Estonia expresses misgivings over EU energy reform measures

  • 2008-02-27
  • Staff and wire reports
TALLINN - Estonia's center-right government has determined positions on a series of climate change measures approved by the European Union and identified several key areas where the Baltic state's opinion diverges from Brussels'.
Estonia believes that the climate change measures, which were passed in January by the European Commission, the EU executive, do not take into account regional nuances, particularly those in the Baltics.
Ministers claim that Brussels' proposals, which aim to boost renewable energy and prevent global warming, pose a threat to Estonia's economic development and energy security.
"Estonia' energy supply security must not contract as a result of the climate and energy package, and neither must the competitiveness of our economy deteriorate," Economic Affairs Minister Juhan Parts said Feb. 21 after a government meeting.

The government formalized opinions on six different issues involving the EC's proposals. For example, ministers believe that 1990 's not 2005 's should be used to calculate the carbon dioxide emissions, which will by 2020 have to be reduced to earmarked levels.
Estonia also wants more leeway for producing energy from oil shale, which is extremely abundant in the Baltic state and therefore guarantees a modicum of security.
"One of Estonia's most important positions is that energy produced from oil shale must partly be brought out from under the carbon dioxide quota," Parts said. "This is because Estonia's energy security will depend on oil shale energy in the foreseeable future. At the same time money from the sale of quota must only be channeled into energy sphere investments."

Estonia also wants Brussels to review the effects of the emissions trade 's including moving industry and electricity generation outside the EU 's with a view to maintain the EU's competitiveness.
The government has authorized Parts to present the Baltic state's positions at the EU ministers' transport, telecommunication and energy council.
According to the EC's draft directives, the amount of emissions distributed between European Union member countries and in sectors involved in the trading system would decline in Estonia by 1.74 percent a year in 2013-2020 as compared with 2005.

In sectors not involved in the trade of permitted emissions quota (e.g., transport) Estonia has been given the right to increase its carbon dioxide emissions by 11 percent by 2020.
What's more, when the directives takes effect, member states will no longer be permitted to give emission quotas to energy generation companies; rather, the whole quota will have to be sold at state-organized auctions. As Narva Power Plants generate electricity from carbon dioxide-rich oil shale, this would mean a significant rise in the cost of energy generation.
Meanwhile, a top energy official has said that the climate package would jeopardize the reconstruction of Narva Power Plants, because the facilities are fueled by oil shale.
Einari Kisel, head of the Economy Ministry's energy department, told a news conference on Feb. 25 that if the 2013-2020 EU energy reform plan would take effect as it is now, there would be no sense for Eesti Energia (Estonian Energy) to proceed with the reconstruction plan.

Rather, the government could decide that it would be more economically viable to build new generation units to ensure energy supplies and security, he said.
The European Union energy market is expected to be liberalized in 2013, giving consumers access to different suppliers. At the same time the market for the sale and purchase of carbon dioxide emission quotas will also begin.
Under current EU forecasts, a ton of carbon dioxide emission would cost 25 - 50 euros. Translated into electricity, this means that a kilowatt-hour of electricity produced from oil shale would cost 0.9 's 1.35 kroons (0.058 to 0.086 euro) without transmission costs. Currently the same kilowatt-hour costs 0.41 kroons without transmission costs.

After 2013 electricity generated using oil shale will remain competitive on the Nordic energy market, where the share of carbon dioxide emissions in power generating is significantly smaller than in Estonia. Thus investments into new generating units in northeastern Estonia also depend on the price level on the Nordic energy exchange Nordpool, Kisel explained.
The possibility also remains that, in an open market, Estonia will be able to import cheap electricity from Russia and other third countries, which will not have to pay for carbon dioxide emissions.