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Environmental Policies Made by the Finland Government Research Paper

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Updated: Oct 20th, 2021

This research is based on the various policies that were formulated by the government of Finland to promote sustainable development through the proper use of its natural resources. To accomplish this government of Finland came up with various policy instruments to protect its environment, and these policy instruments were based on government legislation for instance:

  • Water act
  • The air pollution control act and
  • The chemical act.

All these legislations were based on the taxes that were charged on the electricity usage and the voluntary management systems.

The above legislations that were formed by the government to act as environmental policy instruments had various positive feedback, and one of the main functions was to direct major industrial pollutants in solving the existing environmental problems.

The trust and openness between the operators and authorities is a major factor to ensure the success of the implementations of various legislations that aimed in protecting the environment. This type of approach that has been developed by the government and all its shareholders has made it possible for the Finish firms to adopt the environmental management system and a wide-open mind towards environmental reporting. The idea to give permits to individuals and firms has not resulted in innovations, but they have contributed to the eradication of belief of waste management at the end of drainage, this idea has contributed to innovations by expanding the market for environmentally better technical solutions. The permit system has indirectly contributed to innovations by creating a demand for environmental education and environmental experts.

Due to the massive response and consequence to Regulatory instruments, there have been developments of various Networks which have appeared to have had t greatest significance before the permit procedures by the government. The tendency has been towards a better emphasis on the communication in the networks before the presentation of an application to ensure a smoothly functioning permit process. In the networks causative to innovations and the dispersion of innovations authorities have largely been outsiders, except when an innovation has become a de facto standard for permit conditions.

In Finland, the sources of nitrogen oxides and sulfur dioxide are mainly in energy production. Nitrogen oxides are also emitted from the transport sector and ammonia emissions in agriculture. The following are some of the sources of air pollutants in Finland.

  • Emissions of acidifying compounds and particles
  • Heavy metal emissions
  • Emissions of persistent organic compounds
  • Emissions by source sectors

Prevention is better than cure

The government of Finland was able to change its policies on environmental instruments on several occasions to take into action the issues of control and preventive measures rather than the corrective ways on means to repair the already degraded environment.

Environmental instruments used in Finland

Legislative controls

The Finland government was able to pass legislation that can control and prevent harmful environmental substances from harming the environment. In addition to these, other environmental legislation that has been put in place to do the following main function:

  • prevent the use of harmful substances
  • To set targets and limits on emissions
  • To set certain technical standards.
  • To make producers responsible for their products as waste.
  • To cut down the extent of certain activities in particular areas such as nature reserves.
  • To control land use planning.

Sustainable development in the legislation

The Finland government has been successful in bringing in the concept of sustainable development into Finnish legislation for instance the Building Act was enacted to enforce the responsibilities of builders and landowners on taking care of the environment. The Local Government Act was also introduced by the government to give power to the local authority to deal with environmental issues at the local level. Eventually, in 1996 the government introduced the Nature Protection act.

The Environmental Protection Act

The Environmental Protection Act by the Finland government has been able to implement the European Union directive on Integrated Pollution Prevention and Control, which encourages the European Union member, states to integrate the control of emissions caused by industry.

The principles of the Environmental Protection Act are:

  • the avoidance or the control of damages to a low level i.e. the caution and precaution – principle
  • The application of the best available technology.
  • The best practice from the perspective of the environment.
  • The polluter pays-principle

With the incorporation of environmental laws, pollution can be controlled and prevent efficiently since the environment is considered as a whole. The adoption of environmental permits is narrowed down to one authority, and all the environmental effects of the activity will be assessed during the consideration of the permit. Scientific solutions that have been shown to save energy as much as likely and that are at the lowest possible cost will be applied to reduce emissions1.

The environment protection act defines more explicitly, and in a more integrated manner, the necessities of environmental permits and the fundamentals for yielding a permit. The consent necessities are not, however, stricter, and actions that require a permit have not been added to the legislation.

Environmental permits

One of the requirements by any firm or individual when carrying out any activity that could risk the healthy state of the environment is a permit from the local authority. According to Finland’s environmental protection act, permits are needed for all activities involving any risk of pollution of the air and water or soil. One of the main reasons for giving permits is to ensure that environmental pollution is at its lowest level of occurrence.

Economic instruments

As one looks keenly you will find that legislative policies mainly consist of enforcements and restrictions or putting of barriers but economic instruments are designed to provide more positive financial incentives to promote more favorable forms of production and consumption of available resources. Therefore the Economic instruments include:

  • Selective taxes on environmental polluters.
  • Subsidies by the government to encourage environmental protection.
  • Grants
  • Tax exemptions for patriotic companies and individual citizens.

The encouraging factor is that the local authorities are in place and actively involved to make sure that the measure is implemented and are working. Although in another type of economic instrument, the authorities can also set favorable frameworks for financial transactions within the private sector2.

Economic instruments for water pollution control

One of the major tasks of Finland’s municipal councils is to ensure that their people get fresh water daily and the polluted water is treated in a better way. The treatment of polluted water and water provision within the municipality are financed by the money collected from users of water in every municipality. Both Water and waste tariffs are decided separately by each municipal council.

In addition to volume charges, where an individual or a firm is only allowed to have a certain volume of polluted water within their environment, there are fixed components for example a connection charge designed to cater for the production and maintenance costs of the municipality in water service management. Industrial firms often get their sources of water directly from surface water or groundwater sources and therefore they are is responsible for the treatment of their polluted waters.

Economic instruments for waste management

Another function of Municipalities is to make sure that wastes have been collected, they have undergone treatment and they are safe to reuse by all households. Waste disposal service charges are laid down at levels covering the cost of the service. In 2007 an act that states that waste charge was introduced by the government and the more waste an individual has the more the charge. The average municipal waste charge was estimated at €100 per tonne for treatment plus roughly the same for collection3.

Informative measures

Public education is very important for the general awareness of environmental issues therefore it is vital that the authorities should also use softer policy instruments to improve the general understanding and awareness of the public on these issues relating to the environment. Extensive research and monitoring work must be supported and publicized, and public awareness of environmental issues should be increased through education and special training.

Voluntary measures

Apart from these legislations and governmental initiatives on environmental issues, companies and other organizations can adopt a variety of market-based measures voluntarily to show their contributions towards improving the environment. This can also be done by signaling environmental prevention commitment by the government, it shows a good gesture to conserve the environment.

Protecting the ozone layer

The government has also put into action the banning the use of ozone-depleting substances in all sectors of the economy for instance the manufacturing and the marketing industries. The use and export of ozone-depleting substances and products are generally prohibited in Finland. Ozone-depleting substances have never been produced in Finland.

The Control on the usage of ozone-depleting organic substances in Finland is supervised by the authorities as defined in the Environmental Protection Act, the Waste Act, and the Chemicals Act.

Protecting the air

The nitrogen dioxide emissions deriving from energy production constitute a major pollutant on the environmental and health problems. With a new combustion technique, nitrogen dioxide emissions from large combustion plants can be reduced at considerably less cost than by methods based on fuel gas cleaning. The main obstacle to reducing emissions is the continuous growth of energy consumption. For example, in Finland, specific air emissions from electricity generation have fallen but total emissions have not, since electricity generation and consumption have doubled during the same time.

Noise reduction

There are several ways to prevent the harmful effects of noise. It should be prevented at its source before spreading over, if it spread then it should be curbed, noisy activities should be located in appropriate areas, and sites that are exposed to noise need to be protected properly.

Disturbance and disruption due to noise also need to be taken into account when planning and implementing land use and transport and traffic schemes, and in con­nection with housing construction, renovation work, and the design, procurement, and use of vehicles and equipment.

The water protection

Finland’s water conservation and protection policy aim at conserving and protecting the water quality in lakes, rivers, and groundwater. The government has put up water policies that have been based on long-term strategies. The three national water protection programs identifying targets to be protected, measures to be taken and instruments have been prepared since the beginning of 1970 when the water act was introduced.

Soil protection

There is no specific legislation in place to protect the soil in Finland, but soils are protected and their sustainable use is ensured through legislation controlling the various activities that affect soils, such as construction, sand and gravel extraction, farming, and forestry. Pollution control Laws and nature conservation also helps to protect soils. In many dimensions, the Finland environmental laws, i.e. the precautionary standard, the polluter-pays rule, and the concept of shared accountability are applied effectively.

Chemical and environmental risks

On the chemicals and their effects on the environment, the government of Finland was able to come up with legislation that prohibits the use of those chemicals that are harmful to the environment, under the chemical act, individuals and firms are encouraged to use chemicals that have zero risks on the environment, or those that have less than one percent risk on the environment

Finland’s energy taxation system

Finland’s energy tax system consists of money that is paid on traffic fuels and heating fuels, and electricity. The paid fuel duty is made up of the basic obligation and additional responsibility. The basic duty is very important and it is the main one, a lot of emphasis is put into it to promote environmental protection. Therefore, lower tax rates are applied to encourage firms to reduce sulfur from reformulated petrol, as well as to disulfide diesel oil. The additional, environmentally-based duty is determined based on the carbon content of the fuel.

In addition to these, there is an output tax on electricity, which falls into two classes: a lower rate for industry and greenhouse cultivation and a higher rate e.g. households and the service sector. To enhance the competitiveness of renewable energy sources and to partly compensate for the tax, subsidies are granted to electricity produced by e.g. wind, small-scale hydropower, and recycled fuels4.


In the year 1990, the Finland government introduced a carbon dioxide tax at a rate of 13 percent for each tone of carbon dioxide at one’s disposal. The surtax on petrol, diesel oil, natural gas, and peat was also introduced but they were being charged at different rates. The tax was enacted to slow down the increase in energy consumption and to reduce harmful environmental impacts. From the beginning of 1995, the structure of energy taxation was changed so that a tax based on energy content was imposed on all sources of primary energy while at the same time an additional tax based on carbon content was imposed on fossil fuels.

The tax based on energy content did not apply to wood, wind energy, and waste fuel. The taxes based on energy and carbon content were in the form of a fuel surtax 40% of which came from the energy component and 60% from the carbon dioxide component.

Finland was the first country to introduce a tax on carbon dioxide emission; Finland was the first country in the world to introduce carbon dioxide tax in 1990. An additional tax duty is levied on fossil fuels in heat generation and transportation again is differentiated according to the carbon content of the fuel but there are low rates that are applied for natural gas and peat5.

Refundable taxes on renewable energy sources

To improve the competitiveness of renewable energy sources in the country, taxes on electricity produced by wind, wood, and wood-based fuels are refundable. Another sector that benefits from this scheme is those small-scale producers of hydropower and those individuals or a firm that produces their power from peat. Furthermore, electric energy and heat are subjected to the full twenty-two percent value-added tax. VAT is also enacted on the part of the product’s cost which includes the excise duty on fuels and energy sources.

There is also a national waste tax. There was a drastic increase in waste management charges in the years 1996-97 when the Waste Tax came into force. The Tax was given to waste disposed of in municipal dumping landfills. Disposal refund systems for drinks containers as well as the recycling fee for old tires have been introduced in the late 1990s.

Grants and subsidies

For the past number of years, supporting Finnish expertise in different fields has been a central aspect of Finnish government policy. Accordingly, the state of Finland gives subsidies and tax breaks to organizations that buy or export Finnish pollution control equipment. The Government also funds technology canters such as the Technology Development Center and the Technical Research Center of Finland, which have established environmental departments for research and development of new pollution control technology. As par, the case above of the state’s promotion, the development of R&D about GDP has been one of the fastest in the world. The rise of technology has led to arise of local competition in the market.

The effects of the program

By implementing the measures contained in the National Programme, emissions can be reduced to less than the obligations set for Finland for 2010. Most of Finland’s estimated reduction is based on the implementation of the existing Community legislation, particularly in the transport sector. The most important sub-sector is the tightening up of provisions on exhaust emissions from motor vehicles and other mobile sources. Another key factor affecting emissions consists of the expected changes in the Finnish energy generation industry.

Annual emissions of oxides of nitrogen dioxide are currently reducing at about 25 percent above the obligatory target level (170 kt/a), but they have further gone down to 180 kilotons by 2008 and to an estimated 155 kilotons by the target year 20103.

The most significant source of emissions is the transport sector, particularly road transport, plus non-road machinery. According to the latest VTT projections tightening up of regulations on motor vehicle emissions and legislation on fuel inside the EU will reduce annual nitrogen dioxide emissions in road traffic from the 1990 level (145 kt) by an estimated 110 kt by 2010. Nitrogen dioxide emissions from non-road machinery will also be reduced.

Annual emissions of volatile organic compounds (VOC) are currently around 25 percent above the obligatory target level (130 kt), but they have further reduced to 150 kt by 2005 and to an estimated 130 kt by the target year 20104. VOC emissions by non-road machinery and recreational craft will also be reduced. On top of this, the use of solvents in the industry is also going to be reduced by 2010.

The total quantity of emissions from the remaining sources will probably already have been reduced by 2010 to more or less under the earlier level as a result of Community legislation and national measures to limit emissions from small-scale fuel combustion.

Environmental insurance

At the beginning of 1999, the Act on Environmental Damage Insurance came into effect. Based on the Act compensation for environmental damage is granted in a case where the operator causing the damage is unknown or is found to be insolvent. Environmental damage insurance aims to ensure that compensation is awarded for the losses and for the prevention and remediation costs of the party that has suffered the damage.

The compensation system is financed by insurance premiums. According to the Act, the premiums are obligatory for private corporations whose operations involve a material risk of environmental damage or whose operations cause harm to the environment in general. This includes organizations whose activities require an environmental permit or a permit that the Safety Technology Authority grants for handling or storing a dangerous chemical. All compensation coming under the Act on Environmental Damage Insurance is handled by the Environmental Insurance Centre.


On concluding on the impacts of the various environmental policies put in place by the Finland government, the policies have had several positive effects in the context of directing major industrial point source polluters towards solving environmental problems. The environmental policy has, however, been only one of the factors reducing emissions. There have also been serious effectiveness problems, in particular in the early years of introducing the regulatory instruments. Some of these have been caused by inadequate resources of the administration to cope with the tasks created by the instruments, whereas others can be traced to a lack of political will to proceed with environmental protection at a rate that would otherwise have been technically and economically feasible. The principle of granting environmental permits for an indefinite time has reduced the effectiveness of air pollution control permits.

The regulatory instruments have in general been rather flexible in dealing with increasing environmental demands, but have had obvious difficulties concerning qualitatively new kinds of environmental problems and demands. In electricity taxation, the deliberate reduction of effectiveness is seen in the low taxation rates. Transparency has been an important thing that ensures the success of enacted policy instruments and avoiding the control that can thrive in a system based on negotiations between operators and authorities. The transparency has made it swift for Finland industries to take up environmental management systems and have an open attitude to environmental reporting.

Work Cited

  1. David Pearce & Edward B. Barbier, Blueprint for a Sustainable Economy, Earth scan Publications Ltd., London, 2001.
  2. R. Kerry Turner, David Pearce & Ian Bateman, Environmental economics: An elementary introduction. The Johns Hopkins University Press, Baltimore, 1993.
  3. Harris and Brian, Environmental Policy Instrument Mixes, OECD Publications, 2007.
  4. McGregor and Josiah, Environmental Policy in Europe. Palgrave publishers, 2001.
  5. Russell, M. E. Public Policy in the United States. New York: McGraw hill Publishers, 2002.


  1. Russell, M. E. Public Policy in the United States. New York: McGraw Hill Publishers, 2002.
  2. David Pearce & Edward B. Barbier, Blueprint for a Sustainable Economy, Earth scan Publications Ltd., London, 2001.
  3. Harris and Brian, Environmental Policy Instrument Mixes, OECD Publications, 2007.
  4. McGregor and Josiah, Environmental Policy in Europe. Palgrave Publishers, 2001.
  5. R. Kerry Turner, David Pearce & Ian Bateman, Environmental economics: An elementary introduction. The Johns Hopkins University Press, Baltimore, 1993.
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