Investment credit for large investments aiming at a climate neutral economy

A company that carries out a major investment aiming at a climate neutral economy in Finland with eligible investment costs of at least EUR 50 million is entitled to the investment credit.

Investment credit is granted by Business Finland. The credit must be applied for from Business Finland before commencement of works.

A parallel form of aid to the investment credit is the investment grant for large clean transition investments. The call for the investment grant is open from 13 January to 14 March 2025.

When to apply

General conditions for granting investment credit

The right to investment credit shall be granted upon application to a company that carries out a large investment aiming at a climate neutral economy in Finland that fulfils the conditions laid down in the Act:

1. energy production from renewable sources and energy storage;
2. low-carbon industrial production processes and energy efficiency measures; or
3. sectors that are strategic for the transition to a climate-neutral economy.

What is required of your company

A company is not a firm in difficulty.

Investment credit may not be granted if the company or group to which it belongs has been issued an outstanding recovery order based on a previous Commission decision declaring the aid unlawful and incompatible with the internal market.

The company is not entitled to an investment credit if the company or group to which it belongs is a credit institution or other financial institution.

Investment credit cannot be granted to a company, if the company, the group to which it belongs or the owner exercising effective control in the company or group are on the sanctions list of the European Union.

What kind of investments are credited

Investments in energy production from renewable sources and energy storage

Investment projects eligible for investment credit for the production of energy from renewable sources and for the storage of energy concerning:

1. energy production from renewable sources as defined in Article 2(1) of Directive (EU) 2018/2001 of the European Parliament and of the Council on the promotion of the use of energy from renewable sources, including the production of renewable hydrogen and fuels based on renewable hydrogen, but excluding electricity generation;
   
   
2. storage of electricity or heat;
   
   
3. storage of renewable hydrogen, biofuels, bioliquids, biogas, biomethane and biomass fuels when at least 75 per cent of the content stored is obtained annually from a production plant for renewable hydrogen, biofuels, bioliquids, biogas or biomass fuels directly connected to the storage.

The plant or equipment on which the investment credit is based must be completed and operational within 36 months of the date on which the investment credit was granted. If this 36-month period is not complied with, the amount of the investment credit granted to the company under the investment project in question shall be reduced by one per cent for each month exceeding the 36-month period. However, no reduction will be made from the amount of the investment credit if the company demonstrates that the delay was due to an unforeseen reason beyond the company's control, which the company could not have avoided by exercising due diligence.

Where the investment concerns the production of renewable hydrogen or renewable fuels, the investment credit shall also be granted subject to the production of hydrogen and hydrogen fuels from renewable energy sources in accordance with the methods for renewable liquid and gaseous transport fuels of non-biological origin laid down in the renewable Energy Directive, its implementing acts or delegated acts.

Where the investment concerns the production of biofuels, bioliquids, biogas, biomethane or biomass fuels, the investment credit shall also be granted subject to compliance of the fuels produced with the Sustainable Energy Directive, the sustainability criteria set out in its implementing or delegated acts and the greenhouse gas emission reduction criteria.

For an investment in renewable energy production or energy storage, the applicant shall demonstrate that the investment project is carried out in accordance with the 'Do no significant harm' (DNSH) principle. An activity is considered to do significant harm to

1. climate change mitigation if it leads to significant greenhouse gas (GHG) emissions;
2. climate change adaptation if it leads to an increased adverse impact of the current climate and the expected future climate, on the activity itself or on people, nature or assets;
3. the sustainable use and protection of water and marine resources if it is detrimental to the good status or the good ecological potential of bodies of water, including surface water and groundwater, or to the good environmental status of marine waters;
4. the circular economy, including waste prevention and recycling, if it leads to significant inefficiencies in the use of materials or in the direct or indirect use of natural resources, or if it significantly increases the generation, incineration or disposal of waste, or if the long-term disposal of waste may cause significant and long-term environmental harm;
5. pollution prevention and control if it leads to a significant increase in emissions of pollutants into air, water or land;
6. the protection and restoration of biodiversity and ecosystems if it is significantly detrimental to the good condition and resilience of ecosystems, or detrimental to the conservation status of habitats and species, including those of Union interest.

Instructions and examples for answering DNSH questions can be found in the document.

Extensive ex-ante DNSH assessments are available in Annex 3 of Sustainable Growth Programme for Finland (especially the section Energy system transition starting on page 454). According to the Finnish Environment Institute, the assessment methods developed for the Sustainable Growth Programme can also be applied to other projects that require DNSH assessments.

Investments in low-carbon industrial production processes and energy efficiency measures

Investment credits are granted for investment projects that enable at least one of the following:

1. direct greenhouse gas emissions from the company's industrial plant using fossil fuels as an energy source or raw material decrease by at least 40 per cent compared to the situation prior to the investment by electrifying production processes or by switching to renewable hydrogen or fuels produced from renewable hydrogen instead of fossil fuels;
   
   
2. the energy consumption of the company's industrial plant in terms of activities supported by the investment credit will decrease by at least 20% compared to the situation prior to the aid.

The reduction in direct greenhouse gas emissions shall be measured on the basis of the average direct greenhouse gas emissions of the five calendar years preceding the application for the investment credit. When examining the reduction of direct greenhouse gas emissions, the actual greenhouse gas emissions caused by biomass combustion are also taken into account.

The reduction in energy consumption shall be measured on the basis of the average energy consumption during the five calendar years preceding the application for the investment credit.

For investments related to activities covered by the ETS, the investment shall result in a reduction of greenhouse gas emissions from the company's industrial installation below the free allocation benchmarks.

The plant or equipment on which the investment credit is based must be completed and operational within 36 months of the date on which the investment credit was granted. If this 36-month period is not complied with, the amount of the investment credit granted to the company under the investment project in question shall be reduced by one per cent for each month exceeding the 36-month period. However, no reduction will be made from the amount of the investment credit if the company demonstrates that the delay was due to an unforeseen reason beyond the company's control, which the company could not have avoided by exercising due diligence.

The investment credit shall not be granted on the basis of an investment which leads to an increase in the company's total production capacity. However, for technical reasons, such an increase in production capacity does not include an increase in capacity of up to two% compared to the situation prior to the investment.
Investment credit shall not be granted on the basis of an investment which merely fulfils the applicable European Union standards.

Where the investment project concerns low-carbon industry involving the use of renewable hydrogen, the granting of the investment credit shall be conditional on the hydrogen to be used being produced from renewable energy sources in accordance with the methods for renewable liquid and gaseous transport fuels of non-biological origin laid down in the renewable Energy Directive and its implementing acts or delegated acts.
Where the investment concerns a low-carbon industry involving the use of renewable hydrogen fuels, those fuels shall meet the following requirements:

1. they are liquid and gaseous fuels produced from renewable hydrogen whose energy content originates from renewable sources other than biomass;
   
   
2. achieve life cycle greenhouse gas emission reductions of at least 70% compared to the fossil reference point 94 g CO2eq/MJ; and
   
   
3. they have been produced for renewable liquid and gaseous transport fuels of non-biological origin in accordance with the methodology set out in the renewable Energy Directive and its implementing acts or delegated acts.

Investments in sectors strategic to the transition to a climate-neutral economy

The following investments in sectors that are strategically strategic for the transition to a climate-neutral economy are eligible for the investment credit:

1. investments in the production of equipment essential for the transition to a climate neutral economy;
   
   
2. investments in the production of components directly intended for the manufacture of the equipment specified in paragraph 1 and primarily used therein; or
   
   
3. investments in the production or recovery of critical raw materials needed for the production of the equipment and components specified in paragraphs 1 and 2.

For the purposes of paragraph 1., equipment essential for the transition to a climate neutral economy means batteries, solar panels, wind turbines, heat pumps, electrolysis equipment and equipment for the capture, recovery and storage of carbon dioxide. For the purposes of paragraph 2., the components refer to the components in accordance with the annex to the investment credit act. For the purposes of paragraph 3., critical raw materials mean critical raw materials referred to in Annex 4 to Commission Regulation (EU) No 651/2014.

The granting of the investment credit requires that:

1. the investment is kept at the location of the investment for at least five years after the completion of the investment;
   
   
2. there is a concrete risk that the investment will not take place in the EEA;
   
   
3. during the period starting from the application for the investment credit and ending two years after the completion of the investment, the company or group to which it belongs does not transfer to Finland the same or similar production activities from another EEA Member State on the basis of which the investment credit is granted.

Investment credit is not granted if the company or group to which it belongs has, during the two years preceding the application for the investment credit, transferred to Finland the same or equivalent production activities from another EEA Member State for which the investment credit is applied for.

Eligible costs

Investments in energy production from renewable sources and energy storage: The eligible costs for the investment credit are the costs of an investment project insofar as the costs concern the construction of new capacity or the updating of the capacity of the power plant. If the investment project relates to the upgrading of the power plant capacity, only additional costs related to the upgraded capacity are eligible for the investment credit.

Investments in low-carbon industrial production processes and energy efficiency measures: Eligible costs of the investment credit include the costs of equipment, machinery and plants needed for electrification, hydrogen or hydrogen-based fuels and for improving energy efficiency as well as other investment costs related to the investment project.

Investments in sectors strategic to the transition to a climate-neutral economy: The eligible costs for the investment credit include the costs of the investment project relating to tangible assets necessary for the production or recovery of the commodities, such as land, buildings, factories, equipment, machinery and intangible assets, such as patent rights, licences, know-how or other intellectual property.

The eligible costs and terms and conditions for purchases within the Group and from associated companies are described in more detail in Section 8 of the terms and conditions of the investment credit. A link to the terms and conditions will be published when funding is available.

The following costs are not eligible as grounds for the investment credit:

• wages;
• overheads;
• entertainment expenses;
• interest and other financing costs;
• fees based on the Act on criteria for charges payable to the State and payments based on specific charges legislation;
• cost provisions;
• travel expenses paid or reimbursed by the company entitled to the investment credit;
• value added taxes paid by the company entitled to the investment credit as part of the acquisition price of goods or services.

Amount of the investment credit

The amount of the investment credit is 20 per cent of the costs eligible as the basis for the investment credit. The maximum amount of the investment credit is EUR 150 million per company. If the company belongs to a group, the maximum amount of the investment credit is calculated for each group.

Reduction and phasing of the investment credit

Based on the company's requirement in euros, the investment credit is deducted from the company's income tax for the tax year beginning during the calendar year 2028 and for the following 19 tax years. However, the investment credit may be reduced at the earliest in the tax year during which the investment is completed. The investment credit is deducted from the corporation tax after the foreign tax credit.

However, the investment credit may be reduced in each tax year by a maximum of ten per cent of the total amount of the investment credit granted to the company.

Before you apply

Before applying for investment credit, carefully read the terms and conditions and the law. Links to the conditions and the law will be published when funding is available.

Apply for investment credit

Investment credit is applied for from Business Finland before the start of work on the investment project.

The start of works means the commencement of construction work related to the investment or the first legally binding equipment order commitment or other such commitment that renders the investment irrevocable, whichever occurs earlier. However, land purchases and preparatory work, such as obtaining permits and carrying out preliminary feasibility studies, would not be considered to start the work.

Business Finland will open the call for application for the investment credit at a date to be announced later.

More info

Sini Uuttu
sini.uuttu (at) businessfinland.fi and

Hanna Rinta-Erkkilä
hanna.rinta-erkkila (at) businessfinland.fi