Market insights from the Arctics

The 9th Arctic Business Intelligence Forum brought Finnish companies and ambassadors together to talk about business opportunities in the Arctics. A key message was the increasing need for green solutions in all represented countries.

TRAF brought together its members from 22 companies and Finland’s ambassadors to discuss the future of offshore wind in the Arctics. Ambassadors of Finland to Denmark, Harri Kämäräinen, to Russia, Antti Helanterä, to Norway, Mikael Antell, to Germany, Anne Sipiläinen, to Canada, Roy Eriksson, to Estonia, Timo Kantola, and Minister at the Embassy of Finland in Sweden, Jouni Laaksonen, shared market insights from their postings.

All ambassadors emphasized the possibilities around the green transition. Many of the Arctic countries have set themselves national carbon neutrality targets, which are already influencing the investments in the energy sector. This trend looks slightly different in each country.

In Denmark, which is the forerunner of offshore wind, climate change mitigation, digitalization and the green transition are the most important themes that influence the internal market. Central to these is the country’s aim to decrease its carbon emissions by 70% from the 1990 level. Particularly interesting for Finnish companies is Greenland, which is experiencing a growing need for Arctic expertise that continental Denmark cannot provide.

In Russia, the industrial production has recovered well from the pandemic. Russia’s public finances are also in fairly good shape, and it is to be expected that the state will have the opportunity to support massive infrastructure projects in the near future. Russia is investing heavily in the Far East and is developing the Northeast Passage and the northern regions strongly. From the point of view of businesses, the localization requirement poses challenges for companies to operate in Russia. We also got to learn from the news that Russia is striving to be carbon neutral no later than 2060. President Vladimir Putin expects hydrogen, ammonia, and natural gas to play a larger role in the energy mix in the future.

In Norway, the newly elected government’s role is likely to grow from its predecessor. Although the fossil fuel industry remains important, this is likely to have effects on the government’s role in advancing climate solutions. Some key developments include a national hydrogen strategy, which contains a plan to establish a national research institute on hydrogen, and good prospects for offshore wind farms.

Germany’s renewable energy market is likely to see considerable growth because the country will abandon nuclear energy altogether in 2022 and coal in 2038. A quick increase in solar and wind will be essential in the near future. With a new government and chancellor chosen later this year, these goals will likely be consolidated in the government programme. In Germany, too, the state has proactively taken steps towards developing hydrogen industry, which is likely to increase the need for renewable energy even more.

Sweden is aiming to become climate neutral by 2045. One of the key questions regarding the green transition is whether the country will continue producing energy from nuclear power. Already now, 50% of Sweden’s energy is from renewable sources, with the largest source being hydropower. There is a growing need for wind power.

Similarly interesting for Finnish companies are opportunities in Estonia. In the longer term, the gap between Finland and Estonia’s GDP’s per capita will decrease. Already now, there are interesting large construction and infrastructure projects, such as Rail Baltica and some wind power developments.

The opportunities regarding the green transition are tied to an overall positive economic outlook for 2022 and beyond. As the pandemic is slowly easing, countries are experiencing healthy increases in their gross national incomes. For example, Canada’s economy is off to a new growth, and the GDP is anticipated to set somewhere between 3-4% next year. Russia has also exited the economic downturn caused by the pandemic, and the national economy is doing good.

All in all, the future of renewable energy in the Arctics is looking good. There is a growing need for offshore wind and TRAF ecosystem members’ expertise.