Finnish electricity generation company Fortum has said that the Finnish government’s proposed new tax on hydro and nuclear power production built preceding the Kyoto Protocol era is against climate and energy policies and will increase production costs, pushing up end-user electricity tariffs.

Fortum claims that the tax would benefit energy imports over domestic energy production and would also distort competition.

The power generator has said that the government’s plan would be against the EU’s energy directive according to which energy shall be taxed based on consumption, not production.

Fortum’s senior vice president for corporate development, Timo Karttinen said: “The very idea of the emissions trading scheme was to direct investments to emissions-free power production.

“The emission cost is a steering mechanism; producers who emit will pay and producers who don’t will benefit. A special hydro and nuclear tax would work against that idea and would, in fact, punish CO2-free production. At the same time, it would increase uncertainty in the markets and endanger new investments.”