Isamaa MP: Coalition negotiations looking at CO2 quota compensation

Aivar Kokk.
Aivar Kokk. Source: Siim Lõvi /ERR

The three parties undergoing coalition talks, Reform, the Social Democrats and Isamaa, agree in principle on compensation measures for CO2 quotas, but there are differences on how and to what extent this should be done, one Isamaa MP says.

The three parties are entering the third week of talks following Isamaa's agreement to come on board with Reform and SDE, with energy being one of the key issues, not least given soaring prices and inflation in general in recent months.

Aivar Kokk, who is also Riigikogu finance committee chair; said household consumers and small businesses use about two of electricity a year, while state-owned generator Eesti Energia pays €50 million in CO2 quotas to the state every month.

He said:  "It could be that in the case of the production of these two terewatts of power, the Estonian state would be able to sell a CO2 quota to Eesti Energia for zero euros, which would bring the price of electricity to lower than €50 per megawatt-hour today, which was the price of electricity a year ago."

In the course of the discussions, the parties want to find common ground, while the solution currently proposed is not quite the same as that Isamaa has brought to the coalition negotiations, Kokk said.

"At the moment, at least as presented, the Reform Party agrees to move forward with this issue. It is here that we need to see where the easiest solution is and that it does not contradict any European Union directive," Kokk went on.

Buying from suppliers other than Eesti Energia would mean a similar drop in prcies to the above, as only Eesti Energia produces electricity from fossil fuels falling under the CO2 quota in Estonia, Kokk went on.

However, Social Democrats (SDE) leader Lauri Läänemets expressed skepticism, saying EU rules do not allow state aid to be granted in this way

. "This CO2 quota reduction simply cannot be done. European Union law is such that it does not allow such state aid. But in principle, if there is any other way to achieve that we fix a cheaper price for electricity for people, then we should do it," Läänemets said.

The price could be reimbursed to the extent that it would be less than €100 he added, with this cap on energy prices to apply to district heating, as well as natural gas and electricity.

"The fundamental difference is that we want a fixed upper limit and also a capacity limit of three megawatts, while all apartments and normal households should fit under that," he went on.

If Isamaa proposals are ideologically suitable for Isamaa, they don't need to be ruled out from an SDE perspective in and of themselves, Läänemets stressed, adding that the details may need to be hammered out after an agreement in principle between the three parties has been found.

"There's also the question that if we can't give up the CO2 quota, then we'll fix the price - the concern is that in winter it can be cheaper for people at peak loads, in summer it can be more expensive. It's also a challenge that someone will solve today. can't offer, Läänemets added.

The Reform Party has put forward an even higher price, Kokk aid, adding that uncertainty is in the air about this autumn's energy prices, impending natural gas shortages and the specter of prices even higher than last winter.

The issue of excise duties and VAT is still under discussion at the coalition talks, while no compromise has been reached, Kokk added.

One of the questions is also how much timber can be cut and used for electricity production by burning at power stations in Narva, but this discussion will probably not get far, Kokk continued, adding the importance of pressing on with the building of offshore wind farms as soon as possible.

Soaring energy prices last autumn led to two support measures rolled out by the-then Reform/Center coalition, while Russia's invasion of Ukraine and the need for decoupling from energy from that company have exacerbated the situation ahead of next heating season, generally from October to March inclusive.


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Editor: Andrew Whyte

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