Politicians discuss energy and green turn in latest 'Valimisstuudio' debate
The ETV "Valimisstuudio" election debate on Wednesday concentrated on economic topics, including the switch to renewables, felling volumes and the green transition's effect on the economy and tax system.
The participants were Priit Sibul (Isamaa), Kristen Michal (Reform Party), Riina Sikkut (SDE), Taavi Aas (Center Party), Siim Kiisler (Parempoolsed), Rain Epler (EKRE) and Marek Reinaas (Eesti 200).
Several ways to ensure power supply security
EKRE representative Rain Epler said that switching to renewables is not as close at hand is it may seem. "Developers have said it will take 10-12 years. Looking at recent offshore wind developments, 10-12 years might also be too optimistic, and we need to live until then," he said.
Center's Taavi Aas said that switching to green energy is possible by 2030 even if Estonia only constructs currently planned terrestrial wind capacity. "Our program reads that oil shale energy must be retained because green energy will not be able to meet demand at all times. The wind tends to die down every now and again, which is when we will need the old oil shale boilers," he added.
SDE candidate, Minister of Economic Affairs and Infrastructure Riina Sikkut said that the price of electricity will continue to fluctuate in the future, which is just something people need to get used to. "But we must keep it from either extreme. Even if the price of electricity could theoretically drop as low as 3 cents, it is highly conditional," she said. Sikkut said that Estonia's energy needs can be covered using renewables, outside power links, storage and dynamically managed consumption.
Isamaa's Priit Sibul said that Estonia has oil shale know-how, and on-demand generation needs continued development until new solutions become available. "That said, Isamaa's program also states that renewable energy is here to stay. We need to find a compromise between the two."
Kristen Michal for the Reform Party said that a mix of technologies is the best fit for Estonia today. "Energy is a vast system and stands on more than one leg. One is intermittent capacity for which a boom is starting and the green light has been given - solar and wind. Next comes on-demand capacity, such as reserve oil shale plants, and future choices, such as nuclear and links to mainland Europe," he said.
Eesti 200 candidate Marek Reinaas said that entrepreneurs looking to build wind farms must beg the government for the chance today. "I believe this should be the other way around. Estonia should offer entrepreneurs the opportunity of investing here. I believe we will have the wind farms and enough electricity for export."
It is important to give entrepreneurs certainty of investment, said Siim Kiisler for the Parempoolsed. Estonia should first offer necessary legislation and regulation if it wants entrepreneurs to invest in nuclear energy and wind farms. "One important component is expediting judicial proceedings. Things often get stuck in courts in Estonia," he suggested.
Sikkut said that Estonia does not have to best its Baltic neighbors when it comes to building new renewable capacity. She emphasized the importance of distributed generation, which has been highlighted by the war in Ukraine.
Epler said that wind farm construction must also be mindful of resources and environmental impact, adding that plans cannot be hurried. "Expedited proceedings betray a desire to overlook these aspects."
Taavi Aas said that while there is much ado about offshore wind farms, Estonia's energy needs could be covered by terrestrial ones and a stake in Latvia's offshore farm. "Wind farms require links, cables and grid reconstruction. I believe the Estonian taxpayer should not have to be saddled with network costs so that companies generating wind energy could export it."
Priit Sibul said that energy supply security requires Estonia to have independent generation and that consumption targets cannot be met without offshore power. "We need to make these decisions post haste if we want to construct anything at all here."
Forestry sector requires stability and investment security
Kristen Michal said that industry and forestry require stability, with development plans prescribing moving towards greater value added and wood chemistry.
The decision to cut felling volumes is up to the environment minister, and Minister Madis Kallas in no way steamrolled the government when he did so, Riina Sikkut said. "We are not talking about switching saunas off wood heating in Estonia but rather that we do not need to export a third of our timber so that the U.K. or the Netherlands could use it to heat their cities or generate electricity. It is not a good use of our forests," she said.
Priit Sibul countered by saying that according to the coalition agreement, felling volumes should be discussed in the cabinet. "For some reason, Madis Kallas did not consult the finance minister on the fact that state forest manager RMK's dividend expectations were not reduced in step with logging volumes. I cannot see how RMK is supposed to perform its dividend obligation, with the state cutting its revenue stream on the one hand and expecting it to turn a major profit on the other."
Rain Epler said that the [environment] minister should base his decisions on expert opinions, adding that the government is sending mixed signals in seeking more value added from timber while also expecting entrepreneurs to build a smaller pulp mill than they would like.
Kiisler said it is yet another area where businesses need more certainty. Taavi Aas said that forests are managed based on their age and condition, neither of which can be changed by political decision. "Estonian forests are rapidly ageing today. It is true that logging volumes are somewhat higher today, while this will change after a while. The situation will change once mature forests have been processed."
Reinaas said that the forestry sector yields much of Estonian export and needs investment security. This means that plans should reach 30 years into the future at least. "Forestry sector companies say they have been holding back investments aimed at value added for the last three years because they simply have no certainty."
Epler said that the appropriate logging volume changes based on the age of forests.
Reinaas offered that forestry is key to jobs, export and investments. "By the way, wood can be turned into all the same things oil can, and we would be crazy to import oil products instead of using our own timber," he remarked.
Green transition an opportunity for growth
Michal said that people in Estonia need to realize that the green transition, currently seen rather as an inconvenience, is really an opportunity. "It is a green reform meant to bring us growth, prosperity and benefits. It stands for both cheaper energy and clarity in terms of climate goals," he said.
The new Riigikogu's most serious debate will be over the climate law to give entrepreneurs an overview of the state's plans, Michal said. He said that climate policy should also serve as a growth strategy.
"The message of the New Green Deal is economic growth. The "green turn" is an unfortunate expression in Estonian," Kiisler said.
Sibul said that feasible things need to be done first. "We know many companies that are trying to reduce their emissions, sensibly and at a realistic pace. It makes no sense to try to pole vault if you know you'll never clear the ground," he said.
Epler said that it is necessary to work with existing resources until realistic alternatives exist. "Frenzy will not lead us to victory in this matter."
Taavi Aas emphasized that the green transition cannot be based on enthusiasm alone, and the climate law needs to follow an analysis on effects for people and the economy. Riina Sikkut said that climate legislation is needed to give entrepreneurs an idea of strategic choices and changes in the near future.
"I absolutely agree that the green transition is key for economic development and growth. We run the risk of missing the mark if we wait too long. We missed the start of the green energy race ten years ago. Rapid action today will help us get on it. But when it comes to new topics awaiting the whole of Europe, such as circular economy, we need to be the first to jump on to emerge among the winners," Reinaas said.
Kiisler said that energy saving and sensible use must come first. For example, in the form of insulation of buildings. Investments require a stable environment for businesses to be interested.
Epler remarked that more than a few politicians find it inconvenient to stand firm in the defense of Estonia's interests, while neighboring countries have negotiated exceptions for themselves. Reinaas also said that Estonia's economic interests should come first and plainly didn't at LULUCF negotiations.
Budget cuts versus progressive income tax
Parempoolsed want a social tax ceiling and lower income tax rate. Kiisler said the party is not afraid to make budget cuts and promises to save more than is spent on expenses.
The Reform Party is after a universal basic exemption. Michal said that the goal is to leave people more money after taxes, which can be achieved through cuts, the green transition and other levers.
Marek Reinaas agreed that the tax hump is a mistake in need of fixing. "Estonia sports a very sensible tax system. We should not rush to fix what is not broken," he said. The Eesti 200 politician added that the public sector is spending too much at present, which can be remedied through budget cuts.
The Center Party wants a three-tier tax system. "Such a system is in place in most countries, and they're happy with it," Aas said.
Sikkut said that people should be able to make ends meet on their salary instead of relying on benefits, while the current system does not facilitate it. "The problem of paid poverty concerns low-paid workers, meaning that we cannot just spend several hundred million on a tax break for the wealthy. Lowering the tax burden of less fortunate people and hiking it for the wealthy is the only sensible solution," she said. Raising taxes is the only way to safeguard Estonian education and culture and raise defense spending, Sikkut suggested.
Priit Sibul said that this is not the time to lay down new taxes and that people aren't ready for it.
EKRE are not in favor of progressive income tax, while Epler said that public sector cuts could be in order. He said that labor taxes are too high and affect companies' competitive ability. EKRE also want to slash VAT on Estonian food products.
Kiisler said that costs can be cut by necessity-based social benefits, abolishing free public transport and the state rental buildings program, slashing government appropriations and the bureaucracy. "Parempoolsed find tax hikes and new taxes to be wholly unacceptable. To the credit of left-wing parties - they are honest in admitting that tax hikes are necessary if we keep spending recklessly."
Michal said that Estonia's working-age population is shrinking and that public services must become digital. Estonia should also privatize unnecessary property and cut costs. "We should try and save using these measures, instead of looking at tax hikes."
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Editor: Barbara Oja, Marcus Turovski