Finland

FI-1:Energy Efficiency Agreements

Policy Description

The Energy Efficiency Agreement scheme running over the period 2008 to 2016 is Finland’s cornerstone instrument for saving energy and cover approximately 80% of Finland’s total energy consumption. Companies that have joined the agreement scheme set their own targets for improving their energy efficiency, implement and Energy Efficiency System (similar to an energy management sytem), implement the measures necessary to reach their targets, and report annually on progress.

Description

Finland has a long tradition of voluntary energy efficiency agreements, beginning in 1997 (*1). With the agreements fully revised in 2007, a new Energy Efficiency Agreement scheme started in the beginning of 2008 and runs until the end of 2016 [1] [2].

These voluntary agreements are Finland’s cornerstone instrument for fulfilling of the 9% energy savings target under the Energy Services Directive (absolute end use energy savings target by 2016 based on 2001-2005 levels (*2). They cover approximately 80% of Finland’s total energy consumption [3].

One of the main objectives of the Energy Efficiency Agreement scheme is to encourage continuous improvement of energy efficiency [3]. Companies that have joined the agreement scheme set their own targets for improving their energy use, implement the measures necessary to reach them, and report annually on the realization of the energy efficiency measures and other activities aimed at its improvement [4].

There are separate agreements for different sectors and branch-specific Action Plans [3]:

­ Industry:

  • Action Plan for Energy-intensive Industry
  • Action Plans for Medium-sized Industry (food and drink, plastics, technology, wood products and chemical industry and industry – general)

The energy sector:

  • Action Plan for Energy Production
  • Action Plan for Energy Services (including transmission, distribution and retail sales of electricity, district heating and cooling)

The private service sector:

  • Action Plans for the Private Service Sector (hotel and restaurant services, commerce sector, motor trades and repairs, service sector – general)

The Energy Efficiency Agreement for Industries consists of three main elements [2]:

  1. Framework Agreement on the Improvement of Energy Efficiency in Industry and Commerce (PUSO), signed by the Ministry of Employment and Economy and the Confederation of Finish Industries, and contains the 9% target for non-EU Emissions Trading System (EU ETS) companies. EU ETS companies set their own energy savings targets [2].
  2. Sector specific Action Plans, where the sectoral targets are established.
  3. Company’s accession document, whereby an individual company joins the agreement, defining which sector-specific action plan it will follow.

In particular, the action plan for the energy-intensive industry [5] and energy production prescribes that companies commit to implement an ‘Energy Efficiency System’, similar to an energy management system. According to the Energy Efficiency System, companies must incorporate energy issues in their existing management systems within 12 months of joining the agreement scheme.

The Ministry of Employment and the Economy provides subsidies to participants for energy efficiency investments (*3) [3].

 

Apart from the industrial sector, the EEA’s cover almost the entire Finnish society, with agreements for the oil, buildings, municipalities, farms and transport sector.

The EEA’s are based on the principle of continuous improvement and participants of the Agreements set their own targets for improving their energy use, implement the measures necessary to reach them, and report annually on the realization of the energy efficiency measures and other activities aimed at its improvement.

Subsidies are provided by the government for energy audits and energy efficiency investments and the government conducts assessment on a case-by-case basis. Participants of the scheme must report their energy use and measures annually and the information is submitted confidentially into an online monitoring system maintained by Motiva. Agreements in the transport and agricultural sectors have their own monitoring systems. In most agreement sectors, annual summaries of the results are compiled [8]. 

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative, Voluntary Agreement

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 1997

End Date: 2016

Policy Linkages

Supported By Energy Audit Programme Supporting Measure

Agencies Responsible

Ministry of Employment and the Economy
Ministry of the Environment

Primary Objective: Energy

Objective

The aim of the agreement is to implement energy savings measures to achieve the EU Energy Services Directive energy savings target and to develop and introduce models and practices that would allow energy efficiency to become an integral part to the companies’ operations [4].

Target Group

The Energy Efficiency Agreement in Industries covers the energy-intensive sector within the EU ETS (large industrial and energy production installations), medium-sized energy users (industry and the private service sector) and energy services (electricity transmission, distribution and retail, and district heating and cooling).

Driver of energy consumption or emissions affected by policy: Energy efficiency and carbon dioxide emission reductions within industrial companies.

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

By 1 June 2011, more than 450 undertakings in industry, services, property and energy sectors had signed up to the agreement, involving a total of more than 2 500 reporting premises or clusters of premises. In total, the energy use and energy saving activities of nearly 4 400 buildings or premises are reported under the agreements [1]. The Energy Efficiency Agreements, if all companies voluntarily participate, cover approximately 80% of Finland’s total energy consumption [3]. However the actual energy use of participating companies and communities that have signed up to agreement scheme represents around 60% of Finland’s total energy use (*4). Coverage in the industry sector is over 80% of the total energy use in industry in Finland.

Quantitative Target? yes

Target: The principal target of all company and community signatories covered by the Energy Services Directive is to achieve annual energy savings (MWh/a) by 2016 equivalent to 9% of the energy use reported at the time of joining the scheme [3]. The energy intensive industry and energy production installations under the EU ETS set their own specific energy saving targets.

Time Period: By 2016 from levels reported at the time of joining the scheme (2008 onwards)

Progress Monitored? yes

Verification Required? yes

Enforced? no

Sanctions: State aid received by the company in form of subsidies for investments in energy audits or energy efficiency measures may be recovered according to the conditions outlined in the aid decision in question, if: ­• a company cancels its membership in the agreement scheme, or ­• the Ministry terminates the agreement with an individual company or community that does not implement the obligations committed in the accession document.

Requirements on the Target Group

Requirements on the target group are specified in the different sector-specific Action Plans.

Companies must:

  • appoint a company-specific person in charge of energy.
  • commit to constant improvement of energy efficiency. In particular, energy-intensive industry and energy production companies commit to introduce the Energy Efficiency System.
  • report by the end of February each year on the energy use of the previous year and the related efficiency measures and on the implementation of other activities related to the Action Plan. Data is reported for each site or group of sites into the monitoring system of the Energy Efficiency Agreement.
  • aim to enhance the energy efficiency of logistics by improving, e.g., the logistics of transport and energy use in co-operation with companies providing these services.

Further details on the specific requirements of the Energy Efficiency System can be found in [5]

Support by Government

  • Government subsidises energy audits under the Energy Audit Program (see FI-3) that supports the Energy Efficiency Agreement [3]. In the industrial sector, up to 90% of all energy audits executed are linked to the agreement scheme [3].
  • The Ministry of Employment and the Economy provides subsidies, based on individual assessments, for energy efficiency investments of companies and communities that have joined the agreements. In 2012 the maximum subsidy is 20% (2008: 20%, 2009–2011: 25%) of the investment costs. If the investment project is implemented with ESCO service the subsidy can be 5% higher. Subsidies are granted for investments with a repayment term excluding interest exceeding two years. Minimum subsidy is €10 000 and maximum subsidy for one company per year is €500 000 euros (*3) [3] [6] .
  • Companies that have joined the Energy Efficiency Agreements are offered various training events and materials, which facilitate the identification and implementation of energy efficiency measures [3].

Implementation Toolbox

Sector-specific Action Plans have been formulated for the following sectors [2]:

  • Wood products industry
  • Technology industries
  • Plastic industries
  • Chemical industries
  • Food and drink industries
  • Energy intensive industries
  • Energy production
  • Energy services 

Complexity of Implementation

Government

Motiva Oy (a state-owned company) has the responsibility for carrying out the general administration of the agreements, supporting the participating companies as well as annual monitoring and reporting.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions The annual impact of implemented measures (since 2008) at end of 2011: ­• Savings of heating energy and fuels 3.5 TWh ­• Electricity savings 2 TWh ­• Savings in energy costs €225 million ­• Carbon dioxide emissions reduced by nearly 2 million tonnes • Nearly 70% of the reported energy savings attained in industry (25% in energy production, 5% in other sectors) [7] ­• 31% of the investments in industry, 53% in energy production, 11% in municipal and 5% in other agreement sectors [7]. N/A
Estimated costs/benefits for industry Total of approximately €33 million in investments reported for the implementation of energy savings measures [3]. N/A
Estimated cost for government Subsidies and investments over the period 2008–2011 [7] of €48.7 million, of which: • €7.4 million or energy audits • €41.3 million in subsidies for energy-saving projects N/A
Other Benefits
General Benefits At the end of 2011, energy efficiency had been incorporated in the management or environmental systems in almost 90% of the energy-intensive industry sites and 76% of the energy production sites [7].
Specific Benefits N/A

References & Footnotes

References

[1] Finnish Government (2011). Finnish II National Energy Efficiency Action Plan (NEEAP 2008-2010)

[2] MURE II Database on Energy Efficiency Policies and Measures (Industry). Available from: http://www.muredatabase.org/public/mure_pdf/industry/FIN14.PDF

[3] Motiva Oy (2012). Energy Efficiency agreements – Results 2008-2010. Available from: http://www.motiva.fi/files/5367/Energy_Efficiency_Agreements_Results_2008-2010.pdf

[4] Motiva Oy (2012). Energy Efficiency Agreements website. Available from: http://www.energiatehokkuussopimukset.fi/en/about_the_agreements/cornerstones_of_the_agreement_scheme/

[5] Motiva Oy (2012). Energy Efficiency Agreement for Industries: Company Accession Document for the Action Plan for the Energy-Intensive Industry. Available from: Energy Efficiency Agreement for Industries: Accession Document for Energy Intensive Industries

[6] Suomi, U (Motiva Oy). Personal communication. November 2012

[7] Motiva Oy (2013). Energy Efficiency Agreements – Results 2008-2011. Available from: http://www.motiva.fi/files/6699/Energy_Efficiency_Agreements_Results_2011.pdf

[8] Motiva (2013). Energy Efficiency Agreements. Available at http://www.energiatehokkuussopimukset.fi/en/about_the_agreements/cornerstones_of_the_agreement_scheme/

Footnotes

(*1) The Energy Efficiency Agreements 2008-2016 are a continuation of the Energy Conservation Agreements that were in force over the period 1997-2007.

(*2) Indicative energy savings target for Finland according to the ESD is 17.8 TWh by 2016

(*3) Companies that subscribe to the Energy Efficiency Agreements are eligible for a subsidy from the Ministry of Employment and Economy to finance investments in efficiency measures. The subsidy rate of customary efficiency investments will be confirmed annually according to the state budget. In 2012 the maximum subsidy is 20% (2008: 20%, 2009–2011: 25%) of the investment costs. If the investment project is implemented with ESCO service the subsidy can be 5% higher. Subsidies are granted for investments with a repayment term excluding interest exceeding 2 years. Minimum subsidy is €10 000 and maximum subsidy for one company per year is €500 000 euros [6].

(*4) Around 80% Finnish energy consumption falls under one of the agreements. However, not all companies/communities subscribe the agreements. The total energy use of companies and communities subscribing the agreement represents around 60% of the total Finnish energy consumption.