Optimizing Finland's carbon reduction pathways : a multivariate analysis of power and transport sectors

Abstract

Finland’s 2035 carbon neutrality target faces unprecedented challenges following the transformation of its forests from carbon sinks to net carbon emitters, undermining a key pillar of national climate policy. This thesis presents a comprehensive, data-driven optimization of Finland’s carbon reduction pathways in the power and transport sectors, which together account for the majority of national greenhouse gas (GHG) emissions. Using 34 years of historical data (1990–2023) and real-time electricity generation data, the study employs multivariate linear regression and constrained optimization algorithms to determine the optimal mix of renewable & nuclear energy against total primary energy demand (TPED), and carbon tax rates required to achieve emission targets of 21 Mt CO₂-eq by 2035 and below 5 Mt CO₂-eq by 2050. The analysis reveals that achieving the 2035 target requires a renewable energy share of 58% of TPED, nuclear share of 30% of TPED, and a carbon tax of 84€/tCO₂, with further increases in renewables needed by 2050. Forecasting with Seasonal Autoregressive Integrated Moving Average (SARIMA) models indicates that Finland’s electricity sector is on track for near-zero emissions by May 2029 with a 95% confidence level, potentially 19 months ahead of the government's target end of 2030. This optimistic outlook is primarily driven by the rapid expansion of wind power and the stable contribution of nuclear power. However, the transport sector's emission reduction efforts are currently off track. Annual emission reductions must accelerate from 1.25% to nearly 5%. After 2030, an even higher reduction rate of 6.7% annually will be required. This necessitates aggressive electrification, the adoption of alternative fuels, and significant modal shifts, particularly within road transportation, as evaluated using the ASIF and A-S-I frameworks. Correlation analyses also confirm the effectiveness of carbon pricing and renewable energy expansion, while also highlighting the need for tailored regional adaptation due to declining heating demand from climate warming.