The built environment and its maintenance employ every fifth employed person in Finland, or half a million people. A revival in the domestic market and labor-intensive construction industry would radiate widely throughout Finland. It is good to remember that the industry returns up to more than 40 percent of the euros invested in construction as taxes and tax-related payments. Despite the corona pandemic, the construction industry has been able to keep its wheels turning. Even so, employment in the industry has decreased by almost 10 people during the pandemic.
The number of building permits for all types of construction is decreasing, which predicts a further slowdown in production and employment. This has been influenced by the uncertainties of the economy, the difficulty of obtaining financing for construction, and the rapidly decreasing willingness of municipalities to invest. These reductions hit smaller companies and smaller towns particularly hard. Because of this, it is precisely by bringing forward the necessary and planned investments of the state and municipalities that the economy can be stimulated into growth again. When investments are brought forward, the growth of the economy and tax revenues is also brought forward.
The carbon footprint of the built environment accounts for 30 percent of Finland's total emissions, when the entire life cycle of buildings and their energy consumption is taken into account. Without the emissions of energy consumption during the operating phase, the share is 7 percent. In order to increase the energy efficiency of the built environment, and thereby reduce emissions, the current and slow rate of renewal of the building stock is not sufficient to achieve the goals. According to the European Commission's country report, in addition to the climate goals, Finland must pay attention to, for example, structural reforms, improving productivity, and raising the investment and employment rate. Investments in company-oriented R&D activities and the digitization of transport systems are the key to growth. The financial package should also be used to speed up renovation construction by supporting renovation construction and investment projects of municipalities, housing associations and private operators to improve the energy efficiency of the built environment throughout its life cycle. From the financing package, R&D investments must be allocated to those building materials with the highest emission reduction potential.
Alongside the revitalization efforts, construction processes must be streamlined by reforming the regulation in connection with the overall reform of the Land Use and Building Act. The goal must be to increase the productivity of land use and the entire real estate and construction industry, as well as the efficient use of capital.
Construction industry RT proposals:
The investment package aimed at municipalities increases employment and saves regional growth (implements: green transition, systemic change, private investments)
The municipal economy has been put to the test during the corona pandemic and even before it started. Despite the state's large corona subsidies, the indebtedness of the municipalities continues. In the operating economy crisis, many municipalities are unable to implement even their necessary investments.
A large investment package must be directed to the municipalities to speed up and ensure the realization of the municipalities' investments. Investments and repair projects related to the built environment meet the commission's boundary conditions, implement a green transition, where especially the breakdown of the energy system and the efficiency of the building stock, leverage private investments, accelerate system-level change in the operations of municipalities and create employment regionally. All over Finland, there are projects in readiness that could be started almost immediately. When the already planned and necessary investments are put into motion earlier, thousands of jobs will be quickly created around the country. Examples of items in the investment package include investments that improve the energy efficiency of public buildings, energy investments that support the transformation of the energy system required by the green transition (chip burning plants, wind power, geothermal heat, solar energy), municipal technology, e.g. basic improvement projects of the water supply network and public and light transport projects. In all of these, it is possible to make a permanent change to the municipalities' investment culture and speed up the realization of climate goals and increase digitalization at the system level. In addition to that, state-level investments are needed in offshore wind power, large solar power plants and energy transmission and storage.
Speeding up repair construction increases energy efficiency and accelerates structural change (implements: green transition, digital, system-level change, private investments)
Only 1–2 percent of our real estate portfolio is renewed each year. The debt to repair the built environment is constantly increasing and lowers the value of our national wealth, if we do not invest enough in the maintenance and upkeep of real estate and infrastructure. The biggest emission reduction potential is in improving the energy efficiency of the existing building stock and renewing heating methods. These include e.g. waste heat recovery, centralized geothermal energy utilization opportunities and development of district heating networks. At the same time, the building technology systems and the overall digitalization make it possible to utilize the flexibility of real estate demand.
Energy subsidies for housing associations must be expanded to also cover larger-scale repairs. At the moment, support is mainly given to changes in the heating system, which does not sufficiently encourage households to move towards more energy-efficient housing. In addition to giving up oil heating, support must be directed towards giving up other fossil fuels as well.
In connection with the recovery measures, the basic improvement loan conditions of housing stock companies must be renewed. Housing companies have not taken advantage of ARA's basic improvement loans and related guarantees, because the two percent guarantee fee paid on the loan amount is too expensive. Eliminating the guarantee fee would encourage the planned repair investments to be carried out. Housing companies are now having trouble getting a bank loan.
Effective measures include government repair subsidies and loan guarantees granted to housing associations, as well as the expansion of the household deduction. Municipalities' investments and renovations must accelerate the green transition and the growth of the regional economy
Digitization of the built environment creates new things and reduces costs and emissions (Implements: green transition, competitiveness, sustainable infrastructure and digitalization, private investments, system-level change)
Digitizing the rail network will make investing in rail traffic even more profitable in the future. The implementation of the Digirata project promotes the green transition and digitalization of the infrastructure and improves the operating conditions for foreign trade. With the help of the investment, there is an opportunity to enhance the capacity, functionality and efficiency of the railway network.
The digitalization of the construction industry has advanced by leaps and bounds. The potential benefit of the KIRA-digi project implemented during the last government period is estimated to be around 5,5 billion euros, if all its measures were implemented on a large scale. For the implementation of these measures, funding must be channeled from this funding package. In addition, R&D investments must be directed to companies' digitization projects and speed up the development of the platform economy in the real estate and construction sector.
Transport projects reduce emissions and improve the competitiveness of business life (Implements: green transition, competitiveness, sustainable infrastructure)
In order to increase Finland's competitiveness, investments are needed, especially in industrial transport infrastructure. With the help of the financing package, it is necessary to speed up large rail projects and the digital railway package. Without functioning logistics, Finland cannot meet international competition. The leverage effect of transport investments on other construction and regional activity is considerable. Finland must continue investments related to the main line along its entire length and at the same time promote both the Itäraila and the Turku hourly train.
The Luumäki-Joutseno double track is currently a significant bottleneck for both passenger and freight traffic. A double track would improve the effective transmission capacity and traffic functionality of the busy track section, and thus the service level of passenger traffic and the operating conditions of freight traffic. Completing the double track between Luumäki and Joutseno is also a prerequisite for a significant increase in cross-border traffic in Imatrankoski. The transmission capacity of the rail section affects not only the efficiency of raw material transport in the forest industry, but also the product transport of the export industry to ports.
Huge potential in the circular economy of the built environment (Implementation: green transition, RDI, systemic change, private investments)
The promotion of low-carbon construction and the circular economy can provide Finland with a pole position in the creation of new innovations. Replacing virgin materials with recycled material saves both raw materials and costs. The development of the circular economy still requires research data and especially market demand. An assessment of the use of natural resources should be prepared for the projects financed with the recovery package and a goal should be set for solutions supporting the circular economy. This supports both the green transition and RDI goals.
RDI investments accelerate low-carbon construction (private investments, infrastructure, RDI, green transition)
RDI funding should be directed to making investments in the construction sector that enable the reduction of climate impacts. Emission reduction goals should be targeted where the potential is the greatest. This means large company-led technology projects, in which the aim is to reduce the emission load related to the manufacture of cement in particular. At the same time, the share of the circular economy in cement production, which is already at a high level, must be further developed.
The competence and know-how of public customers must also be increased in relation to reducing the carbon footprint. At the moment, the challenge is often the skills that are missing from the market, e.g. for utilizing the most environmentally friendly concrete grades.
Focus-specific comments:
Focus 1: With education and research and innovation, Finland is back on the path to sustainable growth
The development of material technologies and the circular economy bring with them new working methods and innovations, which make it possible to reduce waste, save virgin natural resources and increase the efficiency of the construction process. The implementation of the construction industry's low-carbon road map must be accelerated and R&D funding must be directed to supporting investments that enable the reduction of the climate impacts of various building materials. Emission reduction goals should be targeted where the potential is greatest.
Innovative public procurement is an opportunity to promote innovation in the built environment and accelerate the green transition. It would be possible to build experimental and piloting environments around the investments of cities and other public actors. Around and in support of the large transport projects that Finland needs, there should be a center of competence for transport and infrastructure construction in Finland, so that international excellence can be concentrated here, which could be used both in domestic projects and sold abroad.
Before the corona crisis, there was a large shortage of skilled workers in the construction industry, and the lack of space had an increasing effect. These challenges have been solved in good cooperation with TEM and OKM, and this started work should be taken into account when planning continuous learning entities. At the same time, we must take care of the level of the quality of teaching, which has challenges especially in basic and continuing education at the employee level.
Focus 2: The green transition supports economic restructuring
Finland's biggest energy users are industry and the built environment, as well as transport. They are also the biggest emitters of greenhouse gases. Accelerating these industries towards a greener way of operating has the greatest potential on the way to a carbon-neutral Finland in 2035. According to the construction industry's low-carbon road map (2020), the most significant is improving energy efficiency and switching to low-emission forms of energy.
The climate goals require an increasingly energy-efficient built environment in Finland. The biggest emission reduction potential is in improving the energy efficiency of the existing building stock and renewing heating methods. Effective measures include government repair subsidies and loan guarantees granted to housing associations, as well as the expansion of the household deduction. Municipalities' investments and renovations must accelerate the green transition and the growth of the regional economy. With the EU package, we would have an unprecedented opportunity to turn the repair debt into a platform for growth and fix Finland's schools, kindergartens and roads. At the same time, the inevitable basic improvement investments of housing associations and households must also be supported and accelerated, with the help of which the energy efficiency of buildings is improved, the life cycle is extended and Finland's climate goals are promoted.
Well-planned repairs also improve the health, safety and usability of buildings and extend the useful life of properties. Streamlining traffic, developing transport services and transferring them to the tracks also effectively reduces emissions.
The construction industry uses 40 percent of the world's raw materials, so there is global demand for domestic circular economy solutions. In the field of the built environment, the focus must be on the most cost-effective, material- and technology-neutral means of reducing emissions. Waste materials from construction and, at the same time, various side streams from other industries can be used on a large scale in the manufacture of construction products and especially in infrastructure construction. The promotion of low-carbon construction and the circular economy can provide Finland with a pole position in the creation of new innovations. For example, e.g. using demolition concrete in channel construction. It is possible to confirm this e.g. enabling the replacement of virgin materials with, for example, recycled asphalt and concrete and various industrial by-products. However, their use requires researched information, opportunities for piloting and enabling legislation.
Focus 3: Securing Finland's international competitiveness
The export industry plays a significant role in the realization of Finland's employment goals. Well-chosen freight transport investments make industrial transport smoother and improve the competitiveness of exports. Investments in passenger transport will speed up the mobility of the workforce. In particular, the rail transport investments within and between the growth centers leverage the necessary housing construction and urban development projects and promote the development of mobility services. These actions build growth and enable the creation of new jobs. Investments in climate-resistant transport networks and services build tomorrow's society and strengthen Finland on its way to carbon neutrality.
Focus 4: Strengthening sustainable infrastructure and digitization
Digitization of the construction industry has progressed, but more investments are still needed both in public activities and to speed up private investments. The potential benefit of the KIRA-digi project implemented in the last government period is estimated to be around 5,5 billion euros, if all its measures were implemented on a large scale. To implement these measures, funding must be directed from the recovery unit. R&D investments should be directed to companies' digitization projects and speed up the development of the platform economy in the real estate and construction sector.
Efficient rail traffic in the future requires a transition to the digital ERTMS system. In general, digitizing the processes of transport and industry and services requires increasing the capacity of communication networks, which in turn is made possible by building a comprehensive 5G network throughout the country.
Lauri Pakkanen public relations manager (on parental leave from May 15.5)