NEWS

Estonian government to allocate 125 million to fossil fuel production despite coronavirus crisis and climate change

03-04-2020
Category: Climate Change
PRESS RELEASE April 03, 2020

At the end of March, the Government of the Republic of Estonia decided [1] to provide 125 million euros in aid to the state-owned company Eesti Energia for the construction of a shale oil plant. Estonian environmental organisations consider the government’s decision irresponsible in light of the ongoing pandemic, Estonia’s future and the EU’s climate goals. At present it is not appropriate to invest in high-risk areas with a high climate impact [2], whose economic prospects are not only dependent on the coronavirus pandemic, but also questionable in general. “Much better uses could be found for this money in the current crisis – either in the healthcare sector or to support long-term economic solutions. At the moment, providing a sense of security to oil shale workers with a new oil plant is like trying to build a new hotel for those who are unemployed in the hotel industry,” according to Piret Väinsalu, climate expert at the Estonian Fund for Nature. The government’s decision is based on the outdated Estonian National Strategy Papers [3], which have to be reworked in the light of changing climate policy. Estonia and the other EU Member States have set the goal of achieving climate neutrality by 2050 in order to contain the climate crisis. Estonia is currently in a situation where the country will be unable to meet even the 2030 climate targets. This has been confirmed by the European Commission in its 2020 country report on Estonia [4]. However, an oil plant is not a suitable solution for combating climate change, as Estonia is prolonging its dependence on fossil fuels, environmental damage and carbon emissions will continue. Even though the increase in oil production will direct some of the CO2 emissions out of Estonia, this amplifies climate change to the same degree elsewhere. Without dialogue and agreement, the government made a decision in principle to build a new shale oil plant, which essentially cuts off the opportunity for a just transition to clean energy, and Estonia’s carbon emissions per capita will remain higher than in many EU countries for decades [4]. According to SEI Tallinn study [5] it will make it extremely unlikely to achieve climate neutrality in Estonia by 2050. Estonia is facing a recession due to the impact of the coronavirus, and declining tax revenues will further limit public sector capacity. With limited opportunities, the country must make wise, forward-looking choices. It is particularly important that these choices are also environmentally friendly, because once the pandemic is over, humankind will continue to have to deal with biodiversity loss and climate change. The government’s decision clearly is gambling on the failure of international climate agreements, a continued dependence on fossil fuels and the subsidising of the declining oil industry. Alongside environmental organisations, the government’s decision has also been publicly criticised by Estonian research organisations [6], youth associations [7], entrepreneurs [8] and opposition politicians [9]. Notes for Editors: [1] Government green lights new €286 million oil shale plant (Estonian Public Broadcasting ERR, March 27, 2020) [2] Estonia’s energy sector has been based on the burning of fossil fuels for decades – in 2017, nearly 70% of Estonia’s CO2 emissions came from the energy sector. Estonia is one of one Europe’s largest CO2 emitters per capita. During 2019 oil shale electricity production declined as a result of rising CO2prices in the EU and the promotion of green energy. At the same time, up to four new shale oil plants and pre-refinery are under discussion. [3] The National Development Plan of the Energy Sector until 2030 and General Principles of Climate Policy until 2050 were formally adopted in 2017, but their content was drawn up several years earlier and does not take into account recent developments. The basic research for ENMAK was carried out in 2013-2014, thus even before the Paris Agreement. General Principles of Climate Policy set the goal of -80% greenhouse gas reductions, which needs updating to comply with climate-neutrality goal. Also, the environmental impact of the plans was not assessed when formulating the General Principles of Climate Policy (it was decided not to perform a SEA), nor were concrete measures planned to achieve the objectives set. [4] Country report Estonia 2020 (European Commission, Feb 26, 2020) [5] The Stockholm Environment Institute in Tallinn provides an analysis of sector-specific issues that Estonia must address, and offers an outline of the cost effectiveness of related measures. Among other key findings, the analysis highlights that “Estonia must decarbonize its energy supply, and shift away from its reliance on oil shale. To ensure a just transition, new investments are needed to support and scale wind, solar and local bioresources. /…./ Investing in mature and scalable technologies today is an important first step. Such investments create the conditions to quickly adopt emerging technologies after 2030. These investments also put Estonia on the path to achieve the agreed target of a 70% emissions reduction by 2030, and to reach climate neutrality by 2050. Early action “future proofs” Estonia’s economy – by avoiding the likelihood of stranding public assets, and by enabling local industries to take steps needed to embrace new economic opportunities.” [6] Statement of the Estonian Young Academy of Sciences and the Estonian Chamber of Research “Teadusühendused: põlevkivitehase rajamine kriisiolukorras on vastutustundetu ja kahjulik” (national daily Postimees, March 27, 2020. In Estonian) [7] Youth organizations: Government should not invest in oil plant (Estonian Public Broadcasting ERR, March 29, 2020) [8] Ettevõtja Eesti Energia õlitehase rahastusest: kõike küll ei räägita, aga võib olla on tegu ettevõtte varjatud päästmisega? (Estonia’s biggest news portal Delfi, March 29, 2020) [9] Uue õlitehase toetamine on vastutustundetu, leiavad rohelised ja opositsioon (Estonian news portal Geenius, March 27, 2020. In Estonian) and Õlitehase kriitikud ei mõista valitsuse rahaeraldist (national daily business paper Äripäev, March 30, 2020) are the two examples where environmentalists and opposition politicians state that the Estonian government’s decision to invest 125 million euros in building a new oil plant is irresponsible and risky both economically as well as environmentally. For example, the Estonian Reform Party’s Andres Sutt, a member of the Riigikogu Finance Committee and former board member at Eesti Energia, said the government’s decision is irresponsible and does not solve any urgent problem in the Estonian economy. Ends. For more information, please contact: Piret Väinsalu, Climate Expert, Estonian Fund for Nature, piret@elfond.ee, phone + 372 581 20287 Madis Vasser, Member of Management Board, Estonian Green Movement, madis@roheline.ee, phone: + 372 5395 0310