Finland regions

Peat production falls faster than expected in Finland – but could be on the way back | News

Since the end of wood imports from Russia, energy producers have been considering a return to peat, which was on the verge of extinction due to its climate impact.

Burning peat for electricity emits more C02 than coal, while harvesting it causes other environmental damage. Image: Kare Lehtonen/Yle

High-emission peat could return to Finland’s energy portfolio after a dramatic decline in recent years.

The decline in peat production in Finland has been much faster than expected. Many industry players have drawn their own conclusions from the government’s 2020 target to halve peat use within a decade as part of its climate strategy.

Finland aims to become carbon neutral by 2035, but is one of the last countries in the world to still use peat as an important energy source. Burning peat for electricity emits more C02 than coal (siirryt toiseen palveluun)while harvesting it causes other environmental damage.

“In Central Finland and elsewhere, it looked like peat production would be halved much faster than expected. The transition was really quick and unmanageable,” said Outi Pakarinendevelopment officer at the Central Finland Regional Council, a joint municipal development authority.

Central Finland is one of the regions most affected by the economic impact of the peat closure, second only to Southern and Northern Ostrobothnia. In central Finland, the main peat producing areas include Keuruu, Multia and the Joutsa region.

The burning issue led to protests and a government crisis a year ago as the rural-based Center Party pushed back on ambitious plans to rapidly shut down the peat industry.

The situation of workers and entrepreneurs in peat production has been studied, for example, by the Employment and Economic Development Office of Central Finland (TE).

“In 2021, we were surprised to see how much the demand and the contract situation had already deteriorated. Many contractors had found themselves in a situation where there were no agreements or they clearly had diminished,” said Tuula SäynätmäkiDirector of TE Services in Central Finland.

State-owned company to dig peat next summer

The sharp rise in energy prices since the Russian attack on Ukraine has changed the outlook for peat. In eastern Finland in particular, the operations of many power plants relied partly on firewood imported from Russia, which came to a halt shortly after the outbreak of war.

Pasi Rantonen, director of peat operations at energy company Neova, said the company is resuming production of energy peat, especially east of Lake Päijänne. Majority state-owned Neova previously said it would abandon energy peat production.

“The situation has become clearer in recent weeks. The focus is on eastern Finland, but energy peat will also be harvested in central and western Finland,” Rantonen told Yle.

Until last fall, Neova estimated that existing stocks would be sufficient for heating needs until winter 2022-23. Rantonen declined to say how much energy peat will be harvested next summer, as discussions with contract partners are still ongoing.

Some of the equipment for peat production has already been scrapped thanks to grants from the ELY Centers for Economic Development, Transport and the Environment, but Rantonen did not see this as a major problem.

“These scrapped machines had reached the end of their life. They probably wouldn’t have been used anyway. In my opinion, the scrapping bonus did not reduce the production capacity in Finland” , Rantonen said.

According to Rantonen, the biggest problem is that peat production areas require maintenance and many people working in the sector have already found other work.

Peat will not solve security of supply

However, he said it would be possible to restart production as it has only been a few months since the decision to shut down.

“If there had been a year or two in between, it would have been really tough,” Rantonen said.

Peat stocks were also raised in the supply security discussion due to the crisis in Ukraine and lower energy imports from Russia.

“The peat volumes currently produced will play a small role in supply security, so they will not solve the situation,” Rantonen said.

According to a project that studied the peat industry in central Finland, a third of entrepreneurs who worked in peat production applied for other jobs in recent years.

Eero Suomakithe project manager who led the project, himself worked as a peat contractor.

“It depends a lot on the type of contracts offered. One-year contracts are unlikely to motivate people,” Suomäki said.

Matti SiikkiPresident of the Central Finland Machinery Contractors Association, said his family business scrapped its peat production equipment last summer after 47 years in business.

“I thought about going back into the industry, but the outlook for peat production would have to be strong for at least 10 years to make it worthwhile,” Siikki said.

“In practice, peat is replaced by wood”

Jyväskylä’s city energy company, Alva, is not concerned about the peat situation although in the past it accounted for about a third of Alva’s fuel consumption.

There are no worries for next winter, said the production manager Alex Schreckenbachbut from then on, the prospects are uncertain.

“Alva’s plan is to phase out peat by 2026, but that won’t work if all peatlands are closed by 2024,” Schreckenbach said.

According to Schreckenbach, all energy companies have the same concern: Access to peat must be secure until companies can meet their climate goals and stop using peat altogether.

“In practice, peat is replaced by wood. This, in turn, requires machines and workers,” Schreckenbach said.

According to the TE Office, the forestry and transport sectors are currently facing labor shortages.

“We have a very serious staff shortage in many areas. For example, many seasonal workers in peat production have been able to easily find jobs in the transport sector,” Säynätmäki said.