Estonia challenging EU oil shale transition fund calculation methodology

Oil shale production in Auvere, Ida-Viru County.
Oil shale production in Auvere, Ida-Viru County.

Estonia has challenged an European Commission-proposed methodology for calculating the transformation of the biggest polluters within the economy, via the European Union's Just Transition Fund, which aims to meet climate objectives in areas where fossil fuel production takes place, for instance in Ida-Viru County.

The finance ministry estimates that if the oil shale industry in Estonia was placed on the same footing as the coal industry in other member states in the commission's calculations, the amount due would be €40 million more than the current €125 million allocated; as it stands employment in oil shale (and also peat) production is not accounted for, whereas it is in coalminig. With the oil shale sector, production volumes are consdered instead.

Ida-Viru County, where Estonia's oil shale production is concentrated, is expected to receive approximately €125 million in European Union funding over the next seven years to help mitigate the effects of the decline of the oil shale industry.

On Tuesday, the European Commission announced its trillion-euro Green Deal (which the Just Transition Fund forms a part of), which will help Europe become climate-neutral by 2050.

Several other Member States also reportedly want greater clarity on the calculation of the subsidies, as well as raw data, and a split has emerged between member states who are net beneficiaries from the EU budget (such as Estonia) and those who are net contributors, with the former wanting additions to the EU budget and the latter wanting the money to be found from the budget as is.

However, the European Commission told ERR Friday that the methodology was fair and balanced.

The reason given for employment statistics not covered, was that too few enterprises in the sector would provide the required confidentiality.

Statistics Estonia, the state's statistics agency has, however, asked for permission from the oil shale sector in Estonia to forward those statistics to the commission.

The Just Transition Fund is also multiplied by a coefficient balanced towards member states with lower levels of wealth, making around two thirds of the Just Transition Fund earmarked for member states whose GDP per capita is less than 90 percent the EU average.

This means Poland, which has a large coal mining sector, will receive €2 billion – 16 the size of Estonia's grant and the maximum amount possible.

According to the Commission's proposal, Poland will receive the largest contribution from this fund, €2 billion. 

Nonetheless, the per capita amount received in Estonia, at €95 per person, is the highest – the EU average is €17 per person, and even Bulgaria is receiving €65 per person, according to ERR's online news in Estonia.

Questions may also arise on co-financing from other cohesion policy instruments and at the national level. In any case, the resulting political agreement must be acceptable to all parties.

Finance minister Martin Helme (EKRE) said earlier in the week that the €125-million figure was insufficient.

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Editor: Andrew Whyte

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