Renewable Energy and Climate Policies: Studies in the Forest and Energy Sector

‪This dissertation examines the impacts of energy and climate policies on the energy and forest sectors, focusing on the case of Finland. The thesis consists of an introduction article and four separate studies. The dissertation was motivated by the climate concern and the increasing demand of renewable energy. In particular, the renewable energy consumption and greenhouse gas emission reduction targets of the European Union were driving this work. In Finland, both forest and energy sectors are in key roles in achieving these targets. In fact, the separation between forest and energy sector is diminishing as the energy sector is utilizing increasing amounts of wood in energy production and as the forest sector is becoming more and more important energy producer.‬ ‪The objective of this dissertation is to find out and measure the impacts of climate and energy policies on the forest and energy sectors. In climate policy, the focus is on emissions trading, and in energy policy the dissertation focuses on the promotion of renewable forest-based energy use. The dissertation relies on empirical numerical models that are based on microeconomic theory. Numerical partial equilibrium mixed complementarity problem models were constructed to study the markets under scrutiny. The separate studies focus on co-firing of wood biomass and fossil fuels, liquid biofuel production in the pulp and paper industry, and the impacts of climate policy on the pulp and paper sector.‬ ‪The dissertation shows that the policies promoting wood-based energy may have have unexpected negative impacts. When feed-in tariff is imposed together with emissions trading, in some plants the production of renewable electricity might decrease as the emissions price increases. The dissertation also shows that in liquid biofuel production, investment subsidy may cause high direct policy costs and other negative impacts when compared to other policy instruments. The results of the dissertation also indicate that from the climate mitigation perspective, perfect competition is the favored wood market competition structure, at least if the emissions trading system is not global.‬ ‪In conclusion, this dissertation suggests that when promoting the use of wood biomass in energy production, the favored policy instruments are subsidies that promote directly the renewable energy production (i.e. production subsidy, renewables subsidy or feed-in premium). Also, the policy instrument should be designed to be dependent on the emissions price or on the substitute price. In addition, this dissertation shows that when planning policies to promote wood-based renewable energy, the goals of the policy scheme should be clear before decisions are made on the choice of the policy instruments.‬

Aika ennen aluepolitiikkaa. Pohjoisen kehityshankkeet ja alueiden kehittämisen idea 1950-luvun Suomessa

The dissertation focuses on the recognition of the problems of uneven regional development in Finland in the 1950s, and the way the idea of controlling this development was introduced to Finnish politics. Since it is often stated that Finnish regional policy only began in the mid-1960s, the period at hand is considered to fall in the time before regional policy. However, various ideas, plans and projects of regional development as well as different aims of development were brought forward and discussed already in the 1950s. These give an interesting perspective to the ideas of later regional development. In the 1950s, many Finnish politicians became more conscious of the unavoidable societal change. The need for overall modernisation of the society made it reasonable to expect a growing level of unemployment and eagerness to migration. The uneven distribution of well-being was also feared to cause discontent and political changes. International experience proved interfering in the regional development possible when using the argument of public interest ; the measures taken increased the level of well-being, helped sustain societal balance, and supported national economy. Many of the development projects of the 1950s focused on Northern Finland, the natural resources of which were considered an important reserve and the political climate of which was regarded unstable. After the late 1940s, regional development was discussed frequently both on the national and the regional level. Direct and indirect support was given to less developed areas and the government outlined thorough investigations in order to relieve the regional problem. Towards the end of the decade, the measures taken were already often connected to the idea of equality. In the 1950s the conflicts within and between the largest Finnish political parties significantly affected the decisions of regional development. There are three case studies in this qualitative research based on the narrative method. The case studies clarify the characteristics of the 1950s regional development. In the first one, the representatives of the northern region and the state first discuss the location of a state-run nitrogen fertilizer factory and later the location of a new university. In the second, the aims and perspectives of private entrepreneurs and the state collide due to ideas of statist industrialisation projects and later due to an idea of a tax relief targeting northern industry. In the third case, the main role is given to the changing rural areas, in relation to which societal development and urbanisation were often measured. The regional development of the 1950s laid groundwork for the new, more established regional policy. The early problem solving actions were aimed both at the prevailing situation and the future and thus showed the way for the upcoming actions. Regional development policy existed already before regional policy.

Rauhan atomi, sodan koodi : Suomalaisen atomivoimaratkaisun teknopolitiikka 1955-1970

This dissertation investigates the atomic power solution in Finland between 1955 - 1970. During these years a national arrangement for atomic energy technology evolved. The foundations of the Finnish atomic energy policy; the creation of basic legislation and the first governmental bodies, were laid between 1955 - 1965. In the late 1960's, the necessary technological and political decisions were made in order to purchase the first commercial nuclear reactor. A historical narration of this process is seen in the international context of "atoms for peace" policies and Cold War history in general. The geopolitical position of Finland made it necessary to become involved in the balanced participation in international scientific-technical exchange and assistive nuclear programs. The Paris Peace Treaty of 1947 categorically denied Finland acquisition of nuclear weapons. Accordingly, from the "Geneva year" of 1955, the emphasis was placed on peaceful purposes for atomic energy as well as on the education of national professionals in Finland. An initiative for the governmental atomic energy commission came from academia but the ultimate motive behind it was an anticipated structural change in the supply of national energy. Economically exploitable hydro power resources were expected to be built within ten years and atomic power was seen as a promising and complementing new energy technology. While importing fuels like coal was out of the question, because of scarce foreign currency, domestic uranium mineral deposits were considered as a potential source of nuclear fuel. Nevertheless, even then nuclear energy was regarded as just one of the possible future energy options. In the mid-1960 s a bandwagon effect of light water reactor orders was witnessed in the United States and soon elsewhere in the world. In Finland, two separate invitations for bids for nuclear reactors were initiated. This study explores at length both their preceding grounds and later phases. An explanation is given that the parallel, independent and nearly identical tenders reflected a post-war ideological rivalry between the state-owned utility Imatran Voima and private energy utilities. A private sector nuclear power association Voimayhdistys Ydin represented energy intensive paper and pulp industries and wanted to have free choice instead of being associated themselves with "the state monopoly" in energy pricing. As a background to this, a decisive change had started to happen within Finnish energy policy: private and municipal big thermal power plants became incorporated into the national hydro power production system. A characteristic phenomenon in the later history is the Soviet Union s effort to bid for the tender of Imatran Voima. A nuclear superpower was willing to take part in competition but not on a turnkey basis as Imatran Voima had presumed. As a result of many political turns and four years of negotiations the first Finnish commercial light water reactor was ordered from the East. Soon after this the private nuclear power group ordered its reactors from Sweden. This work interprets this as a reasonable geopolitical balance in choosing politically sensitive technology. Conceptually, social and political dimensions of new technology are emphasised. Negotiations on the Finnish atomic energy program are viewed as a cooperation and a struggle, where state-oriented and private-oriented regimes pose their own macro level views and goals (technopolitical imaginaries) and defend and advance their plans and practical modes of action (schemata). Here, not only technologists but even political actors are seen to contribute to technopolitical realisations.