Opinion: Ida-Viru County needs a bigger life preserver

Erik Gamzejev.
Erik Gamzejev. Source: Siim Lõvi /ERR

The €340 million provided to Ida-Viru County through the European Union's Fair Transition Fund is not nearly enough to offset the damages caused by climate policy to the region. Moreover, the money needs to be used as efficiently as possible while avoiding the remaining oil shale industry being overloaded, regional daily Põhjarannik editor-in-chief Erik Gamzejev, says.

Firstly the EU knocked Ida-Virumaa on its back with its climate policy fist. Now they are rolling over barrels of ammonia to revive the knocked-out region. There is a European Union logo and labels of "Just Transition" on the barrels.

Politicians have tried to paint a picture of the transitional fund as if it is an exceptionally gracious life preserver for Ida-Viru County, able to alleviate the aches and pains of contracting the shale oil industry and get the region to flourish.

It would be reasonable to remain realistic and to understand that while the €340 million over many years seems like a large sum, it is exceptionally lower when compared to what the processing of oil shale has yielded.

The oil shale industry alone brought in €121 million in direct tax revenue to the state at a time when the price of carbon quotas increased, dropping production capacities and making 800 jobs disappear. An audit commissioned by the Estonian Chemical Industry Association showed that shale oil production would bring Estonia €8 billion in wealth over the next 20 years.

A European Commission report published this week shows that Estonia has been well ahead in lessening carbon emissions from oil shale electricity production over the last 30 years. The drop is 62 percent. By the way, the footprint of oil shale is no longer considerably larger than that of transport or agriculture.

To compare: The average indicator for the EU is -24 percent. In many wealthy nations, including Belgium - where most European Union politicians and officials make decisions - emissions reductions have been much lower. There are also nations like Spain and Austria that currently throw more carbon tons into the air than they did 30 years ago.

The price for Estonia's gold medal has been a major economic drop in Ida-Viru County as an oil shale region and the poverty of thousands of families who have lost jobs. For comfort, the European Union is now offering €340 million and some Estonian politicians are beating their chest, saying we did so well. It is the same as pressing a small doll's shoe onto the foot of a miner and saying it fits well.

The €340 million must be used in a way to maximally benefit Ida-Viru County. There have been quite a few arguments and as always in these cases, where an attractive pot of gold is hanging in the air, there is no shortage of contenders. The main question being whether the money is reparations for socioeconomic damages or seed money for a better future.

€340 million is obviously not enough to achieve either goal. It is not reasonable to spend that money on support measures and benefits, because while that would make things better in the short-term, the money would run out rather quickly and a dark future would lie ahead. Making revolutionary changes to Ida-Viru County economy, even just ones that could compensate for what is lost in oil shale, would require billions, not millions. And even then, success is not guaranteed.

To use the funds as efficiently as possible, it is likely rational to allocate them into companies that create jobs in Ida-Viru County. Even then, these allocations must be directed well and efficiently, with measurable results and clear schedules.

The Just Transition Fund might do Ida-Viru County a great disservice, in fact. We can already see how many ministries have tried to direct previously planned expenses through the fund. Everyone knows Ida-Viru County is now a huge pot of money. If we need to develop new roads, sports halls or whatever else, the money will be taken from there. As an end result, Ida-Viru County will not receive any money for those developments, from the fund or from anywhere else.

Experience from the last few years has shown that creating new jobs in Ida-Viru County to replace ones lost is an expensive and time-consuming action and results tend to come later and in lesser amounts than expected. Part of it is state bureaucracy, but there are also objective factors. There are not many good reasons why a company should be created in the outskirts of the EU, right next to the wall of Russia.

If the state seriously wishes to contribute to redeveloping Ida-Viru County economy, they must discuss larger sums from the EU and offer companies stimuli that would actually make them invest. Soft solutions tend to be spectacles called "We are doing something," which do not actually improve anything.

It is important that local governments would be more interested in bringing in new companies so there would not be a repeat of the plans to develop a oil shale ash processing plant, which Narva-Jõesuu local government council called off. On the reason that if ash were to go to recycling, the city would miss out on ash disposal fees.

As long as the new economy has not gotten off the ground in Ida-Viru County, it would be silly to rush to overload the currently operational oil shale industry with additional taxes or similar steps. Improvements in technology in oil shale production for the next 20-30 years will not prevent Estonia from making a solid green turn.

World records in decreasing our carbon footprint will not bring Estonia a more golden medal from the EU, nor will it bring a better life. But it will make our people more unhappy and our state poorer.


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Editor: Kristjan Kallaste

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