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Jaak Aaviksoo: What to expect from the climate law

Jaak Aaviksoo.
Jaak Aaviksoo. Source: Kairit Leibold/ERR

If the aim of Estonia's climate law is just to give orders for compliance with obligations the country has already assumed, we will end up with environmental commandments that will benefit no one, Jaak Aaviksoo writes.

Climate warming, its connection to the concentration of greenhouse gases in the atmosphere and the significant role human activity plays in the latter are all based on an extensive scientific consensus. It gave rise to a political agreement to keep warming significantly below 2 degrees Celsius in Paris in 2015. This in turn requires greenhouse gas emissions to be brought to zero by the middle of the century.

The European Green Deal is one of the most ambitious manifestations of this global process, which policy Estonia has actively set about executing. The government's formation of a climate ministry and Estonia's planned climate law serve as proof of this.

Opinions differ as to the necessity of a climate law, while I will attempt to phrase a few starting points and expectations for the incoming law to substantiate its necessity.

Climate warming and relevant global processes pose serious dangers for the Estonian economy and society, all the way to jeopardizing our constitutional goal, the longevity of the Estonian people, language and culture. But I would propose an adjustment to the emphasis. We need a law for weathering climate change to ensure Estonia's survival, not so much a law to protect the climate, not to mention one for meeting greenhouse gas emissions reductions targets pursuant to political agreements.

It has become clear by now that goals for a global reduction in greenhouse gas emissions, and especially the EU's zero emissions ambition, will require colossal additional national investments – exceeding even the 3 percent of GDP Estonia currently spends on defense. Even then, hitting those goals is tied to a lot of uncertainty as achieving the desired result is only feasible when the entire world makes an effort.

For Estonia, annual additional investments needed have been estimated at 4 percent of GDP or €1,500 per capita at current prices. Finding this much money either in the state budget or the wallets of citizens is unrealistic in the conditions of recent rules.

That is why we need a legalized and funded mechanism for rising to the challenge of climate change flexibly and in a way that considers shifting conditions, including striking a balance between adjusting to change and combating its consequences. The latter is key, as it will make little sense for Europe to try and save the world by only holding its own breath if the others won't go along with it, and most of our attention will have to be paid to adjusting to change.

Climate change and the policies meant to combat it have led to considerably greater economic uncertainty as a result of which investment risks have grown to a point many companies can no longer contend with, especially considering Estonia's low capital concentration. It has already become a factor keeping economic growth down and one in need of a legislative solution.

The inability to sustainably manage those risks could result in the need to nationalize struggling vital services providers. Hence the expectation for additional investment security for companies.

In the end, the main weight of fighting climate change will land on households. The first manifestation of this are considerably higher energy prices, whereas the situation is showing no signs of improvement in the coming decade. Rather, it will be the opposite.

It is clear that adding buildings' and transport emissions to the European quota trading system will hike households' expenses further, especially in areas of modest socioeconomic development. Renovating buildings and buying newer vehicles might not be economically feasible in those areas, not to mention the lack of necessary investment capacity.

It is similarly evident that more extensive renovation of buildings can only take place with considerable state support and even then only in more economically developed regions, whereas the recent volume of subsidies is clearly not enough for hitting existing targets in time.

This clearly points to the need to create new and government-backed ways for households to reduce emissions.

In a brief summary, the continuation of recent green policy would necessitate the creation of legislative mechanisms to help society meet growing expenses and manage risks. It would be self-deception to believe that these expenses can be covered with money from the Just Transition Fund or similar EU instruments or laid on the shoulders of companies and households using administrative regulations.

It is self-evident that all planned measures, when preparing the law, need to be put through an economic analysis also considering their social effects.

Many technologies necessary for rising to the challenge of climate change are not sufficiently advanced yet and need a lot more development and testing. Knowing the risks involved in research and development, it would be irresponsible to count on the successful implementation of proposed solutions, not to mention attempts to execute them using the power of the law.

Next to the economic aspects of fighting climate change, the planned law should also treat with legal aspects, especially as concerns infringement of rights and additional obligations.

Recent practice has seen green policy pursued mainly in the form of new administrative restrictions; permits, quotas and limits, which are often laid down based on unclear considerations. The constitutionality of such an approach should seriously be considered when preparing the law.

This is why the law could prioritize replacing existing or planned administrative restrictions with market-based mechanisms, which would ensure efficiency through competition based on greater transparency and equal treatment of participants.

It does not follow from this that the rights of persons should not be infringed at all on the road to meeting climate targets, while relevant decisions would require far more substantial reasons than simply meeting performance indicators.

I would like to hope that those in charge of putting together the law agree that rising to the challenge of climate change depends directly and decisively on the sensibility of relevant goals and targets, as well as our economic ability to pay for it. That is why, when phrasing legislative regulations, we should also treat with practical matters of competitive ability, next to national interests provided by the Constitution.

Provided all of this is done, the climate law could prove useful.

But if the aim of the climate law is just to give orders for compliance with obligations the country has already assumed, we will end up with environmental commandments that will benefit no one, instead of a new law to boost feelings of security.

The comment is based on a presentation given at the environmental day of Estonian oil shale chemistry group Viru Keemia Grupp.


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Editor: Marcus Turovski

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