Compensation of indirect carbon costs

The chemical industry supports the full use of emissions trading compensation as it levels the total price of industrial electricity compared to the competitor countries. In Finland, the EU-approved but nationally implemented compensation was launched in 2017, but only at 50% of its full capacity.

The objective of emissions trading compensation is to compensate for the indirect cost increases caused by emissions trading to energy-intensive industries. Emissions trading increases the price of electricity in general, irrespective of the user’s energy efficiency, emission amounts, and whether the user is involved in the emissions trade.

  • Emissions trading compensation is already used in 11 EU countries
  • The compensation affects cost levels and competitiveness in Europe and around the globe
  • Finland should take advantage of the EU-approved mechanisms and not give the advantage to others

Funding comes from the industry

Emissions trading compensation is funded by allowance auction revenues that are paid by the industry and that come from the national budget. Finland will receive over 95 million euros in emissions trading income in 2017.

The amount of compensation depends on the price of allowances, and the electricity consumption of companies or the amount of production, among other things. The national budget for 2017 provides the sum of 43 million euros of which 37,9 millions was used, including 4,4 million euros for the chemical industry. The national budget for 2018 provides 27 million euros for compensation.

Using the compensation is a statement

Using the emissions trading compensation is a signal: it shows that the state is willing to create a good working environment for energy-intensive manufacturing. Accordingly, it affects investment decisions and the development of activities more than how large a sum the allowance itself is.


Sami Nikander
Director, Responsibility
M.Sc. (Env. Eng.), B.Eng. (Biotech.)

+358 40 567 4413