EUR 3.5 bln for Estonia's economic and social development, green transition in 2021-2027

TALLINN – Estonia will receive 3.5 billion euros in EU cohesion policy funding to support economic, social and territorial cohesion in 2021-2027 in the framework of a partnership agreement between the European Commission and Estonia, which was adopted on Monday.

The agreement will also support the implementation of key EU priorities such as the green and digital transition and contribute to competitive, innovative and export-oriented growth, the Commission said in a press release.

The commissioner for cohesion and reforms, Elisa Ferreira, said: "Following today's adoption of the partnership agreement, Estonia will be supported to further develop its economy, the green and fair transition, innovation in small and medium businesses and its transport sector. Estonia has a far-reaching smart, green and digital future ahead."

An allocation of 781 million from the European Regional Development Fund (ERDF) and the Cohesion Fund will support the circular economy in businesses, ensuring less waste and more resource efficiency. The funds will also promote energy efficiency, renewable energy, and an increased use of recycled materials.

An amount of 354 million euros from the Just Transition Fund (JTF) will help Estonia's transition to a greener and more competitive industry while maintaining employment and upskilling workers in East-Viru county.

Up to 521 million euros from the Cohesion Fund will promote the shift from road to rail transport for both passengers and freight. This will help reduce commuting times and CO2 emissions. Investments will also be made to complete the road network, necessary for the Core TEN-T, which should be ready by 2030.

An amount of 742 million euros from the ERDF will improve cooperation between businesses and research institutions and will be invested in small and medium businesses to boost productivity, innovation and competitiveness in line with smart specialization. These funds will also speed up the digitalization of the economy, the development of public digital services and high-speed internet.

An amount of 534 million euros from the European Social Fund Plus (ESF+) will be invested to address social, health, lifelong learning and labor market needs. Skills measures will be offered throughout all stages of life, ranging from support for school children, over upskilling measures, to helping people finding and advancing in their careers.

ESF+ resources will also address child poverty, prevent early school leaving, support long-term care reform, match education to labor market needs and promote healthy work life. Support for food and basic material assistance will be also provided to the most vulnerable groups in society. All ESF+ investments will contribute to further implement the European Pillar of Social Rights.

An amount of 97.4 million euros from the European Maritime Fisheries and Aquaculture Fund (EMFAF) will increase the resilience of the fisheries, aquaculture and processing sectors. The EMFAF program will focus on innovation and interdisciplinary scientific cooperation, climate change adaptation and environmental protection. The sustainable development and economic diversification of the coastal fishing and aquaculture communities will be further strengthened, consistently with the objectives of the European Green Deal.

Investments in the fisheries and aquaculture sectors will also contribute to the green transition in Estonia, by promoting development of small-scale coastal fisheries through community-led local development.

The partnership agreement covers the cohesion policy funds, meaning ERDF; ESF+, the Cohesion Fund, the JTF, as well as the EMFAF. It paves the way for the implementation of these investments on the ground through two national programs and five INTERREG programs, concerning cross-border, transnational and interregional cooperation.

In particular, Estonia has set a target to phase out oil shale based power generation by 2035. The CO2-intensive oil shale sector is concentrated in East-Viru county. In order to mitigate the high socio-economic costs of the green transition, Estonia will invest money from the Just Transition Fund in East-Viru County to restructure its economy, support communities affected by the transition process, reduce the impact of mining activities and oil shale processing on the environment and human health..

Under cohesion policy, and in cooperation with the Commission, each member state prepares a partnership agreement, a strategic document for programming investments from the cohesion policy funds and the EMFAF during the multiannual financial framework. It focuses on EU priorities, laying down the investment strategy identified by the member state. It presents a list of national programs for implementation on the ground, including the indicative annual financial allocation for each program.

The 2021-2027 partnership agreement with Estonia is the 16th to be adopted following those of Greece, Germany, Lithuania, Austria, Finland, Czechia, Denmark, France, Sweden, the Netherlands, Bulgaria, Cyprus, Poland, Italy and Slovakia.