Finland’s green transition – Strategic investments and policy initiatives

Finland is intensifying its commitment to achieving carbon neutrality by 2035 through substantial investments and supportive government policies. The approach encompasses a combination of tax incentives, direct funding, and regulatory reforms aimed at fostering sustainable industrial growth and attracting foreign investment. The changes have already resulted in significant new investments into the region, with several projects in the pipeline. In this article, we take a closer look at government initiatives and notable investments supporting green transition in Finland.

Government initiatives supporting the green transition

In February 2025, the European Commission approved a EUR 2.3 billion Finnish state aid scheme designed to accelerate the transition to a net-zero economy by reducing industrial emissions and boosting clean energy investments. This initiative aims to support investments in renewable energy, energy efficiency, and the production of strategic equipment and critical raw materials essential for the green transition. The scheme is part of Finland’s broader strategy to enhance its competitiveness and reduce greenhouse gas emissions. Finland has been authorised to allocate up to EUR 2.3 billion in total state aid. Under the scheme, the aid will take the form of a tax credit. The scheme complements the direct grant scheme adopted in December 2024. The tax credit and the direct grant are discussed below in more detail.

1. Tax credit for large green transition investments

The Finnish Parliament has enacted legislation introducing a tax credit for substantial green industrial investments. Key features include:

Eligibility: New investments exceeding EUR 50 million in areas such as renewable energy production (excluding electricity generation), energy storage, decarbonisation of industrial processes, and production of equipment needed in the transition towards a climate neutral economy.
Credit details: A tax credit covering 20% of qualifying costs, up to a maximum of EUR 150 million per company or corporate group. The credit is deductible from corporate income taxes over a 20-year period, starting no earlier than 2028, with annual deductions capped at 10% of the total credit amount.
Application process: Companies must apply through Business Finland before commencing any work on the investment project. The application period is open until 29 August 2025.

Recently, the Finnish government has announced that also investments commenced in the upcoming years will be eligible for the tax credit should the European Commission adopt a new state aid framework.

Find out more about the tax credit from our previous article: Tax credit for major green transition investments approved by the Finnish Parliament.

2. EUR 400 million Business Finland grant for large clean transition investments

Business Finland has allocated EUR 400 million for large-scale clean transition investments for the year 2025. The funding targets projects aimed at decarbonising industrial production processes and improving energy efficiency. Key features include:

Eligibility: New investments exceeding EUR 30 million in eligible investment costs, that contribute significantly to Finland’s climate and industrial policy goals. These include electrifying production processes or switching to renewable hydrogen or fuels derived from it.
Performance thresholds: A reduction of at least 40% in direct greenhouse gas emissions from the beneficiary’s industrial installation using fossil fuels as an energy source or raw material, or a reduction of at least 20% in energy consumption related to the supported activity compared to the situation prior to the aid.
Strategic sectors: Grants are also awarded for investments in sectors that are strategic to the transition towards a net zero economy, including the production of relevant equipment – such as clean energy and carbon capture technologies – as well as key components and critical raw materials needed for their manufacturing.
Grant Details: Grants may cover up to 50% of eligible costs for GHG reduction investments (excluding electrification), and up to 30% of the eligible costs of investments to reduce energy consumption. The total grant may not exceed EUR 200 million per undertaking.
Application Process: The application period concluded in March, and Business Finland is required to make its funding decisions by the end of 2025.

Notable green transition investments in Finland

The current pipeline of contemplated investments under the green transition umbrella in Finland is substantial, with several already also under development. One critical issue for renewable energy investments is the balance between energy production and consumption. After significant investments into renewable energy over the past years, Finnish domestic consumption has remained relatively modest compared to production until now. However, if even a portion of the contemplated green transition projects together with other industrial investment projects, such as several contemplated data centre and battery projects, were to be realised, domestic energy consumption in Finland could increase significantly. You can find examples of recent published Finnish investment decisions below.

1. Arctial’s low-carbon aluminium production

Arctial, a project company backed by industry leaders including ABB, Fortum, Mitsubishi Corporation, Rio Tinto, Siemens Financial Services, Tesi, and Vargas, is conducting a feasibility study for low-carbon aluminium production in Kokkola and Kronoby, Finland. If realised, this would be the first greenfield primary aluminium development in continental Europe in over 30 years, significantly boosting the supply of domestic low-carbon aluminium. The final investment decision is anticipated during 2026–2027.

2. Nordic Ren-Gas' power-to-gas facilities

Nordic Ren-Gas is developing several power-to-gas facilities in Finland. The company has entered into a long-term sales and purchase agreement with Gasum, whereby Gasum will buy all of the e-methane produced by Nordic Ren-Gas at its Tampere plant. Nordic Ren-Gas has been granted several subsidies by, for example, the Ministry of Economic Affairs and Employment, the EU Innovation Fund, and the European Hydrogen Bank.

3. P2X Solutions’ green hydrogen plant

P2X Solutions has commenced commercial production at Finland’s first green hydrogen plant in Harjavalta, utilising renewable electricity sources like wind power. The facility, with a 20 MW production capacity, received also Finnish domestic financial support, including a EUR 26 million grant from the Finnish Ministry of Economic Affairs and Employment, and a EUR 10 million loan from the Finnish Climate Fund. P2X plans to build additional facilities with higher capacity in Finland.

4. Blastr Green Steel’s low-carbon steel facility

Norwegian company Blastr Green Steel is progressing with plans to establish an ultra-low carbon steel facility in Finland. The project is expected to create 5,600 person-years of work and generate EUR 300 million annually in tax revenue, but has also received significant negative press and opposing views from the community. This initiative represents one of the largest industrial decarbonisation efforts in the Nordics.

5. Projects supported by European Investment Bank (EIB) financing

In 2024, the EIB Group’s financing in Finland more than doubled to EUR 2.3 billion from EUR 992 million the year before, with an estimated half of the funds allocated to the green transition, and the other half going into, for example, social infrastructure projects, road works etc. The financing in Finland last year included EUR 1.7 billion from the EIB and EUR 606 million from the European Investment Fund (EIF) arm, which focuses on supporting Europe's micro companies and small and medium-sized enterprises (SMEs). The funding total also included a EUR 200 million partnership with Finnvera. In addition, the EIF partnered with leading Finnish banks to deliver more than EUR 560 million in loan guarantees in 2024.

Notable green transition projects financed by EIB include:

EUR 168 million investment in the Keliber lithium project, to enhance the EU’s battery material supply.
EUR 221 million funding to Prysmian’s factory in Pikkala, for expanding production of extra-high-voltage submarine power cables.
EUR 150 million to replace Helsinki’s fossil-based heating plants with renewable energy.
EUR 435 million loan to Stora Enso, for producing sustainable packaging at the Oulu factory.

6. Venture capital

Finnish and international venture funds, including but not limited to Lifeline Ventures, Kvanted and Greencode Ventures, have also invested into green transition adjacent technologies and energy production and optimisation. Some of the most exciting Finnish startups advancing the green transition include Intergrid, a company specialising in the electrification and optimisation of industrial heat production, Steady Energy, a pioneer in the use of small modular reactors for zero-emission district heating and Synergi, a company building a virtual power plant by aggregating household energy assets, enabling participation in the energy market and CapaloAI, a company specialising in battery energy storage optimisation systems through AI.

Conclusions

Finland’s proactive measures to the green transition present significant opportunities for domestic and international investors and project developers. The combination of financial incentives, regulatory support, a developed and stable energy grid, high share of green energy production volume, and a commitment to sustainability goals, position Finland as an attractive destination for green investments. While Finland might not be able to offer the most extensive subsidy schemes compared to some other countries, it could further enhance its attractiveness through measures pertaining to streamlining permitting processes and lead times, and ensuring a stable political environment.

At Krogerus, we expect to see significant investments into green transition also going forward, and applaud entrepreneurs, investors and developers taking risks and investing into the sector and into Finland.