Renewable energy use exceeds use of fossil energy, and biogas included in the distribution obligation

In 2020, the use of renewable energy in total energy consumption surpassed the use of fossil energy. The rapid increase in the price of emission allowances promotes investments in renewable energy and their use. The biogas sector will advance with the introduction of the distribution obligation and the guarantee of origin system. These were the conclusions of a thematic report on renewable energy published on 18 January 2022.

In 2020, the total consumption of renewable energy was 140 terawatt hours (TWh). The share of renewable energy sources in the end-use energy consumption rose to 44.6%, which meant that Finland clearly exceeded the 38% target set by the EU for the use of renewable energy sources. This surplus also enabled the statistical transfer of 1.9 terawatt hours to Belgium for a price of approximately EUR 26 million. Even after the transfer, the proportion of renewable energy in Finland’s end consumption remained high (43.9%).

At 74%, wood-based energy sources were the most significant source of total renewable energy consumption in 2020. Biogas production totalled 877 gigawatt hours (GWh) and its consumption 733 GWh. The remaining 144 GWh were burned off in a flare stack system.

Including biomethane in the biofuel distribution obligation from the beginning of this year may increase the demand for biogas, especially as a transport fuel, and improve the profitability of biogas projects. This will also improve their eligibility for financing. Under the legislation currently in force, the distribution obligation will gradually rise from 19.5% at present to 30% by 2029.

Other measures that promote biogas production include extending the scope of the guarantee of origin system to biogas and streamlining permit procedures. However, the future price level under the guarantee of origin will ultimately determine the impact of the system on a biogas company’s financial performance and profitability.

The need to reduce greenhouse gas emissions has a major impact on the auto industry too. The greatest uncertainty regarding the wider use of biogas is the availability of gas vehicles in the future. Due to the regulation, auto manufacturers must significantly reduce carbon dioxide emissions.

The proposal on the zero emissions of passenger cars from 2035, which is included in the EU’s ‘Fit for 55’ package, one-sidedly favours the introduction of electric and hydrogen cars. This would mean that the development of biogas use in transport would focus exclusively on heavy vehicles and shipping. In addition, the thermal energy required for industrial processes can be produced with biogas very easily.

Business Sector Services are expert services provided by the Ministry of Economic Affairs and Employment that collate, analyse and distribute information about the operating environment for companies and the development of sectors.

Inquiries
Markku Alm, Sector Manager, Southwest Finland Centre for Economic Development, Transport and the Environment, tel. +358 40 086 4945 and email. firstname.familyname(at)ely-keskus.fi
Katri Lehtonen, Development Director, Ministry of Economic Affairs and Employment, tel. +358 29 506 4926 and email. firstname.familyname(at)gov.fi
​​​​​​​Outi Vilén, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 016 and email. firstname.familyname(at)gov.fi