The Ministry of the Environment said Tuesday that CO2 emissions from Estonian installations which are under the EU's EU Emissions Trading System (ETS) system rose by almost 22 percent on year to 2021, or by approximately 1.2 million tonnes of CO2.

Evidence for this is derived from reports submitted by the end of last month from close to 50 electricity generators, district heating plants, shale oil refineries, paper and pulp mills, brick and lime kilns, glass producers and producers of ammonia.

However, the main contributor to the rise in emissions is the district heating sector.

District heating involves the heating of large quantities of water – sometimes as a by-product of electricity generation. This hot water is then piped to apartment blocks, specifically for heating purposes.

Annika Konovalov, departmental chief at the Environmental Board (Keskkonnaamet), says there are several reasons for the higher ETS emissions n 2021. 

"There are many district heating plants in the ETS scheme whose emissions depend directly on the weather, and since the temperatures were lower than normal for several months in 2021, the emissions from many district heating plants were also somewhat higher," Konovalov said, via a press release.

CO2 emissions also rose at the Baltic power station in Narva, and in the Estonia power station in nearby Auvere, which primarily use oil shale.

When taking the period 2013-2020, ETS emissions fell significantly, by almost 9.1 million tonnes – or 57 percent, however.

Operators are also increasingly being influenced in their business decisions by unit price of allowances, which now cost €54.10 per tonne, compared with less than €25.00 in 2019-2020.

Imre Banyasz, environment ministry climate advisor, says rapid rises in the world market price of natural gas are behind this.

Banyasz said: "Several EU countries have seen the replacement of coal-fired power plants with [natural] gas-fired power plants, as one way of meeting the ETS targets, since the specific emissions of CO2 from natural gas are significantly lower."

"However, the high price of natural gas no longer supports the transition, as the cost of coal-fired power generation has become lower, making coal-fired power the first to enter the market," they added.

"Coal is more polluting in terms of CO2, so the need for emission allowances is higher. Increased demand has also had an impact on prices," Banyasz went on.

The start of the new trading period and the EU's "Fit for 55" Green transition have also had their effect on CO2 quota prices, Banyasz said.

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