Commerce sector emissions decreasing efficiently, but not enough to achieve carbon neutrality by 2035

According to the carbon index* followed by the Finnish Commerce Federation, the commerce sector’s total emissions (direct emissions, refrigerants, electricity, heat) decreased by eight per cent in 2020. The carbon index is used to monitor the realisation of the two scenarios of the commerce sector’s low-carbon roadmap: the basic track and the track of renewable commerce.

Data from Statistics Finland indicates that Finland’s overall emissions in 2020 were at a record low, decreasing by nine per cent from the previous year. The reduction in Finland’s emissions was caused by a warm winter, recent changes in the structure of electricity production and a decrease in traffic performance, among other factors. In 2019, direct emissions from the commerce sector decreased by three per cent and total emissions by eight per cent.

Measured by the commerce sector carbon index, the sector’s CO2 emissions decreased in 2020

The eight per cent decrease in the total emissions of the commerce sector demonstrates that the sector and its pioneering companies are doing a lot to reduce emissions – especially considering that the sector’s turnover has still kept growing. Nonetheless, the commerce sector carbon index does indicate that the actual rate of decrease of emissions is not sufficient to achieve carbon neutrality. Achieving carbon neutrality for the whole sector by 2035 would require an annual reduction in emissions of at least 10–13 per cent.

In the basic track of the carbon index, the present positive change, mainly relying on companies’ own actions, will continue, and carbon neutrality will be achieved in 2050. In the scenario for renewable commerce, the sector’s transition is supported by a reduced electricity tax rate, in addition to which commerce will launch its own small-scale production of renewable energy, which will considerably reduce the use of purchased electricity and heat. In this case, carbon neutrality can be achieved in 2035.

“Achieving carbon neutrality in the commerce sector by 2035 requires political action focused on the sector,” emphasises Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.

The low-carbon roadmap for the commerce sector, published in 2020 (Renewable Commerce 2035, in Finnish) includes a lower electricity tax rate for the service sectors as one of the key ways of achieving carbon neutrality in the sector.

“Lowering the energy tax to promote increasing the use of electricity would allow stores to give up energy produced with fossil fuels more quickly,” says Kiviniemi.

Companies can achieve more than eight-fold emission benefits by increasing the use of electricity

According to a survey commissioned by the Finnish Commerce Federation in spring 2021**, electrification of the commerce sector can substantially reduce carbon dioxide emissions. The emission benefit achievable with electrification is more than eight times the emissions caused by the increased use of electricity. Lowering the electricity tax in the commerce sector would speed up electrification, thus enabling carbon neutrality. Recent data regarding changes in the commerce sector carbon index demonstrate that increasing electricity use is a prerequisite for achieving carbon neutrality in commerce by 2035.

“The carbon index demonstrates that the current annual emission reductions are not enough to achieve the target, but reductions need to increase faster. Returning the electricity tax of the service sector back to the same level with industry will open a path to carbon neutrality by 2035 for the sector and encourage investments that reduce the carbon footprint,” says Bate Ismail, economist at the Finnish Commerce Federation, who also created the carbon index.

“Finnish commerce has faced new challenges and intensifying international competition for a long time, much like industry. All businesses must be on an equal footing with regard to electricity taxation, so that all sectors have equal opportunities to pursue carbon neutrality by 2035,” says Mari Kiviniemi.

The commerce sector carbon index is used to monitor the development of emissions in the sector

The Finnish Commerce Federation monitors the development of carbon dioxide emissions in the commerce sector and reports on the development of the carbon index annually in October, after Statistics Finland has published its statistics on atmospheric emissions and energy accounts. The Finnish Commerce Federation also uses the carbon index to monitor the progress of scenarios set out in the low-carbon roadmap, published in 2020, as well as to assess what the real impact of policies and business measures is on emissions and their reduction. The carbon index does not take into account the compensation of emissions by companies in the sector.

“The carbon index allows us to compare real emissions figures to two of the scenarios presented in the roadmap: the basic track and the track of renewable commerce, demonstrating if the objectives of the commerce sector are being achieved and whether policy measures are effective enough,” explains Ismail.

The index can also be followed on the Finnish Commerce Federation’s website at kauppa.fi/hiili-indeksi >>

Appendix: Commerce sector carbon index, October 2021

For further information, please contact:

Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 50 511 3189, mari.kiviniemi@kauppa.fi

Bate Ismail, Economist, Finnish Commerce Federation, tel. +358 40 526 0942, bate.ismail@kauppa.fi

*The carbon index is based on comprehensive information about the direct and indirect emissions in commerce, such as the use of electricity and heat, collected from various official sources. In addition, surveys have been conducted among member companies to determine the present state and future outlook of refrigerants, important in the commerce sector. Other data include the present emissions factors and the future factors for different scenarios produced by Energy Finland. These helped harmonise the impacts that the different scenarios have on the sector. The harmonised CO2 emissions at present and for different scenarios were indexed using statistical methods to make it possible to monitor changes. The carbon index does not include emission compensation.

*As part of implementing the commerce sector low-carbon roadmap, the Finnish Commerce Federation commissioned Gaia Consulting to conduct a survey on electricity use. The survey provides detailed information on the current overall use of electricity, estimates on its development over the following 20 years and on factors that affect the development.