St1 and Valio Establish Joint Venture to Advance Climate Action Through Finland’s Distribution Obligation Flexibility Mechanism

St1 and Valio Establish Joint Venture to Advance Climate Action Through Finland’s Distribution Obligation Flexibility Mechanism

(IN BRIEF) St1 and Valio have formed Ekviton Oy, a joint venture designed to advance emission reductions and carbon removals in Finland through the flexibility mechanism of the country’s renewable fuels distribution obligation. Introduced in 2025, the mechanism allows fuel distributors to finance approved climate actions, including measures in the land use and effort sharing sectors, as an alternative way to fulfil part of their renewable fuels obligation. Under the Distribution Obligation Act, the flexibility mechanism can account for up to 5.5 percentage points of the obligation. Ekviton’s first funded project will focus on peatland restoration, particularly the rewetting of peat fields that are difficult to use productively. This approach slows peat decomposition and significantly reduces greenhouse gas emissions. The initiative also offers new financing opportunities for Valio dairy farms, creating a potential additional income stream from voluntary climate measures while supporting Valio’s journey toward a carbon-neutral dairy value chain. Over the longer term, Ekviton aims to explore opportunities in Europe as the EU develops its certification framework for carbon removals.

(PRESS RELEASE) HELSINKI, 27-May-2026 — /EuropaWire/ — Valio and St1 have established a new joint venture, Ekviton Oy, to support emission reductions and carbon removals in Finland through climate actions linked to the country’s renewable fuels distribution obligation.

Ekviton will make use of the flexibility mechanism introduced in 2025 under Finland’s distribution obligation framework. The mechanism allows fuel distributors to meet part of their renewable fuels obligation not only by supplying renewable fuels, but also by financing other approved climate actions, including emission reductions and carbon removals in the land use and effort sharing sectors.

The aim of the mechanism is to direct funding toward climate measures that have not previously had access to market-based financing, while also giving fuel distributors additional flexibility in meeting their legal obligations. Under the Distribution Obligation Act, the flexibility mechanism may account for up to 5.5 percentage points of the overall distribution obligation.

Lea Rankinen, Head of Sustainability and Corporate Affairs at St1, said the company has long supported the development of this type of mechanism as part of the distribution obligation. She noted that, in the current global environment, it is especially important to remain committed to climate targets and ensure consistent implementation so that emission reductions can be achieved through a broad range of cost-effective measures.

Climate actions carried out under the flexibility mechanism are subject to strict approval and verification requirements. All mitigation activities must be approved by the Finnish Energy Authority before implementation, and the resulting climate outcomes must be verified by an independent third party.

The mechanism also includes a double buffer requirement. For every tonne of carbon dioxide used under the distribution obligation, two tonnes of verified emission reductions or carbon removals must be generated. This requirement is designed to ensure that the mechanism delivers real, measurable and significant climate benefits while supporting Finland’s broader climate targets.

The Finnish Energy Authority has prepared an indicative list of eligible measures, and the flexibility mechanism allows climate change mitigation actions to be implemented across multiple sectors. This creates opportunities for new types of projects that can reduce emissions, remove carbon and support land use improvements.

Ekviton’s first funded measure will focus on peatland restoration. The EU Nature Restoration Regulation requires Finland to improve the condition of nature on a broad scale, and Ekviton demonstrates how private-sector investment can complement public funding in meeting these restoration objectives.

The first project will involve restoring peat fields that are difficult to use productively by rewetting them. When peat is rewetted, its decomposition slows, significantly reducing the release of greenhouse gases into the atmosphere. This makes peatland restoration a practical climate measure with potential environmental and economic benefits.

Tuomas Salusjärvi, Director of Expansion Businesses and Renewal at Valio, said many Valio dairy farms are interested in restoring peatlands that are difficult to use. Through Ekviton, farms can receive financing for voluntary restoration measures, creating a new source of income alongside traditional agricultural production. He added that the initiative is also a concrete step in Valio’s progress toward a carbon-neutral dairy value chain.

Although Ekviton’s initial focus is on climate change mitigation activities that support the distribution obligation in Finland, the company also intends to explore longer-term growth opportunities beyond the Finnish market. The European Union is currently developing a certification framework for carbon removals, which could eventually make it possible to offer verified mitigation activities across EU markets.

Rankinen said the EU will not be able to reach its climate targets without carbon removals. She added that the expertise and operating models developed through Finland’s flexibility mechanism could create new business opportunities in Europe within the next few years.

Salusjärvi said Ekviton will enable St1 and Valio to work together on climate change mitigation while strengthening the role of dairy farmers in emission reduction efforts. He also highlighted the financial benefits available to farmers through emissions reduction activities and noted that agriculture holds significant untapped potential for voluntary carbon markets.

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SOURCE: Valio