AAU receipts targeted at green initiatives

TALLINN - The Estonian government on July 30 approved a draft for sale and purchase agreements for Estonia’s unused pollution quota AAUs (Assigned Amount Units), which are being entered into with the Kingdom of Spain and the Japanese bank Sumitomo Mitsui Banking Corporation (SMBC). With the entry into force of these transactions the government will have sold AAUs with the value of 1.0 billion kroons (64.1 million euros) in 2010, which is twice as much as planned in the annual budget, the Ministry of Foreign Affairs reports.

The sale of the AAUs is taking place as part of the green investment scheme, which requires the revenue raised to be reinvested in environmentally friendly projects designed to reduce CO2 and greenhouse gas emissions. The government’s decision to approve the transactions brought to an end almost a year of preparatory negotiations. Based on the agreement with Spain, the revenue raised from the transaction will be used to develop wind energy and environmentally friendly public transport.

AAU sales revenue of 23 million euros will be invested in wind energy. This investment will allow production capacity of around 25-30 MW of wind power to be generated in Estonia in addition to the capacity financed through tariff support. The support will be issued by the Environmental Investment Center foundation on the basis of a regulation of the Minister of Economic Affairs and Communications. The application round will be launched in August and will be open to new projects which do not receive tariff support. The investment will reduce the CO2 emissions from the production of electricity in Estonia by 1.5 million tons over the next 20 years.

As part of the investment scheme for the development of public transport, the state will be spending 21 million euros on economical new buses for public service. The Road Administration will be conducting a public procurement in order to implement the support scheme. The buses purchased as a result of the procurement will go into use on regional and outlying urban routes. With the available financial resources it is estimated that around 110 buses could be purchased, coming into use in 2011.

The sale and purchase agreement being entered into with Spain is valued at 688.5 million kroons.
The government has also authorized the Minister of the Environment to enter into an agreement to sell 0.5 million AAUs to the Japanese bank Sumitomo Mitsui Banking Corporation (SMBC). The revenue raised from the transaction will be invested in measures designed to boost the energy efficiency of government department buildings. A total of 11 buildings will be renovated, three of which are used by the Ministry of Education and Research, six by the Ministry of the Interior and two by the Ministry of Social Affairs.

Estonia has already entered into two sale and purchase agreements with Austria for the transfer of 2.9 million AAUs.