European environment ministers to mull climate package

TALLINN – At a meeting in Luxembourg on Tuesday, European Union environment ministers will discuss how to move forward with the Fit for 55 climate and energy package.

Of the key issues that are important to Estonia, the ministers are to discuss the review of the carbon emission allowance trading system, the creation of a social fund for climate action, and the goals and achieving flexibility in the land use, land-use change and forestry (LULUCF) domain, spokespeople for the Estonian Ministry of the Environment said. 

Minister of Rural Affairs Urmas Kruuse, who will represent Estonia in the negotiations, said that in the discussions in Luxembourg he will proceed from the positions agreed upon in the government and the Riigikogu.

"Estonia supports the general climate goals set by the European Union," Kruuse said. At the same time, he said, it is important that when making changes, the specifics of individual countries are taken into account and the potential socio-economic consequences of the changes are mitigated.

When it comes to changing the EU emissions trading system, Estonia considers it important that there are effective mechanisms in place to stabilize the currently excessively volatile price of allowances, which would also allow for better price forecasting in the future. It is also important that the changes are as smooth as possible and that there are enough free credits for companies that are in global competition.

The inclusion of maritime transport in the trading system will also be discussed. Estonia believes that an adequate transition period should be ensured in this and it should be taken into account that in our climate ships must also navigate ice-covered seas.

"Our shipping must remain competitive with that of southern countries," Kruuse said. "That is why we want the specifics of the climate to be taken into account and that an adequate transition period is provided," he added. 

One contentious issue is the creation of a greenhouse gas emissions trading scheme for buildings and road transport. Estonia's approach here is that, if such a system is established, the revenue should largely go directly to the member states.

These revenues could then be used to offset the impacts of the new system on the most affected households, but also on regions and businesses. Sectoral investment and innovation could also be supported. In addition, Estonia believes that if the new system is implemented, it should not happen before 2027. There must also be sufficient measures in place for this system to ensure a rapid response to price shocks.

The national emission reduction targets set out in the Effort Sharing Regulation for sectors outside the trading system -- transport, mainly livestock farming in agriculture, and the like -- will also be discussed.

While Estonia supports targets that are higher than the ones to date, it should be noted that achieving a higher emissions target will be a significant challenge for Estonia that requires a review of sectoral policies. The country's position is that it is necessary to ensure not only that the existing targets are met, but also to accelerate the implementation of certain measures and to develop new measures to support a systemic approach.

Estonia is affected by the issue of increasing carbon sequestration in the LULUCF sector. In principle, Estonia supports the achievement of the overall objective of sequestering 310 million tons of carbon dioxide (CO2) equivalent in the sector by 2030 -- but this is provided that the state can use a sufficient amount of additional compensation and various flexibility measures in the previous five years.

According to the minister, it must be ensured that Estonia will not end up in a situation where at the end of the period a large amount of CO2 allowances has to be bought from other countries or significant socio-economic effects have to be borne.

"If the negotiations do not succeed in moving towards the above-mentioned conditions, Estonia cannot support the general approach," Kruuse said.

As the entry into force of the current conditions will have significant socio-economic impacts on forestry, agriculture and the peat industry, regulatory flexibility is essential for Estonia. According to the ministry, possible additional measures certainly have to be planned and implemented, but many of them will only yield results in the LULUCF sector after up to ten years.

In addition to the climate package, halting deforestation and forest degradation will be discussed in Luxembourg on Tuesday. As part of that plan, for some goods, such as beef, soy, coffee and timber, it will be necessary to prove in the future when such goods are imported into or leave the EU that their production and cultivation have not been accompanied by deforestation or forest degradation. The aim is for the EU not to contribute to global deforestation or forest degradation. 

Estonia will agree to this initiative if the possibility of deforestation for the purpose of restoring natural habitats and selling products or timber derived from the areas deforested for that purpose are ensured.

For example, Estonia is committed to maintaining historical meadows. Estonia is located in a climate zone where meadows that have been left unmaintained become forested, and reintroducing them into maintenance also requires deforestation. It is estimated that in Estonia, 22,000 hectares of grasslands which have now become overgrown and are classified as forest land need to be restored. In addition, Estonia is also actively restoring bogs and raised bogs, in which effort the country is approaching 20,000 hectares, which will provide a lot of habitat for endangered species.

EU environment ministers will not make final decisions on the future of the climate package on Tuesday, but will agree on a fundamental direction. The agreement between the environment ministers will be followed by trialogues with the European Parliament and the European Commission.