Peat production in Finland has fallen faster than expected – but may be coming back

Peat production in Finland has fallen faster than expected - but may be coming back

High-emission peat may 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 players in the industry drew their own conclusions from the government’s 2020 target of halving the use of peat in ten years.

Finland aims to be carbon neutral by 2035, but is one of the last countries in the world to continue to use peat as a significant energy source. Burning peat produces electricity more CO2 than carbonwhile its harvest causes other environmental damage.

"In Central Finland and elsewhere, peat production appeared to halve much faster than expected. The transition was really fast and unmanageable," said Outi PakarinenDevelopment Manager in the Federation of Central Finland, Association of Municipalities.

Central Finland is one of the regions hardest hit by the economic effects of peat outages right after Southern and Northern Ostrobothnia. The most important peat production areas in Central Finland are Keuruu, Multia and the Joutsa region.

The hotspot issue led to protests and a government crisis a year ago as the Rural Center Center rejected ambitious plans for a rapid closure of the peat industry.

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

"In 2021, we were surprised at how much demand and the contract situation had already deteriorated. Many entrepreneurs had found themselves in a situation where there were no or a clear reduction in contracts," said Tuula SäynätmäkiDirector of Employment and Economic Development Services in Central Finland.

The state-owned company is digging for peat next summer

The sharp rise in energy prices since the Ukrainian invasion has changed the outlook for peat. Especially in Eastern Finland, the operations of many energy production plants were based in part on wood fuel imported from Russia, which stopped shortly after the war broke out.

Pasi RantonenThe head of peat operations at the energy company Neova said that the company will continue to produce energy peat, especially east of Päijänne. The state-majority-owned Neova had previously announced that it would give up production of energy peat.

"The situation has become clearer in recent weeks. The focus is on Eastern Finland, but energy peat is also being repaired in Central and Western Finland," Rantonen told Yle.

Until last fall, Neova estimates that existing storage will be sufficient for heating needs during the winter of 2022-23. Rantonen refused to say how much energy peat will be repaired next summer, as negotiations with contract partners are still ongoing.

Some of the equipment intended for peat production has already been scrapped on the basis of subsidies from ELY centers, but Rantonen did not see this as a major problem.

"Those scrapped machines had reached the end of their service life. They certainly would not have been used. In my opinion, the scrapping premium did not reduce production capacity in Finland," Rantonen said.

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

Peat does not solve security of supply

However, according to him, it is possible to restart production because only a few months have passed since the closure decision.

"If it had been a year or two in between, it would have been really difficult," Rantonen said.

Peat stocks have also been raised in the debate on security of supply due to the crisis in Ukraine and the decline in Russian energy imports.

"The quantities of peat that are now generated play a small role in security of supply, so they do not solve the situation," Rantonen said.

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

Eero SuomimäkiThe project manager who led the project has himself worked as a peat contractor.

"A lot depends on what kind of contracts are offered. One-year contracts are unlikely to motivate people" Suomimäki said.

Matti SiikkiThe chairman of the Central Finland Machine Entrepreneurs Association said that his family business scrapped its peat production equipment last summer after 47 years of operation.

"I am thinking of going back to the industry, but the outlook for peat production should be stable for at least 10 years to make it worthwhile," Whitefish said.

“In practice, peat is replaced by wood”

The city of Jyväskylä’s energy company Alva is not worried about the peat situation, even though it previously accounted for about a third of Alva’s fuel consumption.

No worries about next winter, the production manager said Alex Schreckenbachbut from then on the outlook is uncertain.

"Alva’s plan is to phase out peat by 2026, but it will not work if all bogs are closed by 2024," Schreckenbach said.

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

"In practice, peat is replaced by wood. It, in turn, requires machines and workers," Schreckenbach said.

According to the TE Office, there are currently labor shortages in both the forest and transport sectors.

"We have a really severe shortage of staff in many areas. For example, many seasonal peat workers are easily employed in the transport sector," said Säynätmäki.

Source: The Nordic Page

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