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Press release 16.9.2005

Finnish environmental spending in 2006 almost EUR 900 million

A total of EUR 895 million of projected Finnish government expenditure for 2006 has been earmarked for environmental protection - amounting to 2.3% of the total budget. Government spending on the environment in 2005 is expected to amount to EUR 969 million (2.6% of overall expenditure). In addition to central government spending, Finland's local authorities spent a total of EUR 629 million on environmental measures in 2004.

Objectives related to sustainable development have been well integrated into environmental protection work in Finland. This achievement was recognised in January 2005 when the World Economic Forum's Environmental Sustainability Index (ESI) for the third time rated Finland as the country that had best succeeded in working towards sustainable development. But even though Finland regularly comes out well in such comparisons, it cannot truly be said that Finland is on the road to sustainable development yet.

The greatest challenges for environmental policy-making in Finland concern the need to promote sustainable consumption and production. Waste policies particularly need redesigning to keep up with wider socio-economic changes. Waste can be effectively prevented by promoting sustainable consumption and production patterns. The environment is particularly being affected by increases in natural resource consumption, traffic, and the use of energy. The continued effects of decades of rapid natural resource consumption and pollution generated in the past also still burden the environment in Finland. Long-term declines in the emissions of many pollutants, including nitrogen dioxide and sulphur dioxide, have bottomed out in recent years, and specific measures are still needed to curb or reduce domestic emission levels.

These trends are highlighted together with many other environmental issues in the annual review Finland's Natural Resources and the Environment 2005. This review examines trends in all sectors of the national economy from an environmental perspective, and aims to provide accessible up-to-date information for decision-makers, the media, and everyone else interested in the environment.

Spending on environmental protection down

Overall government spending on the environment will fall next year by EUR 74 million (seeTable 1). Significant changes include the reduction of the total budget for environmental subsidies for agriculture to EUR 265 million. In 2006 spending on environmental protection measures will also drop by EUR 9 million to 44 million.

The budget for nature conservation has been set at 67 million euros for 2006, down EUR 3 million on the total for 2005. Environmental spending on regional co-operation projects will continue to fall next year, by EUR 2 million to 8 million. Since the accession of the Baltic Countries and Poland to the EU in May 2004, Russia has been Finland's only regional co-operation partner.

Spending on research and development work related to environmental protection will contrastingly be increased by EUR 6 million next year.

Table 1. Finnish government expenditure on the environment 2002-2006

Government expenditure, million euros
  2002 2003 2004 2005 1 2006 2
Environmental administration 101 108 111 114 115
Development co-operation 116 107 119 119 119
Regional co-operation 13 10 10 10 8
Nordic Environment Finance Corporation 1 1 1 1 1
Research and development 1 175 176 187 192 198
Environmental NGOs 1 1 1 1 2
Environmental protection 40 54 63 53 44
Nature conservation 59 58 69 70 67
Promotion of energy-saving measures 6 7 10 10 9
Support for investments in renewable energy 28 27 24 24 24
Support for energy-saving housing improvements - 15 17 17 17
Traffic-related environmental protection1 26 20 26 27 16
Support for investments in manure storage 2 2 3 3 3
Environmental subsidies for agriculture 284 288 294 322 265
Promoting ecological forest management 4 4 6 6 7
Total 857 878 941 969 895
1 = estimate, 2 = forecast, .. = no information available, - = not applicable

Income from environmental and energy taxes still on the rise

A total of EUR 4.9 billion will be collected in the form of environmentally related taxation and fees next year, according to the government budget for 2006 (see Table 2). This figure is up EUR 102 million from current estimates for 2005, and represents some 12.5% of total budgeted fiscal income. The rise is due to the increased total fiscal income that will be obtained from motor vehicle taxation and licensing, in spite of cuts in taxation rates. Environmental taxation particularly focuses on energy use, and energy taxes are expected to account for 60% of environmentally related fiscal income in 2006. Other significant revenue sources include motor vehicle tax and vehicle licence tax.

In a comparison of taxation systems in 15 EU countries in 2002, the share of all State fiscal income provided by environmental taxation was fourth highest in Finland (after Danmark, Holland and Portugal).

Table 2. Fiscal income from environmentally-related taxes and fees 2002-2006

Government revenue from environmental taxes and fees, million euros
Alcoholic beverage surtax 20 20 20 - -
Soft drinks surtax 2 2 2 - -
Drinks packaging tax - - - 13 13
Pesticide fee 2 2 2 2 2
Energy taxes 2 756 2 900 2 901 3 010 2 979
Oil waste tax 4 3 3 3 3
Motor vehicle tax 1 023 1 207 1 235 1 200 1 300
Oil pollution control fee 6 9 9 9 9
Vehicle licence tax 446 473 642 536 560
Waste tax 32 41 42 53 62
Total 4 291 4 657 4 857 4 826 4 928
A = Final accounts, B = Budget, BP = Budget proposal

Finland's greenhouse gas emissions exceed Kyoto targets

Finland's total greenhouse gas emissions in 2003 amounted to 85.6 million tonnes of carbon dioxide equivalent - some 15 million tonnes more than total emissions in 1990, the benchmark year for the Kyoto Protocol. The high emission levels were due to an increase in energy consumption, and shortages of hydropower on the Nordic electricity markets, which meant that more electricity was generated by burning coal and peat.

Emissions of sulphur dioxide and nitrogen oxides are estimated to have decreased between 2003 and 2004 by around 7,000 tonnes and 4,000 tonnes, respectively. Finland's sulphur dioxide emissions per unit of GNP are about a third lower than the average for European OECD countries. Most of the acidifying deposition affecting the environment in Finland consists of long-range pollution originating elsewhere.

The review of Finland's natural resources and the environment has been published annually since 1994 in connection with the national government budget proposals. The review is drafted by the Ministry of the Environment in conjunction with the Ministry of Finance, the Ministry of Trade and Industry, the Ministry of Agriculture and Forestry, the Ministry of Transport and Communications, Statistics Finland, and the Finnish Environment Institute (SYKE). The working group responsible for the review is chaired by Mr Markku Nurmi, Director General of the Ministry of the Environment.

Source: Finland's Natural Resources and the Environment 2005. Ministry of the Environment & Statistics Finland.

For more information, contact Markku Nurmi at the Finnish Ministry of the Environment (+358 9 1603 9440 or +358 50 5599 146,), or Jukka Hoffrén at Statistics Finland (+358 9 1734 3351).