Cleantech and Bioeconomy in the Nordic Countries - A spotlight on Finland including an exclusive interview with the Finnish Minister of Economic Affairs

7 January 2015

                                                                                                                                                          Logo of the "Ask a Finn" campaign.

Through the aptly named “Ask a Finn” campaign aimed at highlighting the Finns’ track record when it comes to innovation and sustainability in bioeconomy, the Finnish government wishes to renew the business environment in Finland. Its strategy is set to insure a low-carbon, resource-efficient, and smart development for the country, and to increase the field’s turnover from EUR 60 billion in 2014 to EUR 100 billion by 2025, creating 100,000 new jobs.

By 2030 the world will consume 50 percent more energy and 30 percent more water than it does today, as stated in the report of the United Nations Secretary-General’s High-Level Panel On Global Sustainability. With bioeconomy high on the agenda of both the EU and the OECD, countries in Northern Europe were prompt in designing national strategies and set ambitious goals such as zero greenhouse emissions by 2050 in the case of Sweden, energy self-sufficiency in Germany, hailing an energy revolution, and an investment of EUR 170 million in biotechnology by 2021 in Norway.

Just how daunting these goals turn out to be is evident when looking at the cautionary tale of Germany’s road towards renewable energy and Sweden’s challenges in insuring profitability for the green energy investors, on the backdrop of energy prices at record lows in the Nordic markets, caused by the decrease in local production facilities.

Earlier in 2014 the Swedish Energy Authority (SEA) was taken to court by the Åland-based, Finnish wind farm operator ÅlandVindkraft, connected to the Swedish energy grid, for SEA’s refusal to include it in its renewable energy support scheme on the basis of not being within the territorial borders of Sweden, stating that in doing so SEA infringed the EU free movement of goods regulations. Although eventually the EU Court of Justice ruled in favor of SEA, there was significant controversy regarding the impact of this decision on investors in the European green energy market.

In this context, in order to avert investors’ jitters regarding a false or a difficult start, Finland is heralding its decades-long expertise in sustainable bioeconomy and its vast forest resources covering 80% of its territory, combined with a highly successful waste management system, which put it at the forefront of innovation in the field.

Pioneers in developing and delivering unique technology and smart solutions to the world, the Finns have designed myriad of ways to use biomass, from the traditional timber products and paper, to fibers, pharmaceuticals, chemicals, functional food, plastic materials, cosmetics, intelligent packaging, and biofuels.

The advantages of the bioeconomy, as a branch of the economy using biological natural resources to produce energy and products, are already well known. However, as it was the case with biofuels, its best known and most developed sector, the costs have often proven to be discouraging or even prohibitive. As the price tag of clean energy decreases significantly, making it competitive compared to conventional fuels, there is hope that biofuels will follow suit.

This is certainly an outcome targeted by Finland with the launch of the biorefinery competition, aimed at not only boosting investment in the field, but also finding new and cheaper ways to process biomass. The competition, opened to global companies from June 4th to December 4th 2014, seeks to attract proposals for biorefineries that would be based in Finland and utilize local biomass while using innovative technology that has not yet been commercialized. The winning proposal, to be announced in February 2015, will receive a prize of EUR 100,000.

Through 2015, Business Intelligence Unit will identify, analyze, and promote sound business opportunities in the bioeconomy field in the Nordic markets. We begin our coverage of Finland’s road to bioeconomy with an exclusive interview with the Finnish Minister of Economic Affairs, Mr. Jan Vapaavuori, the main supporter of this strategy.

Discussing the current Finnish economic context and the reasons behind pushing a bold bioeconomy agenda forward, the Minister emphasized the strengths and the impressive achievements of the country, but also the need to renew the economy, which became essential once it was faced with the pitfalls of the overdependence on certain sectors.

“Finland emerged as one of the biggest global success stories in the decades following the end of the Second World War. We went from being a poor European nation, our standard of living rated at half of the Swedish one, to ranking as the most competitive country in the world, having the best standard of living and the best schools.”

The Minister explained that over the past few years the narrow basis of the economy brought about certain challenges: the paper industry and the cluster built around Nokia were both affected at the same time, which triggered a significant GDP loss in a short period of time (Nokia alone represented 4 percent of the GDP, without taking into account its supply chain).

The good news for Finland is that it can build on many of its strengths: its schooling system, the substantial investment in R&D surpassed globally only by Israel and South Korea, a good industrial base, and near-absence of corruption.

“Our three main focus points are bioeconomy, cleantech, and digitalization, which are all rapidly growing on a global scale. Bioeconomy is the next wave of the global economy as it can replace a large number of products traditionally based on oil. We are front runners in the field due to our forest resources and our proven examples of sustainable forest use”, stated the Minister.

“Cleantech is an area where technological revolutions make the difference, and Finland is a country of engineers. Linking our knowhow in energy efficiency, materials design, renewable energy, water treatment, and waste management to our engineering mindset can turn Finland into the world’s number one provider of technologies, outranking Denmark and Sweden, our main competitors in cleantech and bioeconomy, respectively. According to a Finish government study, 50 percent of the future value added will derive from a better use of ICT in all sectors, and even if we don’t have Nokia anymore, we still have its human talent, so digitization should come very natural to us”, he added.

In terms of the Finnish strategy on bioeconomy, which currently employs 13 percent of the work force in the country and provides for 26 percent of its exports, the Minister explained that it is based on the Finland’s capacity to manage its resources sustainably. Deforestation is a sensitive issue internationally because of the non-sustainable management of forests, however Finland has always made sure that the annual forest growth exceeds its industrial use (it is currently twice as big as the harvested volumes).

According to the Minister, “the biofuels currently processed come from the residues of timber, pulp, and paper companies, and by further developing technologies we can further increase the value added of this waste. In Europe we have an EU directive that by 2020, 10 percent of all gasoline used in traffic has to be bio-based. In Finland we doubled this target and we created binding regulation that by 2020, 20 percent of the gasoline should be made up of biofuels.”

“We have set a timeline according to which the percentage will increase gradually and it is up to the gas stations to find the most efficient solution to comply with the regulation.”

The Minister ended by highlighting the complexity of this long term project and the work already undertaken to lay out the plans and create the basics for broad and comprehensive platforms, where the central and local administrations partner to bring together different skills and capabilities throughout the country. Tekes, the Finnish Funding Agency for Technology and Innovation, for example, is ready to cater to both the flourishing startup industry in Finland and the major companies that have proven to be the best incubators for large scale R&D projects.


By Ioana Belu