Increase in the production and use of bioenergy has been among the main priorities of energy policy in Finland since the first energy crisis in 1973. Imports of fossil fuels had increased significantly, reducing self-sufficiency and security of energy supply. Available hydropower resources had to a great extent been developed, and nuclear power plants were planned to provide the base-load generation needed to meet increased electricity consumption. Wood fuels and peat were considered optimal choices for combined heat and power (CHP) production in district heating and industry. Promotion incentives that included investment subsidies, taxes on fossil fuels, research and development, and dissemination activities were implemented with good results: in 20 years the annual use of peat increased from nearly nil to 80 PJ in 1996, and the increase in the annual use of wood fuels in the same period was also 80 PJ. Research and development on bioenergy was intensive because technologies feasible for local conditions were not available and the competitiveness of bioenergy was poor except in the case of wood residues from the forest industry. Examples of important innovations and their successful commercialisation are several fluidised bed concepts for CHP plants using fuels of low and variable energy values and new peat harvesting concepts. Because R&D investments were limited it was decided on the national level that the core technologies for wind and solar energy could be imported from other countries with higher R&D expenditure, although some important components and local applications were developed by the Finnish industry. In the 1990s the need for mitigation of human-induced climate change brought a new driver for renewable energy sources (RES). Earlier drivers, such as security of energy supply, increase of employment opportunities in rural areas, and new use for set-aside fields, still existed. CO2 taxes were already introduced on fossil fuels and peat in 1990 in Finland. The climate strategy of Finland from 1999 includes the Action Plan on Renewable Energy Sources. National targets of RES for 2010 are 27 % (385 PJ) of the primary energy consumption and 31.5 % (27 TWh) of the electricity demand, up from 22 % and 27 % in 1997. RES will take care of about one-quarter (4-5 million tonnes (Mt) of CO2 equivalent) of the greenhouse gas emission reduction needed to meet Finland's commitment for the first Kyoto period, 2008-2012. In 2002, bioenergy, excluding peat, covered 20 % of the total primary energy consumption and 10 % of the electricity demand in Finland, which are the highest figures in the industrialised countries. The available technical biomass resources would enable even the doubling of the current utilisation of bioenergy without decreasing the production volume of the wood-processing industry. National promotion incentives are currently being updated because deregulation of the energy market, the EU and worldwide mechanisms, such as emission allowance trading, green certificates and Kyoto mechanisms, will radically change the market for RES.