While otherwise painting a fairly positive picture, it also draws attention to a lack of waste management in the region and points to the challenges that will accompany future economic expansion.
Annually, 13.2 tons of carbon dioxide per head of population are released into the atmosphere in Estonia, according to the latest figures contained in the report, which is produced by the Baltic Environmental Forum, an organization sponsored by Germany, Finland and Sweden, the Baltic states and the European Commission. Estonia's CO2 emissions, by far the highest in the Baltic states, compare poorly with the European Union average of 8.9 tons per capita annually.
The report comes as a meeting of top scientists convened by the United Nations in Shanghai this week warned that global warming is happening faster than previously predicted. Carbon dioxide emissions are the main cause, say the scientists. In the Baltic states, the progressively earlier date at which rivers are thawing may be the first effects of climate change, says the report.
Estonia's high emissions levels are due to its reliance on the burning of oilshale, say scientists. The fuel is burnt at two power plants in the northeastern Narva region, in which the U.S.-based energy corporation NRG is expected to buy a 49 percent stake.
The plants are currently running at 30 percent efficiency, estimates Valdur Lahtvis, environmental manager at state energy utility Eesti Energia.
Recent emissions figures for Estonia represent a drop of around 10 percent from 1990 levels, the report shows. The reduction is due to modernization at the production and distribution stages, and energy-saving both in the industrial and residential sectors, says Lahtvis. Emissions will decrease further with privatization because prices rises will force customers to reduce consumption, he says.
But this does not satisfy Tonu Lausmaa, director of Estonia's Renewable Energy Center, a non-governmental organization. NRG can be expected to look for new export markets and then increase production, contravening EU environmental standards, he says.
"The Estonian government thinks no one will notice this small country," says Lausmaa. "The government is out of date on global warming and renewable sources of energy."
Hillar Lauri, NRG's executive director of business development, acknowledges that the company hopes to export electricity in the future, particularly if new undersea power lines connecting Estonia to Finland are constructed as part of a proposed Baltic ring, which would link the Baltic states to the Nordic countries, Poland and Germany. But he rejects concerns about increased emissions.
"Our plants will be as legal as any other in the EU," he said.
In all three Baltic states use of renewable energy sources, such as wind, bio-gas, geothermal and solar energy is negligible, says the forum's report.
Lahtvis admits that the NRG deal distorts the government's supposedly eco-friendly policies. On the one hand, he says, the use of alternatives to oil-shale is to be increased, especially with the introduction of carbon taxes and a law requiring the use of renewable energy sources. But under the NRG deal Eesti Energia is obliged to purchase virtually all NRG's production for the next 15 years.
"The NRG deal actually closes the market to other producers," says Lahtivs. "The government is contradicting itself."
In Lithuania, according to the report, CO2 emissions are expected to increase with the planned closure of the Ignalina nuclear power plant, which currently provides between 80 percent and 90 percent of the country's electricity. Nonetheless, Lithuanian environmentalists welcome Ignalina's expected closure. Natural gas is likely to be the main replacement, says Linas Vainius, vice-chairman of Lithuania's Green Movement. But alternatives must be promoted, he says, not least to reduce dependence on gas from Russia.
"Europe is always dependent on supplies from outside," said Vainius. "Diversification would be good for the country. Gas is the cleanest fossil fuel, but it still emits CO2. Alternatives will become more and more important."
The report also raises concerns about the slow progress being made in the treatment and management of waste in the Baltic states. Despite the economic slump in the region waste production in urban areas is almost as high as the European average. Systems for its management have "only just started," said Kristina Veidemane, deputy manager at the forum.
"It cannot be predicted whether current targets for waste reduction and recycling will be met," warns the report. Only a few of the region's 1,600 dumpsites have been made environmentally safe, it says. The introduction of a packaging tax in Estonia has been successful, but a similar tax in Latvia is too low, and Lithuania has no such tax.
Waste management is just one aspect of the questions raised by future economic growth, says Veidemane.
"The use of natural resources such as timber and peat is not currently the biggest problem, but pressure is increasing," she said. "The rapid increase in the number of private cars means air quality in larger cities will be a problem in the future. Fish stocks in the Baltic sea, such as cod, salmon and herring are also in bad condition."
Veidemene says that many aspects of the Baltic states' environment are "okay," but the report is incomplete, she says, because of the poor quality of environmental data.
"The Baltic states don't collect data according to modern criteria," she said. "Environmental data collection was very different in the Soviet period. The capacity of the region's experts needs to improve."
The process of producing the report should increase future cooperation on the environment, said Veidemene. Around 150 people were involved, and experts had to write about issues faced by all three countries.
"The report has been very popular. It's produced a great feeling of cooperation," she said.
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