”The End of the Old World”

Finland has finally reached the bottom. Finch & Poor (what a name for a loan company by the way, should it be Rich & Poor?) dropped Finland’s credit rating from AAA to AA+. Media has been full of comments by politicians, economist and all kinds of commentators. It seems that this decrease of the credit rating is the worst thing that can happen to Finland. The ministries of our government are the exception, they “have seen this coming” and say that “this has nothing to do with the government’s economic policy”. Well, it might even be the case. But everyone agrees, that we really should start to do something.

What can we do? How should we do it? We have a lot of ideas that’s for sure. The FFRC has also been “guilty” of generating these ideas together with various partners. Real implementation of the ideas is missing for various reasons, and it depends on who you ask what these reasons for missing implementation are. Let’s take one example, namely our energy system. The use of coal increased in the beginning of 2014 in Finland. I thought that coal is one of the most harmful energy sources. But it is cheap. So the market mechanism is working and markets are always right, right? In order to develop new ways to produce carbon free energy, we would need other mechanisms too in order to gain some achievements in renewable energy sector if that is what we want. Almost everyone is hoping for it, if we look at the polls made on energy questions.

Germany gives us a practical example on what happens when a radical political decision is made based on a referendum on the energy policy. Germany decided a few years ago to run down nuclear plants and increase renewable energy production. “Energiewende” has reformed the German energy system. In this case, new markets started to emerge when room for new business was created. Could we do the same in Finland? What comes to question of nuclear energy, it seems hard to stop the train, but is it possible. The question of oil and coal is also a hard one. From the point of view of greening the Finnish energy system we should increase the acceptance and demand of renewable energy. We could decrease primary energy consumption even if the share of electricity keeps constant. We could also diminish our dependence on imported primary energy and electricity.  We should develop major energy technologies like biomass gasification, CHP, wind, solar and smart grids further. It would also mean decentralization of the energy system. It would need direct and indirect support to renewables and indirect support to smart grids. New players could enter the energy market, start-ups and jobs in renewable energy could be created. It would mean nuclear decommissioning. It would improve the grid control and stability with a large number of small electricity producers and electricity market with large number of suppliers and producers. Why not do it?

In the short run Finnish “Energiewende” would mean a national joint effort in many sectors of society from households to companies and public administration, education and research. It would also mean risk taking in a tough financial situation. It would need courage from all social players and it would not be easy. I cannot promise it would be a total success but without doing anything we cannot achieve anything.


In Turku 24 October 2014

Juha Kaskinen


The Director for the FFRC,
Juha Kaskinen, writes a column
to these pages.