European Commission Approves Aid for Finland's First LNG terminal
The European Commission has approved under EU state aid rules Finland's plans to grant €23 million to construct a small scale LNG terminal at Pori on Finland's west coast, concluding that the project contributes to environmental protection and to the security of gas supply in Finland whilst maintaining competition in the Single Market.
The project aims to encourage the use of LNG as fuel for ships. Currently, there are no LNG terminals in Finland.
The Pori terminal, with a storage capacity of 30 000 m3, is part of Finland’s plans to create a network of small scale LNG terminals with the aim of offering alternative fuel infrastructure to the maritime industry, i.e. LNG fuelling stations for ships in place of fuel oils and liquefied petroleum gases.
The project will bring about a significant reduction in CO2 emissions by providing cleaner fuel for maritime transport, while increase the security of supply in Finland, providing local industries with access to gas.
The Commission's assessment showed that the project could not have been carried out without public funding. Indeed, as Finland currently has no LNG infrastructure, potential customers are reluctant to carry out the long-term and costly investments associated with switching to LNG fuel. In turn, private investors have no incentive to build LNG infrastructure because there is no demand.
The approved funding will cover less than 30% of the total investment costs; the remainder will be funded by the developer and future owner of the terminal.
EU Commissioner in charge of competition policy Margrethe Vestager said: "The LNG terminal in Pori is the first of its kind in Finland. It will provide a new source of cleaner fuel for the maritime industry and diversify Finland's gas supply sources. It is a good example of how EU state aid rules can encourage sound public investment that helps the EU reach its goals on energy security and environmental protection."
Seeking to end the energy isolation of the Baltic Sea Region and to integrate it fully into the EU energy markets is a key building block for the EU’s Energy Union strategy and one of the key priorities of the Juncker Commission.