Commission Recommendation (EU) 2024/629 of 18 December 2023 on the draft updated integrated national energy and climate plan of Finland covering the period 2021-2030 and on the consistency of Finland’s measures with the Union’s climate-neutrality objective and with ensuring progress on adaptation

Official Journal EN of the European Union L series 2024/629 7.3.2024 COMMISSION RECOMMENDATION (EU) 2024/629 of 18 December 2023 on the draft updated integrated national energy and climate plan of Finland covering the period 2021-2030 and on the consistency of Finland’s measures with the Union’s climate-neutrality objective and with ensuring progress on adaptation (Only the Finnish and Swedish texts are authentic) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof, Having regard to Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and

(EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council(1), and in particular Article 9(2), and Article 14(6), thereof, Having regard to Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999(2), and in particular Article 7(2) thereof,

Whereas:

Recommendation on Finland’s draft updated integrated national energy and climate plan (NECP) of Finland covering the period 2021-2030

(1) Finland submitted its draft updated integrated national energy and climate plan on 30 June 2023.

(2) Article 3 and Annex I to Regulation (EU) 2018/1999 (‘the Governance Regulation’) lay down the elements that are to be included in the updated integrated national energy and climate plans. In December 2022, the Commission adopted the Guidance to Member States on the process and scope of preparing the draft and final updated national energy and climate plans(3). The Guidance identified good practices and outlined the implications of recent policy, legal and geopolitical developments in energy and climate policies.

(3) In connection with the REPowerEU plan(4), and as part of the 2022 and 2023 European Semester cycles, the Commission has put a strong focus on Member States’ energy and climate-related reform and investment needs to strengthen energy security and affordability by accelerating the green and fair transition. This is reflected in the 2022 and 2023 Country Reports for Finland(5) and Council Recommendations to Finland(6). Member States should take into account the latest country-specific recommendations in their final updated integrated national energy and climate plans.

(1) OJ L 328, 21.12.2018, p. 1.

(2) OJ L 243, 9.7.2021, p. 1.

(3) Commission Notice on the Guidance to Member States for the update of the 2021-2030 national energy and climate plans (OJ C 495,

29.12.2022, p. 24).

(4) COM(2022) 230 final.

(5) SWD(2022) 611 final, SWD(2023) 626 final.

(6) COM(2022) 611 Recommendation for a Council Recommendation; COM(2023) 626 final, Recommendation for a Council Recommendation.

ELI: http://data.europa.eu/eli/reco/2024/629/oj 1/7EN OJ L, 7.3.2024

(4) The Commission’s recommendations regarding the delivery of national targets under the Effort Sharing Regulation(7) (ESR) are based on the likelihood that the Member States will respect the 2030 targets, taking into account the rules for the use of flexibilities under the ESR.

(5) The Commission’s recommendations regarding Carbon Capture, Utilisation and Storage (CCUS) aim at having an overview of the intended deployment of these technologies at the national level, including information about annual volumes of CO planned to be captured by 2030, split by source of CO captured coming from installations 2 2 covered by Directive 2003/87/EC of the European Parliament and of the Council(8)or from other sources, such as biogenic sources or direct air capture; about planned CO transport infrastructure; and about potential domestic 2 CO storage capacity and injection volumes of CO planned to be available in 2030.

2 2

(6) The Commission’s recommendations regarding the performance under Regulation (EU) 2018/841 of the European Parliament and of the Council(9) (Land Use, Land Use Change and Forestry Regulation – ‘LULUCF Regulation’) address the delivery by the Member State on the ‘no debit’ rule for the period 2021-2025 (Period 1) and its national target for the period 2026-2030 (Period 2), taking into account the rules governing the use of flexibilities as set out in that Regulation. The Commission’s recommendations also take into account that in Period 1 any excess in emissions under the LULUCF Regulation will automatically be transferred to the ESR.

(7) The Commission’s recommendations on adaptation consider the extent to which Finland integrated in its updated NECP adaptation goals that account for climate risks that could prevent Finland from meeting the objectives and targets of the Energy Union. Water management in changing climatic conditions requires particular attention due to risks of electricity disruption as floods, heat and drought impact the energy production.

(8) The Commission’s recommendations regarding Finland’s renewable energy ambition are based on the formula set out in Annex II to Regulation (EU) 2018/1999, which is based on objective criteria, and on the main policies and measures missing in Finland’s draft updated NECP to enable a timely and cost-effective achievement of Finland’s national contribution to the Union’s binding renewable energy target of at least 42,5 % in 2030, with the collective endeavour to increase it to 45 % pursuant to Directive (EU) 2018/2001 of the European Parliament and of the Council(10) as regards the promotion of energy from renewable sources. The Commission’s recommendations are also based on Finland’s contribution to the specific targets of Articles 15a, 22a, 23, 24 and 25 of that Directive and the related policies and measures to rapidly transpose it and implement it. The recommendations reflect the importance of developing comprehensive long-term planning for the deployment of renewable energy, and in particular wind, to increase visibility for the European manufacturing industry and grid operators in line with the European Wind Power Package(11).

(7) Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement and amending Regulation (EU) No 525/2013 (OJ L 156, 19.6.2018, p. 26), as amended by Regulation (EU) 2023/857 of the European Parliament and of the Council of 19 April 2023 amending Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement, and Regulation (EU) 2018/1999 (OJ L 111, 26.4.2023, p. 1).

(8) Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

(9) Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework and amending Regulation (EU) No 525/2013 and Decision No 529/2013/EU (OJ L 156, 19.6.2018, p. 1), as amended by Regulation (EU) 2023/839 of the European Parliament and of the Council of 19 April 2023 amending Regulation (EU) 2018/841 as regards the scope, simplifying the reporting and compliance rules, and setting out the targets of the Member States for 2030, and Regulation

(EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review (OJ L 107, 21.4.2023, p. 1).

(10) Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82), as amended by Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 (OJ L, 2023/2413,

31.10.2023, ELI: http://data.europa.eu/eli/dir/2023/2413/oj).

(11) Communication on European Wind Power Action Plan COM (2023) 669 final, 24.10.2023, and Communication on delivering EU offshore renewable energy ambition, COM(2023) 668 final.

2/7 ELI: http://data.europa.eu/eli/reco/2024/629/ojEN OJ L, 7.3.2024

(9) The Commission’s recommendations regarding the national contribution to energy efficiency are based on Article 4 of Directive (EU) 2023/1791 of the European Parliament and of the Council(12) on energy efficiency; and the formula in Annex I to that Directive, and the related policies and measures to implement it.

(10) The Commission’s recommendations pay particular attention to the targets, objectives and contributions and related policies and measures to deliver on the REPowerEU plan in order to rapidly phase out dependence on Russian fossil fuels. They take into account lessons learnt from the implementation of the ‘Save gas for a safe winter’ package(13).

The recommendations reflect the imperative to make the energy system more resilient in light of the obligations stemming from Regulation (EU) 2019/941 of the European Parliament and of the Council(14)on risk preparedness in the electricity sector and Regulation (EU) 2017/1938 of the European Parliament and of the Council(15)on the security of gas supply and improvement of the energy storage in line with the Commission Recommendation on energy storage(16).

(11) The Commission’s recommendations take into account the need to accelerate the integration of the internal energy market to strengthen the role of flexibility and empower and protect consumers. The Commission’s recommendations also consider the importance of assessing the number of households in energy poverty in line with the requirements of Article 3 of Regulation (EU) 2018/1999, and Commission Recommendation

(EU) 2023/2407(17).

(12) The Commission’s recommendations reflect the importance of ensuring sufficient investments in clean energy research and innovation to boost their development and manufacturing capacities, including appropriate policies and measures for energy-intensive industries and other businesses; and the need to upskill the workforce for a net- zero industry in order to consolidate a strong, competitive and clean economy within the Union.

(13) The Commission’s recommendations build on the commitments taken under the Paris Agreement to phase down the use of fossil fuels, as well as on the importance of phasing out fossil fuel subsidies.

(14) The Commission’s recommendations on investment needs follows its assessment of whether the draft updated plan provides a general overview of investment needs to achieve the objectives, targets and contributions for all dimensions of the Energy Union; indicates the sources of financing, distinguishing private and public sources;

outlines investments consistent with Finland’s Recovery and Resilience Plan, Finland’s Territorial Just Transition Plans and the 2022-2023 country-specific recommendations issued under the European Semester; and includes a robust macroeconomic assessment of the planned policies and measures. The NECP should ensure the transparency and predictability of national policies and measures, to support investment certainty.

(15) The Commission’s recommendations reflect the crucial importance of ensuring early and inclusive consultation on the plan, including effective public participation with sufficient information and timeframe, in line with the Aarhus convention(18), as well as a wide regional consultation.

(12) Directive (EU) 2023/1791 of the European Parliament and of the Council of 13 September 2023 on energy efficiency and amending Regulation (EU) 2023/955 (OJ L 231, 20.9.2023, p. 1).

(13) Communication from the Commission to the European Parliament, the Council, the European economic and social committee, ‘Save gas for a safe winter’, COM(2022)360 final.

(14) Regulation (EU) 2019/941 of the European Parliament and of the Council of 5 June 2019 on risk preparedness in the electricity sector and repealing Directive 2005/89/EC (OJ L 158, 14.6.2019, p. 1).

(15) Regulation (EU) 2017/1938 of the European Parliament and of the Council of 25 October 2017 concerning measures to safeguard the security of gas supply and repealing Regulation (EU) No 994/2010 (OJ L 280, 28.10.2017, p. 1).

(16) Commission Recommendation of 14 March 2023 on Energy Storage – Underpinning a decarbonised and secure EU Energy system (OJ C 103, 20.3.2023, p. 1).

(17) Commission Recommendation (EU) 2023/2407 of 20 October 2023 on energy poverty (OJ L, 2023/2407, 23.10.2023, ELI: http:// data.europa.eu/eli/reco/2023/2407/oj).

(18) Convention on access to information, Public Participation in Decision-making and Access to Justice in Environmental Matters of 25 June 1998 (the ‘Aarhus convention’).

ELI: http://data.europa.eu/eli/reco/2024/629/oj 3/7EN OJ L, 7.3.2024

(16) The Commission’s recommendations on a just transition reflect the assessment of whether Finland’s plan identifies in sufficient depth the relevant social, employment and skills impacts of the climate and energy transition and outlines adequate accompanying policies and measures to promote a just transition, while contributing to the promotion of both human rights and gender equality.

(17) The Commission’s recommendations to Finland are underpinned by the assessment of its draft updated NECP(19), which is published alongside this Recommendation.

(18) Finland should take due account of the present recommendations when developing its final updated integrated NECP to be submitted by 30 June 2024.

Recommendations on the consistency with the Union’s climate-neutrality objective and with ensuring progress on adaptation

(19) Pursuant to Regulation (EU) 2021/1119 (the European Climate Law), the Commission is required to assess the consistency of national measures with the climate-neutrality objective and with ensuring progress on adaptation.

The Commission assessed the consistency of Finland’s measures with these objectives(20),

HEREBY RECOMMENDS THAT FINLAND TAKES ACTION TO:

CONCERNING THE DRAFT UPDATED NATIONAL ENERGY AND CLIMATE PLAN UNDER REGULATION

(EU) 2018/1999

1. Provide projections to show how the existing and planned policies and measures will deliver on the national greenhouse gas target of -50 % in 2030 compared to 2005 levels under the ESR. If necessary, specify additional policies and measures, including for methane, N O and F-gases from industrial processes and product use, agriculture 2 and waste management, or how flexibilities available under the ESR will be used to ensure compliance. Complement the information on the policies and measures, clearly spelling out their scope, timeline and, where possible, expected greenhouse gas reduction impact, including for measures in Union funding programmes, such as the common agricultural policy.

2. Identify the amount of CO emissions that could be captured annually by 2030, including the source. Provide details 2 on how the captured CO will be transported.

2

3. Set out a concrete pathway towards reaching the national LULUCF target as defined in Regulation (EU) 2018/841.

Include additional measures in the LULUCF sector, detailing their timing and scope and quantifying their expected impacts to ensure that greenhouse gas removals are effectively aligned with the contribution to the 2030 EU net removal target of -310 MtCO2eq and with the country-specific removal target of - 2889 Kt CO2eq. defined in Regulation (EU) 2018/841. Provide additional details about the planned measures in the LULUCF sector, including quantifying their expected impact in terms of removals or emissions.

4. Consider actions related to sustainable forest management, further examining reduction of conversion of forest land to other land (deforestation); carbon farming and long-lasting carbon-storing materials; integrated approaches such as nature-based solutions contributing to the objectives of ecosystems protection and restoration, as well as other environmental objectives; promoting and implementing energy efficiency measures related to biomass, including the supply of bio-based insulating materials. These considerations should include the assessment of the enhancement of such measures on all land sinks and reservoirs, as well as reducing the vulnerability of the land to natural disturbances. Ensure that methodological reviews carried out in the national inventories are consistent with the quantification of planned measures. Provide clear information on how public funds (both Union funds, including the common agricultural policy, and State aid) and private financing through carbon farming schemes are consistently and effectively used to achieve the net removal national target. Provide information on the status and progress to be made in ensuring the enhancements to higher tier levels/geographically explicit datasets for monitoring, reporting and verification, in line with Part 3 of Annex V to Regulation (EU) 2018/1999.

(19) SWD(2023) 914.

(20) EU Climate Action Progress Report 2023, COM(2023) 653 final, and Commission Staff Working Document – Assessment of progress on climate adaptation in the individual Member States according to the European Climate Law, SWD(2023) 932.

4/7 ELI: http://data.europa.eu/eli/reco/2024/629/ojEN OJ L, 7.3.2024

5. Better outline and quantify the link to the specific Energy Union objectives and policies that adaptation policies and measures should support.

6. Raise the ambition for a share of renewable energy sources of at least 62 % as contribution to the EU’s binding renewable energy target for 2030 laid down in Article 3(1) of Directive (EU) 2018/2001 as amended in line with the formula in Annex II to Regulation (EU) 2018/1999. Include an indicative trajectory that reaches the reference points for 2025 and 2027 pursuant to Article 4(a)(2) of Regulation (EU) 2018/1999.

7. Provide estimated trajectories and a long-term deployment plan for renewable energy technologies over the next 10 years, with an outlook to 2040. Include an indicative target for innovative renewable energy technologies in line with Directive (EU) 2018/2011 as amended. Include specific targets to contribute to the indicative sub-targets in buildings and industry for 2030, and the binding minimum level for renewable fuels of non-biological origin (RFNBOs) in in industry and transport by 2030 respectively.

8. Further develop detailed and quantified policies and measures in a way that enables a timely and cost-effective achievement of Finland’s national contribution to the EU’s binding renewable energy target of 42,5 % in 2030 with the collective endeavour to increase it to 45 %. Describe in particular the renewable energy technologies for which it plans to designate ‘renewables acceleration areas’ with faster and simpler procedures. Describe, how it aims to accelerate the deployment of renewables via the uptake of renewable power purchase agreements, guarantees of origin and an enabling framework to promote self-consumption and energy communities. Specify how the design of the obligation on fuel suppliers in the transport sector will be covered and include comparable measures for promoting hydrogen in industry and prepare the EU for renewable hydrogen trade.

9. Include an assessment of the domestic supply of forest biomass for energy purposes in 2021-2030 in accordance with the strengthened sustainability criteria of Article 29 of the Directive (EU) 2018/2001 as amended, and of the compatibility of the projected use of forest biomass for energy production with Finland’s obligations under the revised LULUCF Regulation, particularly for 2026-2030, together with national measures and policies ensuring such compatibility. Include further measures to promote the sustainable production of biomethane, given Finland’s sustainable biogas/biomethane potential and production, profile of natural gas consumption and existing infrastructure, digestate use and biogenic CO applications.

2

10. Provide to the extent possible an expected timeline of the steps leading to the adoption of legislative and non- legislative policies and measures aimed at transposing and implementing the provisions of Directive (EU) 2018/2001 as amended, in particular for the measures mentioned in the previous points.

11. Include a national energy efficiency contribution on final energy consumption to the EU’s binding final energy consumption target for 2030 in line with Article 4 and Annex I of Directive (EU) 2023/1791, or equal to the corrected indicative national contribution that the Commission will submit to each Member State by 1 March 2024 under Article 4(5) of that Directive. Include a national energy efficiency contribution on primary energy consumption in the EU’s indicative primary energy consumption target in line with Article 4 and Annex I of Directive

(EU) 2023/179. Include the amount of energy consumption reduction to be achieved by all public bodies disaggregated by sector and the total floor area of heated and/or cooled buildings owned by public bodies to be renovated yearly or corresponding yearly energy savings to be achieved. Also include the amount of cumulative energy savings to be achieved over the period from 1 January 2021 to 31 December 2030 and, where relevant, an

explanation on how the annual savings rate and the calculation baseline were established.

12. Set out complete policies and measures to achieve the national contributions on energy efficiency and how the Energy Efficiency First principle will be implemented. Specify robust energy efficiency financing programmes and support schemes able to mobilise private investments and additional co-financing. Set out energy savings measures to ensure the achievement of the required amount of cumulative end-use energy savings by 2030.

ELI: http://data.europa.eu/eli/reco/2024/629/oj 5/7EN OJ L, 7.3.2024

13. Include an updated ambition level to ensure a highly energy-efficient and decarbonised national building stock and to transform existing buildings into zero-emission buildings by 2050, including intermediate milestones for 2030 and 2040, and a comparison with the most recent long-term renovation strategy. Include more information on related measures for buildings, the funding of those measures, and provide their expected impact on energy savings.

14. Strengthen the resilience of the energy system, in particular by setting an objective for energy storage deployment.

Specify appropriate measures for the diversification and long-term supply of nuclear materials, fuel, spare parts and services, with special regard to the alternative supplies for the Loviisa NPP (VVER-440 units), and the long-term management of nuclear waste. Provide details on the alternative plan(s) to substitute the low-carbon generation capacity of the cancelled Hanhikivi NPP. Assess the adequacy of the oil infrastructure (refinery, oil stocks) with the expected decline in oil demand and the move toward lower-carbon alternatives.

15. Put forward clear objectives and targets, in particular for demand response to improve the flexibility of the energy system in light of an assessment of the flexibility needs, and describe specific measures to facilitate energy system integration in the context of Article 20a of Directive (EU) 2018/2001 as amended.

16. Further develop the approach to addressing energy poverty by including an assessment of the situation of currently affected households and indicating a specific measurable reduction target as required by Regulation (EU) 2018/1999, taking account of Recommendation (EU) 2023/2407. Provide additional detail on existing and potential measures to address energy poverty and on the dedicated financial resources from the perspective of both social policy

(affordability) and structural energy measures.

17. Further clarify national objectives in research, innovation and competitiveness to deploy clean technologies, establishing a pathway for 2030 and 2050 with a view to support the decarbonisation of industry and promote the transition of businesses towards a net-zero and circular economy. Put forward policies and measures to promote the development of net-zero projects including those relevant for the energy-intensive industries. Describe a predictable and simplified regulatory framework for permitting procedures and how access to national funding will be simplified where needed. Provide detailed policies and measures for the digitalisation of the energy system, the development of clean energy-related skills and to facilitate open trade for resilient and sustainable supply chains of key net-zero components and equipment.

18. Specify the reforms and measures to mobilise the private investments needed to achieve the energy and climate targets.

Include a comprehensive and consistent overview of the public and private investment needs in aggregate and by sector. Complement a bottom-up project specific assessment with a top-down economy-wide approach. Provide a more detailed breakdown of total investment needs with additional information on the national, regional and EU funding sources as well as private financial sources to be mobilised. Add a short description of the type of financial support scheme chosen to implement the policies and measures that are financed through the public budget, Union funding, and the use of blended financial instruments making use of grants, loans, technical assistance and public guarantees, including the role of national promotional banks in the respective schemes and/or how private financing is mobilised. Consider the cost-effective generation of transfers to other Member States under the ESR as a funding source. Provide a robust assessment of the macroeconomic impact of the planned policies and measures.

19. Outline how the policies and measures included in the updated plan are consistent with the revised Finnish Recovery and Resilience Plan, including the REPowerEU chapter.

20. Explain in detail how and by when Finland intends to phase out fossil fuel subsidies. Explain in detail how Finland plans to phase out solid fossil fuels for power generation by clarifying related commitments and measures.

21. Further detail the analytical basis by providing projections under the planned policies and measures on how the energy system will develop with an outlook to 2040.

6/7 ELI: http://data.europa.eu/eli/reco/2024/629/ojEN OJ L, 7.3.2024

22. Provide detailed information the social, employment and skills consequences, or any other distributional impacts, of the climate and energy transition and on the planned objectives, policies and measures to support a just transition.

Specify the form of support, the impact of the initiatives, the target groups and the resources dedicated, taking into account the Council Recommendation on ensuring a fair transition towards climate neutrality(21). Ensure alignment between the peat reduction timeline outlined in the Territorial Just Transition Plans and the final updated NECP.

Include to the extent possible more elements to provide an adequate analytical basis for the preparation of a future Social Climate Plan, in accordance with Regulation (EU) 2023/955 of the European Parliament and of the Council(22), including indications on how to assess the challenges and social impacts on the most vulnerable of the emissions trading system for fuel combustion in buildings, road transport and additional sectors, and identify potential beneficiaries and a relevant policy framework. Explain how the policy framework identified in the NECP will contribute to the preparation of Finland’s Social Climate Plan and how consistency between the two plans will be ensured.

23. Ensure inclusive public participation within a reasonable timeframe and broad participation of local authorities and civil society in the preparation of the plan. Provide a clear overview on how the consultation process will enable broad public participation from all relevant authorities, citizens and stakeholders including social partners in the preparation of both the draft and final updated plan. Provide a summary of the views expressed by different actors and a summary of how the plan integrates the views expressed during the consultations.

Done at Brussels, 18 December 2023.

For the Commission Kadri SIMSON Member of the Commission

(21) Council Recommendation of 16 June 2022 on ensuring a fair transition towards climate neutrality (OJ C 243, 27.6.2022, p. 35).

(22) Regulation (EU) 2023/955 of the European Parliament and of the Council of 10 May 2023 establishing a Social Climate Fund and amending Regulation (EU) 2021/1060 (OJ L 130, 16.5.2023, p. 1).

ELI: http://data.europa.eu/eli/reco/2024/629/oj 7/7