How could Finland promote renewable-energy technology innovation and implementation?

Abstract

Abstract Several major market failures are hindering renewable energy production. Probably the most significant one of these are negative externalities. Another issue hindering renewable energy production is low technological and commercial maturity. These technologies might not become commercially viable in the near future without state intervention. This study aims to analyse Finnish energy policy based on current legislation related to renewable energy production and budget policy related to renewable-energy subsidies. This study shows that the polluter-pays principle is implemented quite well in Finland due to the emissions trading scheme and taxation. Still, this principle is not entirely implemented in electricity production as electricity tax is not based on the carbon intensity of the fuel used, but rather on who uses the electricity. National subsidy policies focus on a short-term increase in renewable energy production as most subsidies are production subsidies granted through a bidding process, making these subsidy policies partly technology-neutral. These policies do not take into account long-term needs for energy policy as much as they could.