Finance minister Martin Helme (EKRE) said on Monday that he is looking into whether Estonia could, on a temporary basis, step out of the European Union emissions trading system (ETS) in order to reduce the price of electricity. The EU has said this is not possible.
The government has lowered the rates of excise duty on electric energy to a minimum allowed by the European Union. The rate will drop from €4.47/MWh to €1/MWh, which means that consumers will pay 3.1 percent less.
"We lowered the excise tax four and a half times. This, however, doesn't mean that the price of electricity will drop four and a half times, as the excise tax is just one part of the price of electricity," Helme said at a Tre Raadio program during the weekend.
According to the minister, if Estonia would want to reduce the price of electricity significantly, the country should withdraw from the EU emissions trading system.
"CO2 (carbon dioxide -ed) price makes up half of the price of electricity. I've done a bit of research and have also asked the environment ministry to do the same on how to step out of the CO2 scheme, even on a temporary basis," Helme said. "This is the largest part of the price component, the so-called administrative price."
"Our electricity is more expensive than in Finland and Sweden," Helme added. "This is the system of connected vessels - if taxes are very high, prices have to go down and this is done to the detriment of wages."
European Commission: Member State cannot intervene
Vivian Loonela, European Commission President Ursula von der Leyen's spokeswoman for the Green Deal, told ERR a member state can not withdraw from the ETS either temporarily or permanently.
"This is a valid European Union directive approved by the Member States and the European Parliament, the rules of which are set out in Estonian law (Atmospheric Air Protection Act). EU law is binding on the Member States, and the Commission expects the Member States to fulfill their obligations and also to monitor it, "said Loonela.
Ministry of the Environment: the system has proved its worth
Kristi Klaas, Undersecretary of the Ministry of the Environment, told ERR no request has been submitted to the Ministry of the Environment to analyze the exit from the EU Emissions Trading Scheme.
"If the Ministry of Finance requests it, we will analyze the possibilities and respond," said Klaas.
She added the scheme is part of EU law, established by a specific directive (2003/87 / EC) and is mandatory for all member states.
"The EU ETS was implemented in 2005 and aims to reduce CO2 emissions from energy production and energy-intensive industries in a cost-effective way to mitigate the effects of climate change."
Installations covered by the Emissions Trading Scheme (there are 46 in Estonia) must submit a greenhouse gas emissions report for the previous calendar year each year, and then the allowances must be surrendered to the extent corresponding to the reported emissions.
"Each EU member state is allocated a certain amount of free CO2 allowances based on its historical emissions data. The allowances will be sold by countries in pan-European auctions. The proceeds of CO2 allowances will be used to improve countries' financial capacity to modernize their energy production and industry and meet other climate policy goals."
Klaas said the implementation of the European Union ETS has met the set objectives.
"By 2020, the European Union has set a target to reduce total emissions in the sectors covered by the EU ETS by 20 percent compared with 2005. This target has already been met, which is reflected in the shift to a more environmentally friendly and cleaner production solutions. This, in turn, affects emissions. Total CO2 emissions from installations covered by the EU ETS decreased by 46.7 percent between 2013 and 2019, largely due to the necessary investments in production technologies and solutions," Klaas said.
Editor: Anders Nõmm