High-emission peat may be returning 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 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 a significant energy source. Burning peat for electricity emits more C02 than coal, while its harvesting causes other environmental damage.
"In Central Finland and elsewhere, it seemed that peat production would be halved much faster than expected. The transition was really fast and unmanageable," said Outi Pakarinen, Development Manager at the Regional Council of Central Finland, a joint municipal development authority.
Central Finland is one of the regions worst hit by the economic impact of the peat shutdown, just after Southern and Northern Ostrobothnia. Within Central Finland, the main peat production areas include Keuruu, Multia and the Joutsa region.
The hot-button issue led to protests and a government crisis a year ago, as the rural-based Centre Party pushed back against ambitious plans for a rapid shutdown of the peat industry.
The situation of peat production workers and entrepreneurs has been studied, for example, by the Central Finland Employment and Economic Development Office (TE).
"In 2021, we were surprised by how much demand and the contract situation had already deteriorated. Many entrepreneurs had found themselves in a situation where there were no agreements or they had clearly declined," said Tuula Säynätmäki, Director of TE Services in Central Finland.
State firm 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 energy production plants were partly based on wood fuel imported from Russia, which stopped soon after the outbreak of the war.
Pasi Rantonen, director of peat operations at energy firm Neova, said that the company is resuming energy peat production, especially east of Lake Päijänne. The majority state-owned Neova had previously said it would abandon the production of energy peat.
"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.
Last autumn, Neova estimated that the existing stocks would be sufficient for the heating needs through the winter of 2022-23. Rantonen declined to say how much energy peat will be harvested next summer, as discussions with contract partners are still in progress.
Some of the equipment intended for peat production has already been scrapped based on subsidies from the ELY Centres for Economic Development, Transport and the Environment. Rantonen does not see this as a major problem, though.
"Those scrapped machines had reached the end of their service life. They probably wouldn't have been used anyway. 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, but many people in the sector have already found other work.
Peat will not resolve security of supply
However, he said it will be possible to re-start production since it has only been a few months since the decision to close down.
"If there had been a year or two in between, it would have been really difficult," Rantonen said.
Peat stocks have also been raised in the discussion of security of supply due the crisis in Ukraine and the decline in energy imports from Russia.
"The peat volumes now being produced will play a small role in security of supply; they won't resolve the situation," Rantonen said.
According to a project that studied the peat industry in Central Finland, one third of entrepreneurs who worked in peat production have applied for other jobs in recent years.
Eero Suomäki, the project manager who led the project, has himself worked as a peat contractor.
"A lot depends on what kind of deals are offered. One-year contracts are unlikely to get people motivated," Suomäki said.
Matti Siikki, chair of the machine entrepreneurs association of Central Finland, said that his family company scrapped its peat production equipment last summer after 47 years in the business.
"I've thought about returning to the industry, but the outlook for peat production would have to be solid for at least 10 years to make it worthwhile," Siikki said.
"In practice, peat is being replaced by wood"
The city of Jyväskylä's energy company, Alva, is not concerned about the peat situation, though in the past it accounted for about a third of Alva's fuel use.
There are no worries for next winter, said production director Alex Schreckenbach, but from then on, the outlook is uncertain.
"Alva's plan is to give up peat by 2026, but that won't work if all the peat bogs are closed by 2024," Schreckenbach said.
According to Schreckenbach, all energy companies have the same concern: access to peat must be secured until firms can meet their climate targets and stop using peat altogether.
"In practice, peat is being replaced by wood. That, in turn, requires machines and workers," Schreckenbach said.
According to the TE Office, both the forest and transport sectors face labour shortages as it is.
"We have a really severe shortage of personnel in many fields. For example, many seasonal peat production workers have been able to find employment easily in the transport sector," said Säynätmäki.
