Environmentally related energy taxation in Finland
(2012)

Finland introduced a carbon surtax (or CO₂ tax) based on the carbon content of fossil fuels in January 1990 as an instrument for climate change mitigation. The tax rate evolved from €1.12/t CO₂ in 1990 to €20/t CO₂ in 2010. 

Some deviations existed: natural gas met a reduced rate, and peat was exempted in 2005-2010. In 1994-1996 a combined surtax base of carbon+energy content was applied. Since 1997 the carbon tax was imposed only on traffic fuels and heating fuels; electricity was taxed per kWh and the fuels were exempted. Short-haul emissions of traffic fuels have been handled in the past variously by differentiation of the main (fiscal) component of the fuel tax, beginning in 1986 with lead in petrol. Individual tax rates were defined only for "traditional" main fuels (petrol, diesel oil etc.), and the substitutes – e.g. bio-components - met the same rate.

The general struc­ture of energy taxati­on in Finland was changed as of 1 January 2011 – for the first time after the tax reform in 1997. Taxation of liquid fuels and coal again takes account of both the energy content and carbon dioxide emissions and, in a more refined way, emissions into the local environment that have adverse health effects. The revised fuel tax has an energy component and a CO₂ component, while the replaced tax had a "faceless" fiscal main component (for transport fuels) and a CO₂ component. The energy component of liquid fuels is largely based on energy content but differentiated according to local emissions (and diesel oil having a reduced rate). The new CO₂ component is based on a life-cycle approach to emissions, rather than on combustion gas emissions only. Quite a few new objects (notably renewables) appear in the tax scale.

Total tax rates for other than road traffic fuels were raised considerably. CO₂ tax rate was raised from €20/t CO₂ to €50 for traffic fuels (diesel oil in 2012) and to €30 for heating fuels (50% reduced rate for heating fuels used in combined electricity and heat production). The relative weight of CO₂ in the total tax for coal, natural gas and fuel oils was reduced, due to the introduction of the new energy component. Tax adjustments for natural gas will take place in stages up to 2015. A low, ascending energy tax for peat is being introduced in stages by 2015.

CO₂ tax rate for traffic fuels was raised from €50/t CO₂ to €60/t CO₂ as of 1.1.2012.

Total revenues from the excise and strategic stockpile fee on energy pro­ducts, million euro:

Notes: Excise duty revenues 2002-2006 net after refunds; from 2007 onwards gross cash-based figures. Tax expenditures in 2011^est., related to energy taxes, €1500 million (incl. "reduced" rates - diesel, electricity rate II etc.). The share of road traffic fuels: 75% in 2009 and 60% in 2011 (budg.). The share of the carbon tax component was circa €500 million in 2010.

• Excise duty and strategic stockpile fee rates as of 1 January 2012 (pdf, 62 kb)