Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Ian Parry and Philippe Wingender

No 2021/171, IMF Working Papers from International Monetary Fund

Abstract: Finland has pledged to cut net greenhouse gas emissions to zero by 2035 and has sectoral targets for deploying electric vehicles, phasing out coal generation, and oil-based space heating. Fiscal policies at the national and sectoral level could play a critical role in achieving these objectives. Carbon dioxide emissions are already priced significantly in Finland but prices vary substantially across fuels and sectors. The paper discusses a reform to both scale up, and progressively harmonize, pricing while using revenues to address equity issues. It also discusses the potential use of revenue-neutral feebate schemes to strengthen mitigation incentives for the transportation, industry, building, forestry, and agricultural sectors.

Keywords: neutrality target; carbon pricing scheme; emission rate; comparing emission reduction; carbon dioxide emission; emission target; Greenhouse gas emissions; Carbon tax; Energy prices; Non-renewable resources; Global (search for similar items in EconPapers)
Pages: 48
Date: 2021-06-25
New Economics Papers: this item is included in nep-ene and nep-env
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