Finland aims windfall tax at hydro, nuclear

Finland’s Finance Ministry said August 16 it plans to impose a windfall tax on energy companies of about 3 euros (US$3.83) per MWh that would apply only to “old” hydropower and nuclear generating capacity.

The initial tax level under discussion would bring in about 100 million euros (US$127.9 million) annually to the government, senior Finance Ministry official Leo Parkkonen said.

“The premise for the plan is to target old hydroelectric and old nuclear power plants, not the new emission-free forms of power generation,” he said.

A ministerial energy working group decided in June that a windfall tax would be introduced in 2008, mainly to even out unmerited gains to companies that are selling carbon credits under Finland’s emissions trading scheme. The tax would fall on power plants whose production costs remain stable, while their profits are climbing with electricity prices, and are further boosted by emissions rights prices.

Finnish power firms and major customers have criticized the proposal, saying it would hurt consumers and producers.

There has been no final decision on the amount of the tax nor on what constitutes an “old” hydroelectric or nuclear plant, but Parkkonen said capacity built after the early 1990s was not being targeted.

“It is very difficult to say how big the exact windfall figure for each individual company would be,” he said. “… I would say, that as the current conditions of the emissions trading scheme prevail, the old hydroelectric and nuclear power plants’ ability to pay tax is even better than before.”

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