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Ministry of Environment and Oil Shale Industry Lock Horns Over Environmental Charges

Kiviõli Keemiatööstus.
Kiviõli Keemiatööstus. Source: Postimees/Scanpix

The Federation of Estonian Chemical Industries has launched a campaign to keep the environmental charges hike from taking effect. The Ministry of Environment says the campaign is misleading and manipulates public opinion.

The federation said in its press release that the tax hike could have a profound effect on the oil shale industry and other sectors related to it, and the Estonian economic environment and the national welfare in general.

"The Estonian oil shale sector is undergoing a period of rapid development. New environmental requirements must be met and this requires the renewal and improvement of technology through large investments," said FECI's executive director Hallar Meybaum.

"Companies need a stable economic environment for this kind of development. An important parameter with which to measure economic stability is the level of environmental charges, which the authorities now plan to increase. All this means continuing instability for this investment-heavy industry," he added.

The federation said that the ministry has failed to discuss the planned hike and its repercussions with them.

The ministry said that the campaign presents the public with the message that the tax hike will cost over 20,000 people their jobs and electricity production in Estonia will stop altogether, reports ETV's "Aktuaalne Kaamera."

Keit Pentus-Rosimannus, the minister of the environment, said: "This campaign manipulates public opinion and the claims, presented as facts by the way, do not reflect the real situation."

The minister refuted the claims of a dramatic tax increase. The mining fees for oil shale, for example, are planned to increase between 3-5 percent.

The companies, on the other hand, say that there will be a yearly increase over the next 10-year period, and the accumulated tax rise will soon prove unbearable to most of them. They are already faced with unavoidable investments in the region of 5 billion euros and oil prices are unlikely to rise in the foreseeable future.

The federation, therefore, wants the government to freeze the environmental charges and work out a tax system that would take into account the current price of oil in the world market.

"There is no model that would reckon with the world market prices for oil anywhere and when we talk of Estonia, we must also consider the peculiarity that we are not only producing oil here, but electricity as well. Should the price of the oil shale that is used to produce electricity be dependent on the price of oil?" said minister Pentus-Rosimannus.

Priit Rohumaa, President of the Board of Viru Keemia Grupp, said: "Both the Ministry of Finance and the Ministry of Economic Affairs have said that such a model is indeed possible, most countries in the world use one and if there is a will there is a way. It is not impossible and it would be the right thing to do."

The Ministry of Environment said it is unlikely to freeze the charges at next year's level but is willing to consider an oil-price dependent tax system.

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