Environment, energy and climate policy

Research in this area encompasses the impact of energy and climate policy on firms’ competitiveness, consumer choices and greenhouse gas emissions.

It is important to be aware of the incentive effects of policy measures when climate and energy policy is formulated: how firms and households will react to policy guidance and what happens to greenhouse gas emissions, firms’ competitiveness and household choices. One important question is the proportion of CO2-based charges, such as carbon tax, paid by consumers and firms.

Energy markets are at a turning point. How policy measures affect the functioning of energy markets and investments is one of the key questions studied by VATT. It is important to understand how various policy actions guide firms’ R&D activities and how they impact changes in the energy sector and the economy more broadly.

Our evaluation is conducted using econometric methods and micro-economic optimization models. Econometric methods can produce analysis that supports decision-making, for example how consumer fuel prices respond to changes in fuel taxes or how energy taxation affects firms’ value added and other competitiveness indicators. 

Issues currently under research include:

  • what changes to the energy system are necessitated by Finland’s climate objectives: how the energy system needs to change if the climate objectives are to be met in a cost-effective manner;
  • how a smart energy system will affect the Nordic energy markets: what does the transition mean for energy markets and regulation of these;
  • development of new energy technologies and innovations and policy actions to support these;
  • households’ investment behaviour in respect of energy prices and the role of households in an evolving energy market.

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