The Finnish government has issued a statement indicating that on Monday, 13 January 2025, a government decree will come into effect regarding state aid for promoting the decarbonization of industrial production processes, enhancing energy efficiency, and facilitating the transition to a climate-neutral economy. At the same time, the Government released the final version of the decree.

What can the state aid be granted for?

Investment aid can be obtained for investments referred to in sections 2.6 and 2.8 of the European Commission’s Temporary Crisis and Transition Framework (2023/C 101/03), which include investments in the decarbonization of industrial production processes and energy efficiency measures, as well as investments in sectors strategic for the transition towards a net-zero economy.

Investment aid for the decarbonization of production processes and energy efficiency measures can be granted for up to 50 percent of the eligible costs of investments aimed at reducing greenhouse gas emissions that are not related to electrification, and 30 percent of the eligible costs of investments related to electrification that reduce greenhouse gas emissions, as well as the eligible costs of investments that reduce energy consumption. An individual investment aid can amount to up to 200 million euros.

For strategic sectors, investment aid can be granted for up to 15 percent of the eligible costs and up to 150 million euros. However, the investment aid can be increased to 20 percent of the eligible costs and up to 200 million euros if the investment is made in areas designated on the regional aid map.

The decision to grant investment aid is made by Business Finland, after consulting the Ministry of Economic Affairs and Employment. A total of 400 million euros has been allocated for investment aid from the state budget. Additionally, investment aid can only be granted for new investments. This means that construction work must not begin, nor a legally binding equipment order commitment be made, before submitting the investment aid application to Business Finland.

How is investment aid applied for?

Business Finland intends to open the application process on January 13th. Entities interested in the investment aid must prepare their applications promptly, as the application process is only open for a few months.

Based on the Government decree, the investment application must include at least the following information regarding the investment:

• A description of the investment project and the intended use of the aid in accordance with the decree
• Project objectives, implementation method, and project start and end dates
• Project budget and financing plan
• The amount of aid being applied for
• An assessment of the project’s impacts
• An assessment of the aid’s effects on the implementation of the project
• Required information and reports on meeting the conditions for granting the aid

In addition, Business Finland may require other information necessary for making the decision. For investment aid in strategic sectors, information in accordance with Annex II of the Temporary Crisis and Transition Framework must also be provided.

Amendments in the final degree?

In terms of the main points, the Government decree largely follows the draft sent for comments in September 2024, and the final decree mainly includes clarifications compared to the draft. However, a significant change has been made regarding the decarbonization of industrial production processes and energy efficiency measures, where after a 36-month deadline, the amount of the subsidy is reduced by one percent for each full month that exceeds the deadline.