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Finland is one of the most innovative EU Member States based .The Finnish national innovation system is an extensive entity, based on education, research, product development as well as knowledge-intensive business and industry. The innovation policy is bound to science and technology policies, which together aim at ensuring balanced development and extensive cooperation within the innovation system. Eco-efficiency and environmental approach has traditionally been a baseline of Finnish production technology, which has been apparent through the research and development (R&D) funding and development of increased eco-efficiency in industrial processes.
Today, the national innovation system in Finland is explicitly involved in the environmental sector. Ministry of Employment and the Economy is developing operational preconditions for ecologically sustainable and competitive business life, and for the growing field of environment and eco-export. Hence the innovation policy includes a principle of integration of environmental considerations within all aspects of R&D.
However, eco-innovation needs and challenges of Finland are strongly associated with material efficiency. Performance in material efficiency because of the large share of energy and material intensive industries such as pulp and paper industry, base metal industry and chemical industry. The greatest challenges for eco-innovations concern high material consumption, the aging of society as well as low material productivity, energy-efficiency and high GHG emissions, which result from energy intensive industrial sectors, freight transportation and traffic as well as extensive earthworks and hydraulic engineering. The Finnish economy is based strongly on added value obtained from natural resources. At the same time Finland has abundant natural resources in terms of the clean forest, fresh water as well as peat, mineral reserves and arable land.
Finland has an explicit policy for developing a national innovation system, and eco-innovation is a part of this system by a strong emphasis on specific R&D programmes. The country also implements a large number of relevant strategies and measures such as environmental taxation.