Head of Enefit Power: Europe's CO2 trading system needs review

Enefit Power's oil industry
Enefit Power's oil industry Source: Rene Kundla/ERR

Chairman of energy company Enefit Power board Andres Vainola says that in order to solve the energy crisis, CO2 trading in Europe needs to be reviewed and new manageable production opportunities should be created in the Baltic States.

"This time three years ago we were producing at the lowest price, and we were competitive as in 2018, producing energy from oil shale was cheaper than from wind and solar sources. Today, the situation has completely changed and the price of electricity produced in the thermal power plants has increased due to the environmental fees and this has also determined the market price," Vainola told Vikerradio's morning program "Vikerhommik".

Three years ago, environmental fees accounted for around 15-20 percent of the net cost, but this year the figure is now 80 percent. CO2 trading and the unpredictability of the price are the main reasons.

"Of course, we have no new production capacity, wind and solar parks. But we have to use our existing managed production capacity and transfer it to renewable energy sources, which we are doing very successfully at Enefit Power," Vainola said.

Vainola said that prices will remain unpredictable as long as Estonia does not have enough suitable managed capacities.

"The Baltic region should be seen as a single electricity market and there is not enough generation capacity here. Today, on average, the Baltics buy 50 percent of their electricity from neighboring countries, and this is unsustainable. Additional generation capacity, including managed generation capacity, must be added here," he said.

Vainola added there are no quick solutions to the energy crisis, the state can only offer short-term relief to consumers, and it would be wise to maintain existing production capacities until 2030. "I see only the construction of new production capacities as the only option," he said.

Vainola said that the biggest cause of the crisis is CO2 trade across the EU.

"Its methodology and principles are relatively opaque, and it is rather an aspect where the EU-wide competition authority also looks to see if there has been market manipulation. At the European level, politicians are also talking about changing this system.".


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Editor: Roberta Vaino

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