Energy efficiency – a clear difference between stinginess and restricting consumption
The world has changed its course, and this is reflected on electricity markets. The energy and climate policy decision-makers must learn to perceive the bigger picture to enable the industry to reach its shared goal.
There is a saying in Finnish: “Years are not brothers”. This has been exactly the case when examining annual energy prices in recent years: In 2020, the pandemic turned the world upside down and cut off the growing energy consumption. That led to a decrease in fuel and electricity prices reaching their lowest levels in the 2000s. In 2021 world started to find its new balance until in early 2022, Russia’s war of aggression disrupted the energy market. In that same year, both fuel and electricity prices reached their highest point since the beginning of the 2000s.
These last three years show that years do vary, but when we look at the bigger picture, the long-term energy efficiency work shines through industries and decades. To a large extent, the last three years enabled Finland to meet its binding energy-saving obligation for 2014–2020. In Finland, the reporting of energy efficiency achievements in business and industry take place through voluntary energy efficiency agreements. As an energy-intensive industry, the forest industry covers the lion’s share of the energy-saving measures reported in Finland.
Contradictory targets stand in the way of development
When talking about promoting energy efficiency, the industry has known a key to success for a long time: reducing the amount of energy used to manufacture the product will also improve competitiveness and reduce emissions from manufacturing.
This concept should and must be maintained in the future as well, but there are some challenges to solve. For example, the reform of the EU Energy Efficiency Directive agreed in the spring ended up restricting the use of energy, but it didn’t properly distinguish the origin of the energy. Emissions trading is already guiding the industry to reduce its fossil emissions through a market mechanism.
When it comes to Finland, this limit on energy consumption is not in line with the country’s climate neutrality objective. At the same time, there is more discussion about the capture and utilisation of biogenic carbon dioxide, which would take up a considerable amount of energy but also help humanity break free from the yoke of fossil energy.
I genuinely believe that the intentions behind the Energy Efficiency Directive are good. However, creating contradictory targets will not assist the transition towards lower-emission technologies. When regulating the use of energy, there is a clear difference between stinginess and restricting consumption.
Investing in Finnish industry pays off
Although this is not the first time the years in the energy market have been more akin to distant acquaintances than brothers, I believe that some things in the energy markets have changed for good.
Emissions trading has already significantly raised the costs of using fossil fuels, and because we want to get rid of emissions faster, the costs are unlikely to return to the previous level. At the same time, the growing share of wind and solar power has increased price volatility in the electricity market. The price of consumed electricity and the emissions from its production are increasingly tied to time and place. This has introduced a new perspective alongside the traditional energy efficiency approach.
Finnish forest industry mills are more energy efficient and have lower emissions than those in our peer countries. Products made here replace higher-emissions products from competing countries and other products made from fossil materials. It is important to ensure that the energy ceiling agreed in the EU does not steer production away from Finland. Transferring production away from Finland would most likely increase global emissions, and move the export revenues of the national economy elsewhere.
It is also good to remember that investments and development activities that improve energy efficiency are constantly carried out at the mills of the Finnish forest industry. This, combined with increasing the use of renewable energy, means important developments in the efforts against climate change.
Learn more about energy action and energy efficiency measures in the Finnish forest industry here.