Professor of Practice in economics Marita Laukkanen: taxation steers transition to fossil-free energy

Climate change requires multidisciplinary solutions where the role of economics is, for example, to determine the economic impact of global warming and how it will affect different groups of people. In her work, economist Marita Laukkanen focuses on solutions, analysing policies and economic instruments that are aimed at curbing climate change.

“Mitigating climate change requires a transition to fossil-free energy. As an economist, I am mainly interested in how economic instruments can help transfer the energy system from fossil fuels to sustainable energy sources,” Laukkanen says.

In her role as Professor of Practice, Laukkanen specialises in energy and climate issues. She has focused on evaluating the impacts of energy and industrial policies, the adoption of new technologies, and international environmental cooperation. From 2016 to 2020, Laukkanen was a member of the Finnish Climate Change Panel, an expert panel appointed by the government to foster dialogue between scientific research and policymaking.

Laukkanen investigates whether policy measures have resulted in emission reductions and analyses the cost and cost-effectiveness of those instruments.

“In a way, Finland serves as a test lab and a pioneer because it has had a carbon tax since the 1990s. At the FIT Centre of Excellence, I study how Finland’s energy taxation has influenced both the energy efficiency and emissions in manufacturing, and the global market success of manufacturing companies,” Laukkanen explains.

Collaborating in a European network, Laukkanen integrates registry data from various countries to enable economics research on environmental issues. The network’s researchers aim to ensure that when assessing the impacts of emissions trading, the analysis is consistent even if data from different statistical authorities cannot be merged into a single dataset.

Economic incentives guide individuals and communities

Taxation affects companies’ investments and the speed at which they transition to alternative energy sources, but taxes can also influence households to choose heating systems, vehicles and modes of transport. To phase out fossil energy, electrification is essential. Laukkanen notes that a significant part of industrial processes can be electrified.

“Taxation and emissions trading directly encourage businesses to gradually move away from fossil fuels. We also need innovation for processes where fossil energy use is still difficult to replace, with the hope of eliminating it later,” she says.

Laukkanen believes that Finland is making good progress in electrification, despite concerns from climate action experts about increased wood burning.

“However, our conditions are favourable since we have relatively affordable electricity. Even during the energy crisis, our prices have remained more moderate than those in Germany, our competitor,” says Laukkanen.

As a Professor of Practice, Laukkanen plans to comprehensively study Finland’s climate actions, including their effectiveness and the emission reductions achieved.

“With research, policies can be designed to use the most impactful measures for the climate relative to their costs,” Laukkanen emphasises.

Regarding manufacturing and manufacturing companies, Laukkanen continues to examine the effects of energy taxation. She intends to expand the topic to include manufacturing labour flows. The question is how the green transition impacts the labour market.

Laukkanen is also interested in various climate measures in transport and has examined, for example, the effect of vehicle scrapping subsidies on transport emissions.

Environmental issues are inseparable from economics

Laukkanen is well-acquainted with the economists at Tampere University, as they specialise in empirical economics. Research articles in this field are almost always collaborative efforts. The FIT Centre of Excellence, funded by the Research Council of Finland, includes researchers at Tampere University, VATT, and the University of Helsinki.

At the University of Helsinki, where Laukkanen is an adjunct professor, she has taught microeconomics and natural resource economics. She completed her doctoral degree in environmental and natural resource economics in the United States.

At Tampere University, she teaches an intermediate-level course in environmental economics and, most importantly, aims to bridge the gap between teaching and practical environmental policy.

“Tampere University has a strong foundation, to which I add my expertise. Given the importance of these issues, environmental economics is not widely taught at Finnish universities. Environmental issues are also economic policy issues and cannot be separated from the broader economic analysis,” Laukkanen emphasises.

“Marita Laukkanen is a leading expert in environmental and energy economics and an eminent researcher in this field.  FIT also studies environmental taxation and regulation, and Marita brings us important expertise in this area. Her appointment as Professor of Practice also supports Tampere University’s mission to promote sustainable development,” says Professor Kaisa Kotakorpi, Director of FIT.

Economic models from economists, decisions by politicians

Laukkanen aims to bring research knowledge to policymakers, businesses, and the wider public. In the media, she is a sought-after expert in discussions on Finland’s climate policy.

The field of economics develops models, evaluates the success of policy measures, and provides context for the information while researchers offer policy recommendations based on scientific evidence. Laukkanen notes that researchers differ in their participation in public debate, influenced by personal factors and their views on the researcher’s role. However, she emphasises the term ‘economics’, which she distinguishes from economic policy.

“I have been one of the more vocal researchers. Based on scientific evidence, I have actively participated in public debates about what works and what doesn’t. Ultimately, it is the political system that makes the decisions, and as a researcher, I am pleased if decisions are based on research,” Laukkanen says.

Contact:

Marita Laukkanen
+358 50 479 5102
marita.laukkanen [at] tuni.fi