Firm Subsidies in the Green Transition

This policy brief analyses the level and structure of business support measures related to the green transition in Finland in a European comparative perspective. Finland ranks among the EU countries with the highest level of green transition support when business subsidies are measured relative to GDP. However, a high level of support alone does not indicate the steering or incentive effects of subsidy policy. A comparison with other EU countries shows that Finland’s support system places greater emphasis on cost-compensating instruments, whereas in many large member states support is more directly targeted at investment projects and technological transformation. The available empirical evidence does not so far indicate that the main Finnish support instruments have had significant effects on firms’ investment activity, productivity growth, or long-term competitiveness, despite their substantial fiscal cost. At the same time, assessing the overall impact of the support system is complicated by the fact that subsidies are concentrated on large and financially strong firms, for which suitable comparison groups are difficult to identify. The policy brief highlights that the central challenge of green transition support policy lies in the structure of support measures and in evaluating their effectiveness, rather than in the overall level of support.