On 4 July 2025, the Recycling Industries of Finland submitted two state aid complaints to the European Commission. The complaints concern financial support granted to Biosairila Oy and Riikinvoima Oy, two municipal waste and energy companies. These companies have received multimillion-euro investments, loans, and loan write-offs from their owner municipalities and municipal groups. Since these subsidies are granted selectively to certain publicly owned companies, they may constitute unlawful state aid under EU rules.

Municipal subsidies distort competition
The circular economy requires market-based solutions. Unlawful state aid hampers the formation and development of circular economy markets and slows down investments.

Selective subsidies granted to publicly owned companies distort competition. When municipal companies can operate on the market with the backing of taxpayers’ money, private companies cannot compete on equal terms. This holds back new investments, even though they are urgently needed for Finland’s economic growth, climate change mitigation, and the advancement of the circular economy.

Ultimately, taxpayers bear the financial risks associated with these subsidies. If municipal companies fail in the market, losses are covered from municipal budgets – in other words, from residents’ tax revenues. This is far from fair competition and transparent financial management. It is also questionable whether such activities are compatible with the basic mission of municipalities and whether they constitute a reasonable use of public funds.

”The circular economy cannot and must not be built on unfair competition. One of the goals of the government programme is to promote the circular economy. That requires fair markets where the same rules apply to all. Today, some municipal companies operate under conditions that private companies cannot access. This undermines new investments and, at the same time, Finland’s growth,” says Mia Nores, Managing Director of the Recycling Industries of Finland.

Key points of the complaints
Biosairila Oy is a biogas company owned by the City of Mikkeli’s subsidiaries Metsäsairila Oy and Etelä-Savon Energia Oy. Throughout its operations, Biosairila has received various subsidies from its owners, such as equity investments, loans, and loan write-offs. At the same time, Biosairila has competed with private companies in both industrial waste treatment and biogas production.

Although it is difficult to determine the exact amount of state aid granted to Biosairila based on publicly available information, in 2025 alone the company’s shareholders forgave loans exceeding EUR 10 million. As a result of the measures subject to the complaint, the total amount of state aid granted to Biosairila is likely to be significant. It is hard to imagine that any private market operator would ever have financed the company in the same way as Mikkeli’s municipal subsidiaries have. Therefore, there is reason to suspect a violation of EU state aid rules.

Riikinvoima Oy is a waste incineration plant located in Leppävirta, owned by eight municipal waste companies and Varkauden Aluelämpö Oy. The plant has been financed partly through interest-free shareholder loans granted by Riikinvoima’s owners and partly through external bank loans secured by commitments from the owners. These commitments given by the owners to the benefit of Riikinvoima are in practice equivalent to state guarantees. It is also highly unlikely that any private market operator would ever have granted such significant long-term capital loans on virtually non-commercial terms.
The subsidy measures under complaint have been directed solely to Riikinvoima, meaning they have not been available to other companies. This makes them selective in nature, favouring a single company, Riikinvoima, over its competitors. Riikinvoima also processes treated wood waste, a market where private companies operate. The subsidies granted by the municipal owners to the company may therefore distort competition and breach EU state aid rules.

Further information:

Mia Nores
Managing Director
Recycling Industries of Finland
+358 44 330 0928
mia.nores@kierratysteollisuus.fi

Mikko Alkio
Partner
Geradin Partners
358 50 413 5502
malkio@geradinpartners.com