Finnish Government Programme supports the forest industry’s competitiveness

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“Establishing the prerequisites for economic growth is a central objective of the new Government Programme. From the perspective of the forest industry, one of the most significant developments is the decision to lower the energy-intensive industry’s taxation by €120 million through an amendment to the energy-tax refund mechanism. Another welcome development is the decision to adopt a stricter stance towards proposed new sulphur emission limits on Baltic Sea maritime transports, which would add hundreds of millions of euros to the costs of the export sector,” says Timo Jaatinen, Director General of the Finnish Forest Industries Federation. 

“The forest industry can be very successful in Finland if the operating environment is improved by removing burdens that are unreasonable in comparison to our competitor countries. The new Government Programme represents a sound step forward on this path. Implementation of its policy decisions will decrease upward cost pressure on domestic production inputs and establish better opportunities for developing operations and investing in Finland,” Jaatinen continues.

Energy taxation to be developed along lines established by our competitor countries

The Government intends to increase the effectiveness of the energy tax refund system in order to safeguard the competitiveness of energy-intensive industries.

The revision of the refund mechanism will lighten the energy taxation of the basic industry to the minimum level permitted under EU regulations. This will improve the forest industry’s opportunities for increasing its production of renewable energy in conjunction with the manufacture of products for export and boost the competitiveness of the Finnish forest-based sector.

The Government’s decision to withhold permits for new nuclear power plants is, however, a disappointment. Furthermore, the planned windfall tax on hydropower and nuclear power would jeopardise the production of climate-friendly electricity. Both of these decisions have an impact on the industry’s competitiveness, as they will spur rising energy costs. Ensuring reasonable energy costs and corporate investment prerequisites must be taken into consideration in the development of windfall tax system.

More active approach to maritime transport cost pressures

The Government Programme includes a pledge to influence the EU’s transport and environment regulations in a way, which ensures that companies – irrespective of their location – enjoy equitable operating possibilities.

The forest industry considers it significant that, in the implementation and scheduling of shipping-related solutions at the International Maritime Organization IMO and in the EU, the Government aims to actively pursue alternatives that support the competitiveness of the Finnish export sector. The IMO has approved stricter maritime transport sulphur emission limits, which threaten to load hundreds of millions of euro in additional costs on Finnish exports after 2015.

“It is very important that Finland raises the changing of the sulphur decision to the top of its EU agenda and proposes measures that would help the industry to adjust to the extra costs it would cause. This issue needs to be influenced on the highest political level at both the European Union and the IMO,” Jaatinen says.

Distortions caused by the energy utilisation of wood to be focused on 

The Government Programme includes a clause, which unambiguously states that the Government will ensure that renewable energy subsidies will not distort competition in the timber market and cause problems for the forest industry’s raw material procurement.

It is important for Finland to identify how to meet its renewable energy commitments in a way that does not jeopardise the operating prerequisites of the forest industry.
 
Contrary to this, the goal of reducing the energy utilisation of peat will lead to more wood being burned to generate energy, which will increase the import-dependency of Finnish energy production and raise the cost of energy.

Wood supply and forest ownership structure in need of improvement

The Government is committed to the implementation of the National Forest Programme 2015 with the aim of improving the availability of wood. From the perspective of the forest industry, a key target is raising the forest utilisation rate to 70 million cubic metres per annum.

The decision to clarify the activities of forest management associations and realise competition neutrality between different actors is a positive change. It will strengthen the development of the forestry service market and promote the establishment of equitable competitive conditions.

The Government Programme aims to enhance the effectiveness of wood procurement and improve the structure of forest holdings; these are fine goals but the proposed measures are insufficient.

Wood construction to be promoted 

Significant steps forward were taken in fire safety building regulations during the previous Government’s term of office when unreasonable obstacles to the use of wood were removed.

It is positive that the new Government Programme further improves wood’s status as a building material and introduces life-cycle assessments to energy-efficiency requirements. The Government is committed to promoting wood construction in the EU and will launch a national wood construction programme.

Comprehensive infrastructure strategy needed

The Government intends to draft a comprehensive transport policy report, which will focus special attention on logistics bottlenecks. It is a good idea to examine investments into route projects from the perspective of national competitiveness.

The decisions made regarding the maintenance of the lower road network, which is important for forestry activities, are also favourable from the point of view of the forest industry.

Company-specific collective bargaining agreements a goal for the forest industry

The Government has expressed its desire to work cooperatively with the different labour market organisations. The goal of the Finnish Forest Industries Federation is to continue collective bargaining on pay-related questions on the union level and to promote company-specific negotiations in order to boost the industry’s competitiveness.

Further information:
Timo Jaatinen, Director General,
Finnish Forest Industries Federation, tel. +358 9 132 6600