Energy innovations and pathway to carbon neutrality in Finland

Abstract

Given the determination to maintain the status of a low-carbon energy and clean energy technology country, Finland has remained committed to facing out coal energy and subsequently halve the domestic utilization of fossil oil all by 2030. To assess these laudable national targets, this study applies a two-scenario approach to examine the environmental effects of Finland’s disaggregated energy mix for the period between 1974 and 2019. The first scenario of analysis focuses on the environmental effect of the disaggregated energy mix with environmental technologies, while the second scenario explores the case of without environmental technologies. The application of the autoregressive distributed lag (ARDL) technique for the analysis revealed some insightful results. Firstly, the deployment of environmental technologies in coal energy development will yet exert a significant environmental cost. Secondly, with innovations in the development of oil, natural gas, and nuclear energy sources, a statistically significant environmental benefit is attainable. Thirdly, without the deployment of environmental technologies, the utilization of the disaggregated energy forms (coal, natural gas, nuclear, and oil) will continue to constitute an environmental nuisance. Furthermore, the environmental Kuznets curve hypothesis is only valid for Finland when the environmental technologies deployed in the country’s disaggregated energy utilization are considered. Lastly, the independent deployment of environmental technologies mitigates carbon emission with an elasticity of 0.1 in the long run. Intuitively, the result suggests that energy and climate financing policy that promotes innovation via research and development is vital to achieving the decade-long target.