EU Council approves Estonia's EUR 953 mln updated recovery plan

  • 2023-06-16
  • BNS/TBT Staff

TALLINN – On Friday, the Council of the European Union endorsed Estonia's updated recovery plan of 953 million euros, which will focus more than before on investments related to the green transition in both the private and public sectors.

The planned actions will be implemented by mid-2026, the Ministry of Finance said.

Estonia's original recovery plan was approved in autumn 2021, but due to the decrease in the amount foreseen for the country in the EU Recovery and Resilience Facility (RRF), disruption of supply chains, high inflation and the energy crisis, the plan had to be revised. In the process of adjustments  that began in the summer of 2022 and ended on Friday, both the timelines and composition of the projects were changed, placing more emphasis than before on investments with a climate impact, especially when it comes to support measures for businesses, but also in the field of energy. The investments in Tallinn Hospital, the Turba-Risti section of the railway that is to eventually connect Tallinn and the sea port of Rohukula in northwestern Estonia, and the medical helicopters project were excluded from the plan.

Finance Minister Mart Vorklaev explained in a press release that in light of the changed circumstances and new challenges, it is important to review what to focus on and what can be realistically done in the time frame set forth by the recovery plan.

"The goal was to agree on changes that would put the most critical needs first -- the competitiveness of companies, including green reforms and the energy, and digital transition in both the state and private sector, as well as energy security," the minister added.

The final RRF allocation for Estonia is 863.3 million euros, plus 90 million euros in the second half of 2022 as part of REPowerEU, which focuses on rapidly reducing dependence on Russian fossil fuels and boosting the green reform. Under the REPower plan, included as part of the amendments to the recovery plan, 31.8 million euros is allocated to a reform to accelerate the deployment of renewable energy and 18 million euros to grid investments to speed up authorization procedures and bring new renewable energy capacity to the market.

In addition, an amount of 20.2 million euros is directed to increase the production and use of biogas. All these investments will be made in the next few years and will be completed in the spring of 2026 at the latest.

In total, energy and energy efficiency related investments in the plan increased by more than 200 million euros, while measures to assist business increased by 35 million euros. This will mobilize a total of 543 million euros through the recovery facility to increase the capacity of electricity grids, improve the energy efficiency of apartment blocks and small houses, increase resource efficiency, develop green technologies, deploy comprehensive hydrogen chains, and other private and public green investments. This brings the share of measures with a climate impact in the plan to almost 60 percent, up from the required 37 percent.

"With this money, we will be able to invest in future-proofing ourselves in the coming years and create opportunities for the birth of new, smart solutions. We will also be able to strengthen the competitiveness of our companies, open up new export opportunities and thus lay the foundation for our future long-term economic growth," the minister said in the press release.

The government endorsed the official submission of the amendment to the recovery plan to the European Commission in February this year. As a result of the negotiations that followed, the European Commission approved the changes to Estonia's recovery plan in May and proposed to the Council of the European Union to approve the updated plan.