Freight Association: ETS2 and excise duty reduce Estonia's competitiveness

Trucks on the road.
Trucks on the road. Source: Olev Kenk/ERR

According to the Estonian Logistics and Freight Forwarding Association (ELEA), the planned emissions trading scheme (ETS2), along with the proposed increase in excise duties, will further reduce Estonia's competitiveness, diverting business and several hundred million euros in revenue to neighboring countries.

The ELEA believes, that by extending the emissions trading quota to include transport fuels, the price increases will affect the transportation and logistics sectors, thereby contributing to overall inflation.

However, alongside increased costs resulting from the Estonian government's plans to increase excise duty on diesel fuel in the coming years, this will amount to a double blow to the country's transportation sector and also significantly reduce its competitiveness, said the ELEA in a press release.

ELEA board member Herkki Kitsing said, that the period from 2016-2019 provides a good example of what can happen when Estonia's excise policy differs from those of neighboring countries. During that time, excise duties on diesel fuel in Estonia were raised in advance, meaning they were 8 and 10 cents higher than in Latvia and Lithuania respectively.

"During that period, the road administrations' data on the movement of trucks on Estonian roads showed a steady increase, while at the same time the turnover figures for Estonian trucking companies remained static. The increase in excise duties led to the reduced competitiveness of Estonian haulage companies and instead provided several hundred million euros' worth of business to neighboring countries," said Kitsing.

"Estonia must stand up for its own interests and it is important that the emissions trading scheme (ETS2) and the excise duty increase measures are not also extended to natural gas, biogas and other renewable energy sources for heavy duty vehicles," he added.

According to the ELEA's estimations, the introduction of an emissions trading quota, alongside the planned increase in excise duties, would significantly reduce the competitiveness of Estonian haulage companies and the logistics sector.

"(Estonia's) competitive position would change significantly in favor of neighboring countries, where excise duty increases are not being planned on the same scale as in Estonia. For customers, of course, this means higher transportation prices and, in the broader sense, pressures resulting from inflation," said Kitsing.

The ELEA also doubts to what extent emissions trading quotas will actually help to reduce fuel consumption, and believes there are much more effective ways for the government to reduce the carbon footprint of the transportation and logistics sector.

"We need to look at new opportunities including new forms of technology, longer and heavier road trains, maritime connections and flights. These are things that can be made more efficient to increase productivity. The state could (also) start pulling it's finger out now in order to get the Amber Train (A regular freight transportation route connecting Šeštokai, Riga and Tallinn - ed.) up and running," said Kitsing.


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Editor: Michael Cole

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