EU prepares for energy price changes due to Iran war, situation in Finland remains stable

EU prepares for energy price changes due to Iran war, situation in Finland remains stable

The leaders of the European Union met in Brussels on 19 March to discuss the war in Iran and its effects on energy prices. The EU is making preparations to mitigate the war's effects on energy prices, while Finland's energy system remains stable due to its low dependency on fossil energy.

At the meeting, the EU leaders shared their concern over the escalation of the situation in the Middle East and its impact on imports and prices of energy. Finland's energy system functions well, however, and the Finnish electricity production is almost entirely independent of fossil fuels.

"The current situation in the Middle East shows once again why discontinuing the use of fossil fuels is an economic and security issue as well. We need better incentives to strengthen energy self-sufficiency. Finland benefits from its long-term efforts to reduce dependence on fossil energy," says Minister of Climate and the Environment Sari Multala, who is responsible for energy issues.

Finland has been determined in its efforts to safeguard security of supply in the long term. Thanks to the storage of imported fuels and the liquefied natural gas (LNG) terminal in Ingå, security of energy supply is strong in Finland.

In recent weeks, there has been a great deal of discussion in the EU about energy prices. The Finnish Government is prepared for sudden changes and is currently drafting a proposal to enable the regulation of retail electricity prices during an electricity price crisis declared by the EU. The changes would help ensure the availability of reasonably priced energy for private consumers and small companies. The consultation period for the proposal ended recently and the Government plans to submit the proposal to Parliament during the spring session 2026. A reform of the Emergency Powers Act is also under way.

Principles of emissions trading scheme to remain unchanged

The EU leaders agreed that, despite the hopes of some Member States, the principles of the EU Emissions Trading Scheme (ETS) would not amended. Instead, the EU will introduce a number of measures to fine-tune the scheme to respond to the criticism of the system.

Finland welcomes the decision due to its active and long-standing support of the ETS. Minister Multala has highlighted the issue at recent Energy Council and Environment Council meetings and Finland has co-signed two letters advocating the important role of ETS.

"The Emissions Trading Scheme will continue to be the cornerstone of the EU's climate policy. At the same time, many EU countries remain too dependent on fossil fuels. Phasing out fossil energy is crucial not only for the climate but also for Europe's economy and security," Multala says.

"Finnish industry has invested billions of euros in clean energy so it is in Finland's interest to have a strong ETS. In addition, an ambitious and well-functioning emissions trading system is a key condition for many investment plans," she adds.

A more thorough EU-level discussion on the matter will continue in July in connection with the reform of the Emissions Trading Directive. Finland will actively continue its efforts to advocate emissions trading.

Prime Minister Petteri Orpo represented Finland at the European Council.

Inquiries:
Riku Huttunen, Director General, Minister of Economic Affairs and Employment, tel. +358 50 431 6518
Juuso Kilpinen, Special Adviser to the Minister of Climate and the Environment, tel. +358 50 322 9636 (questions to the Minister)
Tatu Pahkala, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 4217
Juhani Tirkkonen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 506 2140 (emissions trading)