TALLINN - Due to changes in the Modernization Fund and Innovation Fund financed from the EU emissions trading scheme as well as due to the establishment of the Social Climate Fund, Estonia can expect hundreds of millions of euros of additional funding for its transition to climate neutrality.
Estonian Minister of Rural Affairs Urmas Kruuse, acting as the country's minister of the environment and representing Estonia at the "Fit for 55" negotiations at the Environment Council, said that the ministers agreed last week on increasing the volume of the Modernization Fund, which will bring an estimated nearly 320 million euros of additional funding for Estonia to support its transition to carbon neutrality until 2030.
"In total, Estonia's share in the Modernization Fund will amount to some 850 million euros," Kruuse said. "Estonia will get an additional 320 million euros for 2024-2030 from additional units about to be directed into the fund. The increased volume of the fund will be financed from the sale of additional emissions allowances."
As a separate emissions trading system is to be created for the road transport and building sectors, the European Commission proposed around a year ago to create the Social Climate Fund. The latter is geared at supporting more vulnerable households and micro-enterprises during their first years of transitioning to cleaner transport and energy.
The EU environment ministers agreed that the volume of the Social Climate Fund is to total 59 billion euros from 2027 until 2032. A part of revenues from the emissions trading system in the transport and buildings sectors will be directed into the new fund and redistributed to member states.
Estonia will get 169 million euros for supporting more vulnerable target groups in their transition to cleaner and more sustainable transport and heating alternatives and for investments in energy efficiency.
The environment ministers also decided to increase the share of priority investments co-funded from the Modernization Fund from 70 percent to 80 percent. Priority investments include renewable energy production, increasing energy efficiency in the transport, buildings, agriculture and waste sectors, and energy storage.
Estonia in cooperation with other member states added provisions to the Innovation Fund helping ensure better geographical balance between future projects to be financed from the fund. The volume of the fund is being planned to be increased.
The decisions made at the Environment Council do not necessarily mean a definitive agreement, however; they serve as basis for official negotiations over the climate package between the European Parliament and Council of the European Union.