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Fiscal Policies for Achieving Finland’s Emission Neutrality Target

Author

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  • Ian W.H. Parry
  • Mr. Philippe Wingender

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.

Suggested Citation

  • Ian W.H. Parry & Mr. Philippe Wingender, 2021. "Fiscal Policies for Achieving Finland’s Emission Neutrality Target," IMF Working Papers 2021/171, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/171
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