Estonian govt considering granting temporary license to oil plant

TALLINN – Estonian Prime Minister Kaja Kallas said at a government press conference on Thursday that the government has three options in moving forward with Enefit Power's pending oil plant project: end the construction and development of the plant, delay them until the climate law is passed, or change the law to grant the oil plant a temporary integrated permit.

Kallas admitted that the oil plant does not fit into Estonia's climate goals in the long term.

"The temporary nature provides an opportunity to regulate the fact that if [the plant] no longer fits into the goals, the operation will also end," the prime minister said.

On Oct. 11, the Supreme Court annulled the construction permit granted to Enefit Power AS, part of the Eesti Energia group, for building the oil plant as mistakes had been made in the permit procedure during the environmental impact assessment process. 

CEO of Enefit Power Andres Vainola said that over 65 percent of the 353-million-euro investment in the Auvere oil plant has already been made and paid out to projects partners, and contracts have been signed with regard to over 90 percent of the construction.

The prime minister admitted that since such a large part of the investment has already been made or is tied to obligations, it puts the state under duress.

"A shale oil plant is not the best solution for our environment, but not completing it is not something we can afford," she said.

The prime minister also pointed out that if it is decided not to move forward with the plant, East-Viru County will lose out on 450 jobs and the decision may also threaten 680 jobs in the Estonia mine.

"In a situation where just transition has actually not been implemented here yet, these alternative jobs would have been created there. The positive thing is that we actually see, firstly, interest in a just transition, and secondly, investors who will still come," the prime minister said.

Kallas also promised to raise the issue of extending the terms of use of the funds of the Just Transition Fund at a meeting with European Commission Vice President Valdis Dombrovskis next week.

"If we ultimately decide to minimize the damage, so to speak, to proceed with this plant in such a way that it fits into the climate goals, to change the law in this way, then we have until 2035 to create alternative jobs there," Kallas added.

The total volume of the European Union's Just Transition Fund (JTF) for Estonia is 340.3 million euros, however, according to the Ministry of Finance, only 64.4 million euros or 18.9 percent of this is covered by projects. Funds ready for use, for which the conditions for granting support have been set in the form of legislation, total 280.5 million euros, or 82.6 percent of the total budget.

The Just Transition Fund consists of two financing components: 56 percent are the funds of the so-called restart facility, the eligibility period of which lasts until the end of August 2026, the remaining 44 percent are the funds of the cohesion policy 2021-2027 budget period, the eligibility period of which lasts until the end of 2029.