Finland plans subsidy for low-emission cars, importers call for biofuel support

The Finnish government is exploring the implementation of a €100 million subsidy package for 2017-2020 to speed up the uptake of biogas- and electricity-powered cars.

With the subsidy, the government aims to have 250,000 electric and 50,000 biogas cars on Finland’s road by 2030, which would mark a massive increase from the current 2,250 fully electric or hybrid cars.

According to a tip-off received by the Finnish national news agency YLE, the plans are part of the government’s climate and energy strategy that will be published in full on Thursday.

The fine print of the subsidy has not yet been agreed on and it will most likely drafted by next spring.

Government documents suggest that a subsidy of €4,000 could be given to those purchasing new low-emission cars, but only the first 25,000 buyers would be eligible for the support, fulfilling the budget of €100 million.

The subsidy might reduce the reservations some Finns have about exchanging their fossil-fuelled cars for low-emissions ones, the documents suggest.

Currently the high initial price, the low range of the cars, and the lack of a comprehensive charging/refuelling network hinder the uptake of electric and gas vehicles.

For example, the new Renault Zoe electric car has a range of 400km in ideal conditions, but in the chilly Finnish climate the actual range when fully charged could end up being less than half.

As an alternative to the buyers’ subsidy, the government suggests an extensive road tax reform but any changes to tax policy are still being debated in the Ministry of Transport and Communications.

‘Guaranteed’ to hit targets

Car importers have called the subsidy plans a good start, saying that should they be implemented, they would be a “guaranteed” way to set Finland on the path towards the 2030 car number targets.

“However, I want to emphasise that electric cars alone will not be enough to hit the emission reduction goals. We must renew the car pool in other ways as well,” said Tero Kallio, CEO of the Association of Automobile Importers in Finland.

Kallio says that removing the tax paid on new cars in its entirety would be an effective to contribute to emissions reductions, but such a decision would be a blow to the Finnish economy as the tax earned the state nearly €900 million in 2015.

He also highlights the role of biofuels in reducing emissions. The Finnish government is planning to include a target of having a 30% blending mandate for biofuels into fossil fuels by 2030.

According to the current government agenda, Finland is on track to halve its oil consumption by 2030 as part of EU climate policy.

Road transport contributes approximately one fifth of Finland’s annual climate-impacting carbon dioxide emissions.

This article was written by Ilari Kauppila, deputy editor at Biofuels International