Position Papers
Energy, Raw Materials and Circular Economy
Subject Overview
In the future, the chemical industry will require a huge amount of alternative raw material sources, to replace virgin fossil raw materials and energy. Alternative sources include all captured carbon dioxide, recycled/reused carbon (waste), and sustainable bio-based carbon sources. In addition, the chemical industry will need significant amounts of renewable and low-carbon hydrogen. On the inorganic chemistry side, there is a great need to find the best material solutions. A good example is the growing need of batteries and battery chemicals where the recycled materials are the only viable option to subsidy virgin raw materials. Decreasing the share of virgin fossil raw materials will often reduce the dependence on the imported raw materials and therefore increase material and energy security.
Modern production plants are very efficient and different kind of waste heat, waste, and residues are utilized effectively. Chemical industry raw materials can also be produced synergistically with other segments. For example, more extensive use of biomass as a raw material in the chemical industry can increase its overall value and benefit food/feed production and renewable energy production. The chemical industry produces a wide range of products and fuels for other sectors, so finding alternative raw materials is also critical for the carbon neutrality of other industries.
The development processes for new raw materials have been going on for some time and new sources have been found and adopted whenever possible. The work has been challenging because each new source must be carefully evaluated. Often restricting factors and/or other challenges are found during the evaluation. For example, potential raw material might be very climate friendly, but challenging from biodiversity perspective.
The incompleteness of legislation and current flaws also slow down the transition and at worst remove the basis for investments altogether. In addition, the cost difference between virgin fossil raw material and alternative raw material is often a significant obstacle. On the product side, this is reflected as a lack of demand.
Current legislation does not recognize and support the alternative raw materials which slows down the transition and, at worst, completely prevent investments. The cost difference between virgin fossil raw material and alternative raw material is often a significant obstacle, which reflects as a lack of demand of alternative raw material products.
The Commission published a communication on industrial carbon management (ICM) and 2040 climate targets in February 2024. The ICM communication describes the role of carbon capture, storage and utilization in the future, as a part of the 2040 climate framework. The role of carbon cycles seems to be connected better in the climate policy framework and this is expected to be reflected in further discussions.
Objective of the Chemical Industry Federation of Finland
Key messages
- The EU must develop a sufficiently comprehensive Circular Carbon Strategy that covers all alternative carbon cycles (recycling, bio, (B)CCU)
- Existing legislation must be amended to recognize and support alternative carbon sources:
- Legislative sectors must be harmonised to recognise all alternative carbon sources and support all carbon cycles
- Climate legislation must be fixed. The most crucial parts seem to be:
- ETS including CCU rules and emission accounting rules, which must clear and favour fairly (B)CCU products.
- Renewable energy directive (RED) covering crucial hydrogen rules and sustainability criteria’s which should be harmonized to cover all products.
- Carbon removal certificates should promote alternative carbon cycles fairly
- New market incentives should be developed for alternative carbon products.
- Funding and subsidies are crucial to accelerate massive investments
- Focus on EU-level mechanisms instead of subsidy race between EU member states For example, carbon bank seems to be promising mechanism.
- Only competitive industry can invest and move towards carbon neutrality.
More detailed messages
Subject Overview
In the future, the chemical industry will require a huge amount of alternative raw material sources, to replace virgin fossil raw materials and energy. Alternative sources include all captured carbon dioxide, recycled/reused carbon (waste), and sustainable bio-based carbon sources. In addition, the chemical industry will need significant amounts of renewable and low-carbon hydrogen. On the inorganic chemistry side, there is a great need to find the best material solutions. A good example is the growing need of batteries and battery chemicals.
Reducing virgin fossil raw materials will often reduce also the dependence on imports and increase the level of raw material security.
The development processes for new raw materials have been going on for some time and new sources have been found and adopted whenever possible. The work, however, has been challenging as each new source must be carefully evaluated. Often restricting factors and/or other challenges are found during the evaluation.
In addition, the legislation does not support the alternative raw materials which slows down the transition and, at worst, completely prevent investments.
The Commission published a communication on industrial carbon management (ICM) and 2040 climate targets in February 2024. The ICM communication describes the role of carbon capture, storage and utilization in the future, as a part of the 2040 climate framework. The role of carbon cycles seems to be connected better in the climate policy framework and this is expected to be reflected in further discussions.
Objective of the Chemical Industry Federation of Finland
All alternative sustainable carbon sources should be favoured instead of virgin fossil raw materials, and legislation should support this principle. The EU therefore needs to ensure that sufficient comprehensive Circular Carbon Strategy will be prepared. This strategy should support all technologies that are need for circular economy and different carbon loops (chemical and mechanical recycling, (B)CCU technologies, bio-based carbon sources etc).
CO2 calculation rules in the emissions trading sector, effort sharing sector and land-use sector are currently inadequate. For example captured carbon or negative emissions are not properly accounted in ETS. The Commission has identified ETS as a key element in the future climate, but the calculation rules should be fixed so that technologies related to CCS/U would become more common and new raw material alternatives could become reality. In addition, the role of carbon removal certificates should be clarified. These certificates could be used to connect carbon removals to the ETS, which might solve some challenges related to calculation rules.
The legislative framework should favour the development of a hydrogen economy including green hydrogen as well as other emission-free ways of producing hydrogen and low carbon hydrogen. By-product hydrogen should be acceptable and comparable to renewable hydrogen.
Too strict technology guidance is not needed. In certain situations, however, it is justified to target legislation to promote certain new technologies or environmentally friendly products. For example, the double counting for the advanced biofuels category is justified in order to bring advanced fuels
into wider use. Otherwise, multipliers should be abandoned, and real emission reductions should be favoured.
It is important for the chemical industry that the sustainability rules for renewable fuels are kept unchanged to maintain the operational capability of current and planned investments. Long-term and predictable politics are essential for industrial investments.
The need for investment subsidies will be huge. However, it is important to maintain access to subsidies for all member states within the EU and avoid subsidy competitions between member states. For example, a “carbon bank” as a form of support could be justified from this perspective.
Competitive industry enables the raw material revolution and the implementation of carbon cycles. More precise information can be found from the CIFF 2040 onepager.
Innovations, Funding and Investments
Predictable Permitting, Policies & Legislation
Skills & Education
Subject overview
Starting from the premise that the funding for vocational education in the field of technology should cover its implementation costs, financing should take into account investment-intensive learning environments, machinery, and equipment. Funding should also be available for joint learning environments between the workforce and educational providers, in line with the spirit of the revamped vocational education law.
In the vocational education reform, a focus was placed on work-life orientation and workplace learning, individualized paths, and competence-based approaches, resulting in accelerated studies. However, funding remained fragmented and challenging to predict.
The challenges in vocational education within the field of chemistry include low attractiveness and poor employment prospects for graduates of basic vocational programs, all while the competency needs in the chemical industry are growing and diversifying.
Objective of the Chemical Industry
The relevance of funding for technology-related fields will be reviewed. The weight of feedback from the workforce will be increased in funding decisions, as promised during the law’s reform.
In the future, funding criteria should be adjusted to consider not only short-term realized costs but also other training cost metrics. Funding planning should take into account the specific characteristics of expensive training fields.
The entire vocational education funding system needs to be made more understandable, predictive, and supportive of vocational education’s role in the workforce.
Implementing vocational education reform; involving businesses and making learning flexible. Creating new learning environments in collaboration with companies.
English-language accreditation for vocational education should be granted whenever there is a need for skilled workers in a particular field, and local companies are involved in the applications.
Finnish industry actively works to secure Finnish future expertise. In the future, we need the best possible experts for businesses to secure renewal and growth towards a carbon-neutral future. Expertise in natural sciences and mathematics (STEM) is one of the most important skills needed by the industry. The National STEM Strategy responds to the long-term development of expertise needs.
Goals of the chemical industry:
- We closely monitor the implementation of the STEM Strategy. The implementation of the STEM Strategy must respond to the industry’s expertise needs, especially when considering the increased need for STEM expertise due to the transition to carbon neutrality. Finnish STEM expertise will increasingly compete in global markets in the future. Finland must remain a leading country in STEM expertise, and PISA results must be improved.
- An objective impact assessment will be carried out for STEM CENTER Finland. The STEM Finland network has been doing valuable work in promoting natural sciences and mathematical capabilities for almost a decade, but its impact has not been objectively studied.
Safety & Security
The national implementation of the CER directive approved by the EU is underway. The directive pertains to the resilience of nationally important companies in the face of disruptions. A Finnish legislative proposal is expected to be ready for review by the end of 2023. The law is set to come into effect on October 18, 2024, pending approval by the parliament in the spring of 2024. Together with the NIS2 directive, the CER directive forms the basis for preparedness against security threats.
It is not yet known which companies will fall under the scope of the law. The law will categorize companies it applies to as either essential or important. Essential companies will be required to report in advance to the authorities. Important companies will be inspected by the authorities based on their own schedules. In general, the categorization of companies will follow the NIS2 directive.
The law’s requirement for companies to prepare for various security threats is broad and challenging to implement because it is unknown what kinds of threats criminal entities may pose to companies in the future. The successful implementation of the law requires strong cooperation between companies and authorities. Authorities must first conduct a national risk assessment. Based on national risk assessment companies falling under the scope of the law will conduct company-specific risk assessments. Due to these risk assessments and the resulting actions, it is likely that the law will have long transition periods.
Kemianteollisuus ry (Chemical Industry Federation of Finland) is monitoring the progress of the law’s preparation through stakeholder events, organizing information seminars for member companies, and communicating the perspectives of the chemical industry to the lawmakers.
The revised Dangerous Substance Transport Act (Vaarallisten aineiden kuljetus, VAK Act, in Finnish) came into effect on September 1, 2023, and it now forms a comprehensive framework for requirements in all four modes of transportation – road, rail, maritime, and air transport. The goal is to streamline regulations, eliminate ambiguity, and address deficiencies. Finland’s national VAK Act is now more aligned with international regulations. Above all, the law aims to enhance transportation safety in Finland.
The VAK Act is extensive and covers a wide range of activities. In addition to the VAK Act and its related regulations, more detailed guidance will be needed from the Finnish Transport and Communications Agency on how operators should proceed in specific situations. Furthermore, the regulatory oversight responsibility will shift to the authority (Traficom). These changes emphasize the growing involvement of the authority in transportation safety and increased collaboration between businesses and authorities.
The law establishes uniform standards for the temporary storage of dangerous substances. Emergency plans and safety assessments prepared for this purpose enhance the ability of both businesses and authorities to respond to hazardous situations and, most importantly, help prevent them. However, this also requires more effort and resources from all parties involved.
The law places significant emphasis on the chemical and safety expertise of both drivers and companies responsible for transportation. The role of safety advisors in companies becomes more crucial.
The national implementation of the EU-approved NIS2 directive, which concerns cybersecurity, is underway. Finland’s national legislative proposal will be prepared for review during the year 2023. The law is expected to come into effect on October 18, 2024, so parliamentary approval should occur in the spring of 2024.
This law is an improved version of the old NIS directive. For the chemical industry, the new law is significant because it now falls under the directive’s scope. The law will categorize applicable companies to as either essential or important. Essential companies will be required to report in advance to the authorities. Important companies will be inspected by the authorities based on their own schedules.
The requirement for companies is to prepare for all cyber security threats. In practice, this is challenging and depends greatly on the types of threats that criminal entities may pose to companies in the future. The successful implementation of the law requires strong cooperation between companies and authorities. Additionally, inter-company information sharing is crucial to quickly identify threats.
Kemianteollisuus ry (Chemical Industry Federation of Finland) will monitor the progress of preparation of the law through stakeholder events, organize information seminars for member companies, and communicate the perspectives of the chemical industry to the lawmakers.