Erik Gamzejev: Coalition conceding energy points to EKRE ahead of elections

Erik Gamzejev.
Erik Gamzejev. Source: Rene Kundla/ERR

Erik Gamzejev said on ERR's Vikerraadio that the government coalition's unwillingness to advocate for a carbon price reduction, which would stimulate domestic electricity production and help alleviate the energy crisis, is fueling the EKRE's popularity.

The government should have a clear plan for withdrawing from oil shale energy while causing as little harm to the Estonian state and people as possible.

The withdrawal of oil shale energy from the market has had a number of negative effects on Estonian society, including an increase in the cost of electricity, an increase in Estonia's reliance on its neighbors, a decrease in tax revenues and an escalation of social tensions in Ida-Virumaa.

Prices rise when there are fewer producers on the market. Consumers do not want to see their bills rise even further, but the situation is worse for businesses, where electricity bills account for a significant portion of their production costs.

These thoughts were penned more than three years ago, when a sharp increase in the cost of carbon quotas, regulated by European politicians, caused oil shale power plants that had served Estonia for decades to slip into a coma. A few thousand well-paid workers lost their jobs in Ida-Viru County's mines, power plants and the servicing them companies.

After three years, not a single job has been created with the promised millions of euros from the fair transition fund, and the initial applications are still being processed.

Estonia shifted from being an exporter to an importer of electricity: it has not been replaced by wind turbines or other renewable energy generation in significant quantities. The most significant change is that instead of oil shale, the same power plants have been burning a little more wood.

Three years ago, a number of European countries became heavily reliant on Vladimir Putin's gas sluice, fanning a carbon price increase that is suffocating our oil shale and coal production facilities.

In layman's terms, they were crippling our existing managed electricity generation capacity by introducing Russia's quota-free fossil-fuel electricity as an alternative resource, which, unlike the electricity from our own shale plants, was generously permitted on the market as one with untarnished reputation.

As a result of all of these factors, electricity prices had already begun to rise prior to Russia's large-scale invasion of Ukraine on February 24. Putin's war only accelerated the price rise, as it was the ideal time to close the gas trap into which he had lured several large but naive European nations.

Now, all of a sudden, it is evident that there is inadequate generation capacity: there are calls to heat as little as possible and officials are busy preparing plans to offset high electricity bills. Companies who do not subsidized are unable to compete with rising expenses and so must shut their doors, e.g., a wooden panel manufacturer in Püssi, Ida-Viru County, which has been in operation for nearly half a century and employed about 150 people, has recently filed for bankruptcy.

This makes it all the more frustrating that Estonia can still meet its energy needs thanks to oil shale plants that, thankfully, have not yet been decommissioned.

Nevertheless, the production of electricity from oil shale would be considerably less expensive if the high cost of carbon trading did not account for more than half of its price.

There is no need to abandon the transition to renewable energy, but it should be carried out in a methodical and sensible way, taking into account our circumstances.

Quotes should be subject to a temporary price cap. For instance, €30 to €40 per ton. This would still generate substantial funds for renewable energy development.

A considerable share of the quota money collected is redistributed to compensate consumers for overpriced electricity. Regardless of how well-thought-out these plans are, these are artificial solutions in which some earn more, others earn less, and others get nothing.

The temporary price cap should be maintained well until sufficient renewable generation capacity has been developed to provide power at an affordable cost and until new companies are ready to hire miners and energy specialists.

During a period of severe energy capacity deficit, it is contrary to common sense to artificially downgrade existing power facilities. When a house is on fire and limited firefighting supplies are available, it is not that smart to leave an expired extinguisher standing in a corner.

Shale power plants will not last forever but if we cannot afford a better solution at the moment, it's worthwhile to use them again, particularly those with environmentally compliant filters.

Setting quota prices would also give Estonian oil shale plants the confidence to invest in maintaining their reliability during power outages. It would employ thousands of people in Estonia and generate tax revenue for local governments and the state. It would also lower electricity prices and eliminate the need for the government to deal with a complex and sometimes unfair compensation system. It would keep local businesses, which rely heavily on electricity prices, from going bankrupt.

Not that all these seemingly simple solutions are straightforward to implement. It is understandable that Estonia, as a member of the European Union, cannot act independently and must conform to general general standards.

To alleviate the current energy crisis to some extent, however, the carbon pricing cap is one of the best alternatives not only for Estonia but also for many other countries. If there is an opposition to this at the European Commission level, we must advocate for our interests more firmly and persuade them the representatives that it is reasonable.

The current government does not seem to be attempting to do so. There is a faint sensation that the present tripartite coalition has a tacit agreement to play trumps in the run-up to the Riigikogu elections with the EKRE, who are now openly saying that Estonia does not need to pay for the utopian energy plans of Europe's wealthiest nations.

Polls indicate that this message is rapidly increasing EKRE support, so this is a chess-piece giveaway by the current coalition government.


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Editor: Kristina Kersa

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