If Estonia fails to reduce carbon emissions from transportation, agriculture, waste management and buildings in the future years, buying emission allowances could cost the national budget tens of millions.
The Effort Sharing Regulation, the EU-wide emissions reduction effort (EU ESR), covers such areas as transport, agriculture, waste management, buildings and small-scale energy sectors, in which EU countries aim to reduce net greenhouse gas (GHG) emissions by 55 percent by 2030 compared to 1990.
Estonia is currently on pace to cut greenhouse gas emissions by 13 percent by 2030; however, the agreement reached at the European Council in December 2020 requires a 24 percent reduction.
Prime Minister Kaja Kallas highlighted this last week in her presentation to the Riigikogu on Estonia's EU policy. "Transport, agriculture, waste and buildings are our current headaches because we are on track to reduce emissions from these sectors by 13 percent, but the goal is 24. Failure to do so could result in a €225 million commitment to the national budget to purchase additional emission allowances."
Mart Kiis, advisor to the Ministry of the Environment's climate department, told ERR that €225 million is a plausible estimate given a new goal for cutting Estonia's carbon emissions in these sectors has been set but no road plan has been prepared.
"The €225 million estimate is based on a comparison of the current and new regulations' objectives for the entire period 2021-2030," Kiis explained.
Kädi Ristkok, head of the climate department at the Ministry of the Environment, said that the difference between the current and new target is 680,000 tons.
"Compared to the 2030 target alone, the difference between the two figures is indeed 680,000 tons, but the difference throughout the entire period is over 2,800,000 tons," Kiis said.
Although the future price of a ton of CO2 in the ESR trading system between countries is unknown at this time, it can be compared to the current price of allowances on the EU carbon market, which is approximately €80 per ton. This is then multiplied by Estonia's excess greenhouse gas emissions, totaling €224 million.
This is why, Ristkok said, Estonia needs to find new ways to reduce carbon emissions from transportation, agriculture, waste management and buildings; otherwise, we will have to buy greenhouse gas credits from other countries that have managed to reduce emissions more than their target.
Editor: Kristina Kersa