and sustainably for energy use from our country's young reforestation tending arrears.

However, increasing domestic fuel wood production requires decisive action. The energy companies operating in urban environments believe that dissolving first thinning arrears must be one of the ways to ensure the availability of fuel wood in the event that the import of fuel wood from Russia is discontinued. This objective can be furthered by increasing the amount of Kemera aid allocated to harvesting low-grade timber and by changing the conditions of the subsidy. In recent years, not all of the subsidies have been used even though we can see that wood will be needed to replace peat. This is a clear sign that the conditions set to receive the subsidy are not practical. The flaws in the conditions of the subsidy can be found in the grounds for payment and in the level of support. Currently, the subsidy is paid per hectare, which is why the amount of the subsidy per cubic meter of wood harvested is highest in areas of low concentrations of fuel wood. The most urgent tending arrears and the best areas of fuel wood are in dense areas with a lot of low-grade timber. To put these areas on the market, the subsidy paid must be high enough per cubic meter of wood harvested in order for the harvesting of low-grade timber to be profitable. These areas also have the greatest forest management benefits.

Encouraging forest owners to carry out thinning with financial support will increase the amount of fuel wood available. In addition, by dissolving the arrears, it is possible to improve the value increment and health of forests and to reduce the energy use of commercial wood usable by industry.

The energy companies operating in urban areas consider it important to ensure the availability of domestic fuel wood in connection with the possible discontinuation of fuel wood imports from Russia.

Energy peat as a security of supply fuel for the coming years

The energy use of peat is expected to be halved by 2030, but in practice it has already been considerably phased out and use has decreased dramatically. According to the National Emergency Supply Agency (Maaseudun Tulevaisuus, February 28, 2022), Russia's energy chips can no longer be replaced by peat because peat will not be dug next summer.

The energy companies operating in urban areas believe that, as a result of the crisis caused by Russia, the role of peat as a fuel for security of supply should be reconsidered: Finland must ensure the production of energy peat for the following heating seasons by creating economic conditions for peat producers to continue production and ensuring that there are market-based conditions for the storage of energy peat. Decisions on actions to be taken must be made during March 2022 to allow for peat extraction to begin in the coming summer season.

The energy companies operating in urban areas propose the following measures to ensure the continuity of energy peat production:

  • The peat tax for heat generation must be temporarily abolished
  • The price of emissions allowances for peat use must be temporarily reduced and/or compensated
  • Peat producers must be compensated for the maintenance of production peatlands for a sufficient area
  • The legislative period to phase out peat production must be extended in order to maintain the economic conditions for entrepreneurs to continue production
  • The legislative period for scrapping peat machinery must be extended in order to avoid excessive scrapping of machinery
  • Peat security of supply must be instituted in the balance sheet of the National Emergency Supply Agency

Finland's energy dependence on Russia can be broken, but, to quote the President of the Republic, it must be done carefully—without delay, but with care.

As nationally and regionally significant energy companies and security of supply providers, we hope to be heard,

Alva-Yhtiöt Oy
EPV Energia Oy
KSS Energia Oy
Kuopion Energia Oy
Lahti Energia Oy
Lappeenrannan Energia Oy
Oulun Energia Oy
Pori Energia Oy
Seinäjoen Energia Oy
Tampereen Sähkölaitos Oy
Turku Energia Oy
Vaasan Sähkö Oy
Vantaan Energia Oy