Researcher introduction: research professor Marita Laukkanen
This time we introduce our new research professor Marita Laukkanen. Read here about Marita’s current research.
Would you introduce yourself?
I am Marita Laukkanen, a research professor at VATT. I study energy and climate policy and follow the current policy debate from both domestic and international viewpoints.
My current research uses mostly empirical methods and leverages the extensive datasets available in Finland. Some examples of topics I am studying at the time are how climate policy has affected the choices of consumers and companies and thus emissions.
Sometimes researchers are accused of sitting in their academic ivory tower with no idea of what is really going on. But our research uses data for example from companies' financial statements and reports filed with tax authorities. One would hope that they reflect what is really going on and can be analyzed to reveal how climate policy has changed operations in companies.
What kind of research questions are you studying on?
Currently, I am studying, among other things, the impact of carbon taxes on companies' energy use and competitiveness. At this point, we can say at least that carbon taxes have accelerated the electrification of manufacturing in Finland.
I have also studied the extent to which fuel carbon taxes have been passed through to fuel prices, as well as how pass-through differed across the rural-urban divide and income distribution in Finland. I am also investigating Finland’s vehicle replacement subsidy program – its impact on the kind of new cars consumers purchased and CO2 emissions, as well as the cost of the emission reductions achieved in terms of public funds.
Recently, Finland’s biofuel mandate has been a source of heated public debate. Some politicians seem to think that all the additional costs of distribution companies would be fully passed through to fuel prices. However, according to our research, this has not happened in the case of carbon taxes. In sparsely populated areas, carbon taxes have been passed through to prices almost completely, but in cities the price effect has been smaller.
Petteri Orpo's government has decided to lower the fuel tax in September 2023 during the budget crisis at the beginning of next year. What do you think of the decision?
It may be that the tax reduction will not be fully passed through to consumer prices – there are many examples in academic studies on the topic of how tax reductions have benefited consumers only partially. The government's decision also not aligned with Finland's goal to halve emissions from road transport by 2030. Has this goal been scrapped?
Halving transport emissions is related to Finland's EU commitments. Finland has agreed to reduce emissions from the effort sharing sectors – the biggest ones of which are transport and agriculture – by 50 percent. Finland wanted to fulfill this commitment mainly through emission reductions in the transport sector.
Achieving the emission reduction target requires consistent policy actions. If policies to reduce transport emissions take steps back, I don't think it will be possible to reach the goals – at least not without reducing emissions further somewhere else, at a very fast pace.
Why have you chosen these topics?
Climate policy is a large set of policies that affects companies and consumers. Climate policy also intertwines with energy and economic policy. There are big questions in climate policy that need to be resolved. Finland also offers a good setting to study these topics, because we have unique, extensive data sets and a long history of emissions pricing. Our research is relevant both in Finland and internationally.
What kind of research projects will you work on in the future?
Just a few weeks ago, we received some good news on a new research grant - we obtained funding for research on energy justice and the acceptability of the green transition from the Strategic Research Council, which works in conjunction with the Finnish Research Council. The grant will run six years, until 2029, and is part of the Energy Solutions as Part of a Just Green Transition program.
The research project will be carried out by a consortium that includes several universities in addition to VATT. From VATT, the entire five-person research group on energy, environment and climate policy and several local public finance researchers will participate in the project.
Research on the fairness and acceptability of climate policy is related to our ongoing research themes. It will be interesting to investigate how the benefits and costs are distributed between different regions and groups. How acceptable is climate policy, and how can barriers to acceptability be overcome?
Studies from other countries have shown that climate policies that do not disproportionally burden low-income people are accepted more widely. People can also have very different opportunities to respond to, for example, the challenges brought along by the energy crisis. For example, last winter when electricity distributors in Finland started only offering spot prices to new customers or those who had to renew a contract, consumers were in very different positions – not all consumers had the skills and digital capabilities to monitor the price of electricity in real time and adjust consumption accordingly.
What societal question would you like an answer to right now?
I would like to have more information – perhaps in part through my own research – on what the benefits of climate policy are in relation to the costs. There are lots of misunderstandings about this in the public discussion.
For example, in the 2023 election debates, concerns were raised that climate policy would bring along such substantial costs that companies might shift production abroad. Research evidence does not support such claims. Credible studies based on comprehensive data from EU countries provide information based on the actual choices of companies. Economic research has shown that companies have been able to adapt to new climate regulation and have found ways to reduce emissions without significant changes in their business activity.