Finland’s new government last week set out a goal to be carbon-neutral by 2035. Global news wires have touted the raft of policies as one of the world’s most ambitious government programmes in targeting climate change.
The policies hit right at the source of carbon emissions – burning fossil fuels for electricity, heat, and transportation. It will require the country to radically rethink its energy sources, especially fossil fuels and peat, which supplies about 40 percent of the country’s energy needs. It will require a push for renewable energy production, electric vehicles, and an increase in bioenergy.
GovInsider met with the President of Sitra, Finland’s public innovation agency, Mikko Kosonen, to talk about the country’s work in a carbon-neutral circular economy, and safeguarding Finland’s future.
The circular economy
A key part of the new government’s agenda is moving towards a circular economy, which combines sustainability and economic growth with business models that focus on reusing and repairing products, and recycling materials so waste is minimised or reduced to zero.
Finland launched the world’s first circular economy roadmap in 2016 with the help of Sitra. The plan outlined concrete steps to fund startups, businesses, and foundations to pilot profitable solutions for a circular economy, including projects on creating sustainable food system, technical loops, transportation, and joint actions.
Economic growth and environmental protections have traditionally been in conflict with one another. On the contrary, Kosonen says, the two are mutually reinforcing. Cars, for example, are idle 94 percent of the time, he says, and the circular economy looks at how resources like these can be shared, so its use is maximised.
Kosonen says policymakers and businesses have increasingly bought into the idea because this model can generate revenue, reduce resources, and create new jobs. Finnish energy companies, like Neste, are already producing bio-based diesel from wastes and residues collected from the country and globally for cleaner fuels.
Helsinki’s mayor, Jan Vapaavuori, wants the city to be a testbed for circular economy projects. Speaking at the World Circular Economy Forum, he said: “One of the biggest strengths of Helsinki is that we are big enough in order to enable pilot and demonstrations on a systemic level. But at the same time, we are small enough to make that really happen.”
Sitra’s plan to future-proof Finland
Like with the circular economy vision, Sitra conducts futures and foresight research to plan 10 to 20 years ahead. Kosonen explains that “Sitra has a mandate to look to the future and take risks on behalf of the public and private sector,” and it does that by first setting a vision, and then conducting experiments to find the best solution. “We are kind of building the future of Finland. Because if you look at government, they only look four years ahead, and the opposition is playing politics daily,” he says.
As a risk taker for both the public and private sector, there are bound to be failures. But even this, he says, is the function of Sitra. “They see that we fail, then they know that does not make sense, so let’s not try. In a way, we have kind of failed for them,” he says.
The innovation fund was started in 1967, at a time where the country was undergoing a rapid transformation from an agricultural economy to an industrialised one. The government presented Sitra as a 50th birthday present to its people – an endowment fund of US$19 million from its reserves. Since then, Sitra has used the money to carry out low-risk investments, and currently has close to US$900 million, of which US$34 to US$45 million are spent on its projects annually.
As a change agent, the exit plan usually involves identifying permanent owners who can take over projects after they’ve been piloted – either by parking the project under an existing organisation or helping to build up one. The Ministry of Environment in Finland was started 30 years ago after Sitra pointed out the importance of environmental issues, for instance.
Automation and education
Two other big challenges the innovation fund is looking to tackle are the rise of populism in Europe, and the fast-evolving nature of education and employment.
Lifelong education in Finland is becoming a critical topic as technology is simultaneously creating and reducing job opportunities. Finland’s education system has been consistently ranked as one of the best in the world, but Kosonen says there are no plans beyond graduation from universities. “No country can afford to send all people back to school,” he says, and Finland must start to rethink the entire pedagogical system to make sure that people stay competitive and willing to learn throughout their life.
There is also a need to rethink the welfare system prevalent throughout Europe, says Kosonen. With the tide of populism sweeping across the region, Kosonen says this is not something politicians are willing to talk about, but is important for its future. If people continue depending on the welfare system when rising unemployment is expected, he questions how long a segment of society support this. “We have to run fast, we have to educate people, and keep as many people as we possibly can in the job market. But still, the risk is that we lose the battle,” he concedes.
Political and financial independence
Sitra’s work cuts across political divides and election cycles. It is part of the parliament, but financially and politically independent. This allows it to tackle challenges – such as climate change, education, and automation – whose impact runs well past government’s four-year terms.
“We have the convening power, only as long as people truly believe that we have only one agenda. And that is the competitive well-being of Finland in the long term,” says Kosonen. And Sitra’s political and financial independence are the twin pillars in securing this trust.
Unlike strategy funds or departments around the world, Sitra is neither part of a ministry, nor funded by businesses. Kosonen says, “Sitra does not get its agenda from the politicians and political decision-makers for the government. It creates the agenda itself.” There is also a law in Finland which protects the independence of the innovation fund, which makes it “kind of untouchable.”
It is still a fine balancing act, however, for the fund to remain independent. Sitra is careful to make sure their projects are never too politically left or right leaning. And his benchmark for that, he says, is: “As long as we are being equally criticised by different parts, we are fine. But if only one party, or one line of thinking criticizes and the others are supporting over time, then we have to look at the mirror.”
Kosonen believes it is important for every country to have an organisation like Sitra to think beyond the politics of the day. Countries must take steps towards long term planning, he adds: “If modern democracies are not capable of becoming more strategic and agile, strategic, more visionary, agile in implementation”, Kosonen fears they will lose to more authoritarian governments.
Meanwhile, as governments continue to come and go, Kosonen hopes Sitra will remain the guardian of Finland’s future.