Kadri Simson: Solution needed over cheap Russian electricity

Kadri Simson on Tuesday night's
Kadri Simson on Tuesday night's "Esimene stuudio". Source: ERR

Estonia's European Commissioner Kadri Simson (Center) said that a solution was needed to alleviate the recent emergence of cheaper Russian and Belarusian electricity imports on the Estonian market. She also said that the oil shale industry per se isn't necessarily dead, hinting that options for its continuation and even the construction of a new refinery could happen.

"At present we can see that electricity generation in Ida-Viru County isn't dependent on performance," Simson said, speaking on Tuesday evening's edition of politics discussion show "Esimene stuudio".

"There's a sense that oil shale-generated electricity can't compete with cleaner forms of energy only due to current market competition," she added.

Cheaper Russian and Belarusian electricity – which is not subject to EU emissions taxes – being dumped on the market is an example of recent competition, though the practice could be stopped, Simson said.

"About 75 percent of Russia's energy production is ​​nuclear, and 25 percent comes from coal-fired power stations, which are not subject to emissions tax," Simson said, adding that Russian-generated electricity entered the Estonian market via Finland, and Lithuania was the conduit for Belarusian power doing same.

Simson added that this state of affairs should not be allowed to continue.

"As such, Russia does not have to pay any intermediate tariff [on its electricity]; this [importing of Russian electricity] cannot continue - otherwise we wouldn't make a difference [environmentally speaking]. We would halt our production but then consume electricity from across the border which had the same carbon footprint," Simson said.

Simson added that the commission planned to discuss a separate cross-border mechanism, to address the issue.

Late last week, state-owned electricity generator Eesti Energia said that environmental taxes should be imposed on cheaper Russian imports to alleviate the problem. However, power transmission operator Elering said that this would be robbing Peter to pay Paul in that cheaper electricity from the Nordic countries would take its stead.

On the issue of any future oil shale refineries in Estonia – out of favor from the perspective of the EU's climate goals – Simson said that in any case the European Fair Transfer Fund could not be used for that purpose.

"No fossil fuel investment can be made from the Fair Transfer Fund. /.../ We have come to the conclusion that no money will be available from the European Investment Bank to be spent on fossil fuels after 2021," Simson said, adding that the Estonian government would not make any decisions on a plant until it had carried out feasibility studies – including consideration for what market the theoretical plant's output might find, including outside the EU.

"Certainly, Europe has stricter rules, but fossil fuels are clearly going to continue to be used outside Europe. And here we have to assess whether the next 30-years will provide a market and market security. Right now, there are plans to invest a great deal in rebuilding ships, to allow them to burn less polluting fuel in their boilers."

Simson noted that the private sector may still want to take a punt on oil shale, which was not the same as coal burning and had plenty of bi-products.

"Naturally, it is fair to say that oil shale is not the same as coal. Oil shale provides more added value than electricity. So it's worth carrying out research and development," Simson said.

Simson also said that electric cars would be in the same price bracket as fossil fuel vehicles within five years.

The original "Esimene stuudio" broadcast (in Estonian) is here.

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Editor: Andrew Whyte

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