St1 warns: A decrease in the distribution obligation can cause permanent damage

The rise in fuel prices has caused a debate about whether the fuel distribution obligation should be reduced. The distribution obligation determines how much of the fuel must be renewable.

The issue was brought up by the chairman of the parliamentary group of Fundamental Finns Jani Mäkelä message service in X.

Fuel distribution company St1 on Thursday, at Kauppalehti’s request, gave his opinion on possible cuts in the distribution obligation. Managing director Henrikki Talvitien the answers were sent by the company’s communications via e-mail.

Talvitie sees that the concern about the increase in fuel costs is justified, but the reduction of the distribution obligation is considered an “inefficient solution” in the company.

According to St1’s view, despite the distribution obligation, pump prices have followed the market price of crude oil.

“Pump prices have followed quite closely the development of the world market price of crude oil, despite the fact that the distribution obligation was significantly reduced in July 2022 and gradually increased from 2024 to 2026. The experience of previous years shows that changes to the distribution obligation are not an effective way to control pump prices,” St1 answers.

St1 has biofuel production at the Gothenburg biorefinery. In cooperation SCA: n the production plant made with cost 4 billion Swedish kronor.

St1 justifies his view on the weak effect of regulating the distribution obligation by the fact that Central Chamber of Commerce estimates are that at the current level of the distribution obligation, the pump price is 20–25 cents worth of renewable fuel per liter. Thus, in calculating the distribution obligation, we would only be talking about a drop of about one cent in the price per percentage point.

Oil and gas come to Finland by sea, mainly from Norway and the United States. Thus, the war in the Middle East has little direct transport effect on Finland, at least for now. There have been problems around the world, especially with the availability of diesel.

The crisis is estimated to have an impact on the fuel market through the destroyed infrastructure at least until the end of the year. In Finland, this is evaluated mainly seen as price pressure.

At odds with the owner’s previous comments

After the previous energy crisis, the distribution obligation was removed from St1’s main owner and chairman of the board From Mika Anttos criticism. Among other things, he suggested reducing the obligation to the EU minimum, i.e. 14 percent by 2030, or removing it completely.

At that time, according to him, the lifting of the distribution obligation did not produce the desired emission reductions.

“First of all, the earth did not have enough raw materials. Secondly, a few large players were able to price their products against the legal fine, which resulted in large profits for them, but the CO2 concentration in the atmosphere did not decrease at all. The end result was an overly expensive climate measure, which the next government canceled at the request of the voters,” Anttonen told Kauppalehti.

Kauppalehti reached out to Anttonen for this story, but he thought the company’s operational management was a better place to answer the questions.

Both Anttonen’s comments from years ago and St1’s recent view agree that sawing the distribution obligation back and forth does not serve growth, as it increases investment uncertainty. St1 emphasizes that the trust took a hit earlier when the claim fell.

“If the same thing happens again, the credibility of the distribution obligation as a driver of the energy transition will be permanently lost,” St1 told KL now.