Legal Alerts/18 Oct 2022

Borenius and Amcham Finland Publish Proposal to Make Finnish Industrial Parks a Driver for FDI and Growth

Finland has recently lost out on several billion-euro investments that have gone to other countries whose industrial parks can provide a one-stop-shop solution also with respect to permitting. In addition, the processing of environmental permits for important investments is currently backlogged, and getting a project fully licenced in Finland takes far too long.

Building on the Amcham FDI Vision, an Amcham Finland working group has formulated a set of proposals on how to reform the permit system to expedite investments without compromising on the environment. One of the main proposals establishes a concept for making Finnish industrial parks a driver for new investments. This alert discusses the key failings of the current permit system and introduces the proposed changes.

Unpredictable current environmental permit system

In the past, despite the permit process taking a long time, companies were still able to rely on the permits they had obtained. However, the Finnish environmental permit system has recently become more unpredictable as several green field industrial investment projects have had their environmental permits overturned in administrative courts.

This trend has a major negative impact on not only predictability but also timetables, as the revoked permits have to be reprocessed. The recent developments have significantly endangered Finland’s ability to attract further investments e.g. in relation to renewable energy and the battery chain.

What are the proposed reforms?

A special status for investments in existing industrial parks

One of the novel proposals introduced by the Amcham working group is to formulate a special status for environmental permits relating to investments in existing industrial parks that are zoned as industrial areas for this type of industry (T or Tkem). The industrial parks in Finland have a long track record of not creating social conflicts and large resistance in terms of their environmental performance and new investments to the parks.

In addition, new investments benefit from centralised water treatment and waste management opportunities. The working group has proposed a model that would enable industrial parks to create growth opportunities when supplied with sufficient amounts of renewable energy and green hydrogen.

Lighter permit requirements, benchmarking, and advance licensing

In order to facilitate these growth opportunities, some small amendments would need to be made in regulation. These include lighter permit requirements for new investments (where the zoning supports the location as a go-to area). Furthermore, emissions should be benchmarked on a park level to enable new investments in situations where old operations are closed down (i.e. the park should not lose emission quotas in these circumstances) and voluntary compensation could be used to bring in new investments for which there is not sufficient quota.

Industrial parks should also be given the possibility to licence new operations in advance so that new investors can ramp up their investments rapidly. It should be possible to integrate this into the permit system especially in situations where the investments would rely on existing licensed wastewater treatment and waste facilities in the park area. 

Industrial parks - a major growth opportunity for Finland

Parallel proceedings and enforcement rights

The proposals also contain a number of small amendments that could have a significant impact. One of these amendments aims to fix the current challenges faced by industry operators whose permits are getting overturned in courts due to long-term risks. The proposals also synchronise zoning and permit decisions so that any appeals can be handled in parallel proceedings, saving up to two years of time.

In addition to the proposal concerning parallel proceedings, the working group has suggested that enforcement rights be introduced to all relevant legislation instead of attempting to limit the right to appeal as this could prove constitutionally challenging. The introduction of enforcement rights would mean that operations can be established and at least partially operated despite appeals if the court does not sustain such a right. These measures can save an additional two years of time in several types of projects.

How quickly and easily could the reforms be adopted?

The proposed reforms put forward by the Amcham working group are focused on fixing several time-consuming bottlenecks without having to carry out large organisational and/or legislative reforms. The proposals also do not require any budget increases and would save authority resources as permits would not be reprocessed and courts could handle several appeals relating to the same project in parallel proceedings.

The small changes suggested by the working group could be rapidly adopted after the new Government is appointed and could enter into force by 1 January 2024. This would help the new Government boost foreign investments in Finland and the green transition post-haste as the proposed approach is efficient, and it is estimated that some of the proposals could speed up large projects by up to four years.

Combined with its surplus of renewable energy from wind and solar as well as its green hydrogen supply and voluntary ecological compensation of water and biodiversity impacts, Finland could potentially attract significant amounts of new industrial activity if the proposed reforms are adopted. This would also improve the security of supply in Europe.

Interested in learning more?

If you have any questions about the Amcham FDI Vision or the working group’s proposals, please do not hesitate to contact the undersigned or your regular Borenius contact.

Borenius Managing Partner Casper Herler has served as the chair of an Amcham Finland working group on permitting and red tape that supports the implementation of the Amcham FDI Vision for Finland. In his role as an advisory board member, Casper has contributed to the formulation of the Amcham FDI Vision, which is the first comprehensive long-term proposal for improving the FDI policies of Finland.

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Additional information

Casper Herler

Managing Partner