TALLINN - Estonia might try to persuade the European Union to impose import duties on Russian electricity to protect the Baltic energy market if and when the EU and Russian grids are interconnected, according to a report.
Einari Kisel, the head of the Economy Ministry's energy department, told the Postimees that levying an import duty will be a matter of life and death for Estonia's energy sector.
He said cheap Russian electricity could satisfy all of Estonia's energy demands. Theoretically, this could happen in 2013, when the European Commission's revolutionary climate change plan comes into effect and the EU energy market is to be completely liberated.
To be sure, it is unclear when Russia, which in 2003 gave its preliminary approval to link its grid with that of the EU, will be able to sell its kilowatts on the open market.
What is clear, however, is that Russian electricity is cheaper than EU-produced power since Russian producers do not have to meet strict environmental requirements, Kisel explained. Russia's regional power companies are even unaware of the need to buy carbon credits.
Otherwise, the rest of the EU is "protected" against cheap Russian electricity by the lack of infrastructure. The three Baltic states, by contrast, are part of the Russian grid.
In October 2001 the European Union and Russia acknowledged that the full integration of their electricity grids would bring "substantial benefits in terms of the development of free competition, improvement of security of electricity supply and the creation of new opportunities for business cooperation in the electricity sectors of both Russia and member states of the EU."
An interconnected grid between the two entities would have a total installed capacity of 800 GW, span 13 time zones and serve some 800 million customers.
A feasibility study was started in 2004 and is expected to be completed by April of this year, according to the Union for the Co-ordination for the Transmission of Electricity.
Estonia wants to propose that electricity exporters to the EU would have to buy carbon credits equal to coal-fired stations. This, he said, would help avoid dumping.
The European Commission's climate change plan suggests that member states start holding carbon credit auctions in 2013 for electricity producers. Eesti Energia, whose production is based on oil shale, would be the only serious buyer in Estonia. If Estonia's proposal were accepted, firms that would want to sell Russian electricity in Estonia would have to participate in these auctions.
"We made the proposal not long ago. The Commission is evaluating it, and the initial response was positive," Kisel said.
In the liberated energy market that should be launched in 2013, Estonia hopes to trade electricity jointly with the Nordic countries' energy bourse, the Nord Pool.
A second power cable between Estonia and Finland in preparation would provide sufficient capacity for the transmission of electricity between the Baltic states and Nordic countries.