Climate neutrality endeavor must take into account country specificities

  • 2020-01-22
  • BNS/TBT Staff

TALLINN - Estonian Minister of Finance Martin Helme said that the transition to a climate neutral economy must be feasible for each country and take into account the specificities and challenges of member states.

"Estonia has also joined the European Union's goal of climate neutrality, but to achieve that, the different starting positions of the member states must be taken into account and member states should also have the flexibility to decide on emission reduction," Helme said at a meeting of the Economic and Financial Affairs Council (ECOFIN) in Brussels on Tuesday.

"The creation of the Just Transition Fund is welcome, but at the moment, the allocation key to funding the oil shale sector is discriminatory compared to other fossil sectors, but the problems and challenges in these sectors are similar," the minister added.

The European Commission presented its communication on the Sustainable Europe Investment Plan published on January 14. It outlines activities and directions for how the EU will move towards climate neutrality by 2050. Activities concern investment incentives, budgetary measures at EU and member state level, as well as measures in tax policy and the prevention of the risk of transboundary greenhouse gas emissions.

Central to the endeavor is the Just Transition Mechanism, regarding which the European Commission submitted its proposals on January 14. It will also create the Just Transition Fund, which is proposed to receive 7.5 billion euros from the EU's multiannual budget over the period 2021-2027.

The fund's support will be distributed among member states according to an allocation key the criteria of which also cover oil shale regions. The fund would be able to diversify entrepreneurship, invest in energy efficiency and renewable energy infrastructure, and support staff training and retraining.

The ministers also discussed the current state of the development of a global solution for the taxation of the digital economy taking place at the Organization for Economic Cooperation and Development (OECD). The issue will be discussed at the end of January in the OECD Inclusive Framework format, where the principles of tax reform will be decided. By June of this year, details will be worked out to reach an agreement on a global tax rule change by the end of the year.

"Estonia does not agree to abandon tax sovereignty and cannot support the creation of a global corporate tax, the terms and rates of which are not ours to set. Taxation is an opportunity for every country to find the best way to promote its economy and find its advantages in international competition, it must be up to each country to decide," Helme said.

The finance minister also received an overview of the priorities of the new presidency of the Council of the EU, Croatia, in the field of finance and economy for the recently started half-year.

ECOFIN initiated the annual "European Semester" process for the monitoring of the member states' economic, employment and fiscal policies. The European Commission presented its fall package published on December 17, 2019, including its report on the annual sustainable growth strategy, highlighting the main challenges for 2020,

the "alert mechanism report" for 2020 and the draft Council recommendation on the economic policies of the euro area.