Name of Instrument
Finland carbon tax
National Carbon tax
Implemented in 1990
Finland
Set price
Formula-based price setting
CO2
Upstream
Not permitted
Covered Sectors
- Covered
- In principle
Description
Finland introduced its carbon tax (official name: Hiilidioksidivero) in 1990, making it the first country to introduce a carbon tax. The carbon tax is a component of the energy tax (official name: Energiavero), which also includes components-based energy content and a contribution to maintaining the security of supply. The base of the carbon tax is the lifetime CO2 emissions of a product. The tax strengthens incentives created under the EU ETS, adding additional carbon costs to fuel-use emissions and capturing additional emissions not captured under the ETS.
Recent Developments
The carbon tax on transportation fuels was reduced from 77 €/tCO2 to 62 €/tCO2 from the start of 2024.
Coverage
The Finland carbon tax applies to direct and indirect (lifecycle) CO2 emissions from energy products in motor fuel or heating use. The tax covers all fossil fuels except for peat. Fuels used in electricity generation are exempted. Fuel used to produce electricity and fuel used as raw materials in industrial processes are exempt from the carbon tax. The carbon tax does not apply to peat, which has a special tax that does not follow the general energy tax structure.
Pricing and allocation approaches
Fixed Price
Compliance Approaches
Upstream: Distributors and importers of the fossil fuels covered are liable for payment of the tax. The Energy tax (including the carbon tax component) is paid on a monthly basis. Not permitted
Relation to other compliance CPIs
EU ETS and carbon taxation partly overlap in Finland. The tax reduction for Combined heat and power (CHP) plants is intended to reduce the double-taxation associated with the overlap.
Covered Emissions
Price range:
in 2023
Indicates instruments with multiple price levels. Only the main rate is shown for these instruments. Data last updated on 1 April 2023
