What is the Climate Council currently working on?

The closer we get to the climate law, the more we should start compiling input from working groups and looking at the potential of reducing greenhouse gas emissions in different sectors.

It is a problem today that public debate is chewing on proposals that are merely the ideas of particular interest groups and might not be implemented at all.

The climate law aims to provide a public sector target, similarly to how we always have to consider a decision or step's effect on the budget in the world of finance. It makes sense. From here on out, we must also look at the effects those decisions will have on the environment.

While we will have sectoral goals, there is some overlap involved. Sectors where the potential for reducing emissions is lower will be helped by those that have more low hanging fruit and where CO2 emissions can be slashed more.

We have agreed on environmental targets at the international level, we have made promises, and we must now see about keeping them. This requires considering carbon emissions in every policy.

It is relatively easy to put down on paper a given activity's environmental impact. It can be calculated in the broad strokes. But how to put down on the same piece of paper the socioeconomic cost of wrapping up that activity, as well as the rules of how to go about it? Politicians must also ask the question of public opinion.

We are fixated with partial balance analysis, meaning that we only look at specific sources of emissions. We are not keeping enough of an eye on the entire value chain; that if we make changes in one area, it might affect the economy more in another. A good example of this is insulating buildings versus district heating. It is clear that we're talking about competing investments, and the more we renovate, the less effective district heating becomes.

We should look at the macro level more. I believe we have not analyzed the macro-level emissions of activities as we're only looking at individual cost objectives.

How many members of the Climate Council are capable of providing real answers to these questions? Some members are merely activists, rather than experts.

Yes, some are activists, but their role is to ask questions. The Climate Council does not analyze anything. Our mission is to ask the public sector the necessary questions, so that the Environmental Research Center, Ministry of Climate and other agencies would analyze those problems.

To try and reflect on recent deliberations we've had, perhaps we've been a bit too puritan when it comes to the green transition, trying to switch to maximally climate-neutral solutions right away.

In truth, intermediary or transitionary solutions have a lot of potential. Failing to make use of them could cost us in terms of our competitiveness.

Other countries' climate bodies are usually made up of specialists, scientists and analysts. In Estonia, the function of the Climate Council has more to do with inclusion. We have brought in people from environmental organizations and the world of business.

One problem you get in Estonia is that everyone is connected to everyone else. And when it comes to experts, there is always the question of whether they really are completely neutral, whether they have business interests of their own or major companies financing their research.

It is just something that needs to be kept in mind. Because if we tried to find experts who are completely neutral in Estonia, we'd end up with people having no influence or whose opinion carries no weight.

It also works the other way around. For example, the Estonian Fund for Nature (ELF), which undoubtedly employs passionate people, is not a classical nonprofit. The organization's annual report clearly shows that only a small part of the salary of its few dozen employees comes from donations, while most of it comes from the taxpayer. Does their involvement merely serve the purpose of allowing influential civil society organizations to blow off steam and make things look above board?

I'm not familiar with the funding of the Estonian Fund for Nature, nor would I want to formulate an opinion of it. But I can say that they have proposed involving more scientists in the council's work.

I think it should be realized that the Climate Council does not just deal with environmental issues. The Council tries to come up with recommendations for making sure climate targets fit within the confines of the economy and, reversely, economic goals would be compatible with climate conditions. The economy must continue to grow and retain its competitiveness.

The climate law is looking at a feasibility test called democracy. Politicians will not be passing laws their voters find unacceptable. That is why we need to look at all of these grand goals realistically. You cannot do things that are universally unpopular in society.

And looking at public debate lately, there has been a lot of pushback when it comes to climate matters. Relevant discussions need to involve business people. Otherwise, we'll have a purely environmental debate. The green transition goes beyond environmental matters to socioeconomic aspects, the competitive ability of Estonian companies, economic growth and finally even national defense. It goes beyond the environment.

The green debate has seen plenty of labels thrown around. The transition has been described as planned economy, gust economy or green socialism. But [businessman] Indrek Neivelt wrote that rather than amounting to socialism, the green transition will see assets redistributed into the hands of a small group of people. He seems to be on to something there. For example, companies that have been hugely successful in exporting shale oil will likely be told to pack it up one day because of the activity's considerable carbon footprint. At the same time, new companies keep cropping up that have virtually no carbon footprint or that share in massive state subsidies. Are we seeing a reshuffling of the cards in economy?

The shale oil business is subject to the carbon quota trading system, and these changes have been known for a very long time there. Shale oil producers are often given as an example of a backward sector, while they've been dealing with these matters for a long time. They'll need to change their business to survive.

Matters pertaining to the [Estonian] climate law are probably less important for them as their roadmap is dictated by EU climate policy and the quota trading system. Unfortunately, the latter is still a little confusing from the point of view of ordinary people.

But in terms of economic theory, there would be much less debate about what kind of changes to make if the system applied everywhere. Change would happen in areas where reducing emissions is most favorable.

Would that require a level quota price? The price has fluctuated between €50-100 in the past year alone, and companies cannot plan their activities based on speculative prices. They don't know what the price and rules will be in a decade's time.

They do know – price fluctuation is a natural part of market economy. The price of oil also fluctuates, affecting the price of shale oil. But there is a measure of uncertainty, no one is contesting that.

But a quota price that depends on demand is natural in a market economy. It is the closest thing to a market economy we can have to reduce emissions. And the price is the same everywhere in Europe.

The role of the state is only set to grow in the economy of the future. Do you agree that subsidies make up a frightfully large part of the circulation of our economy in the coming years? Already some companies are better served by pushing papers for the Ministry of Climate instead of engaging in real innovation.

I do believe it's a problem. We have said in the Climate Council that the law should first and foremost create a framework where the state would create conditions for new technologies that can help reduce emissions.

The goal must not be to to end up with an even more subsidized economy. It is ineffective. Climate policy should not be an authoritative and restrictive affair that only births more subsidized economy. It should create opportunities above all. It may be a pipe dream, while it's more likely to turn out this way.

Let us try to look at a specific sector. How will the decision to reduce carbon emissions in agriculture by a set percentage impact an individual farmer?

The agricultural sector is a good example of how it was necessary to have a voice in climate matters sooner. The sector's emissions reduction targets go back to 2005 when the Estonian agricultural sector was ailing. We had just joined the EU at that time.

The sector has grown in the years since, meaning that the targets are much harder to hit now. It is likely we will not manage to hit all targets in agriculture and will have to balance it out using other sectors. We'll need bigger emissions reductions elsewhere as agriculture is key. Food security is crucial and must not be undermined.

The agricultural sector also seemed like one where little can be done in the Climate Council. But scientists are coming up with entirely feasible solutions. Changes to feed types and the like, while I'm not an expert on the subject.

Neither of us is an agricultural expert, while we both know cattle breeding creates a lot of greenhouse gases. Reduction will need to come through regulations or rules. No farmer in their right mind will be getting rid of their cows voluntarily.

The agricultural sector has grown also because a lot of EU money goes toward agricultural support. Growth this rapid is not really a market economy phenomenon.

Agricultural support cannot be taken away because France and other major producers will always be subsidizing their farmers.

Absolutely. But we can tie subsidies to more environmentally friendly production.

It seems a bit dangerous that some countries have decided to considerably cut back their agricultural sectors. We should think about the aftermath of executing climate policies; whether we'll be able to ensure the same living standard and security.

I wouldn't worry too much about industry. A lot of goods produced in Estonia are exported, and we'll not be able to compete in the Nordics if we cannot offer environmentally friendly products. Entrepreneurs have repeatedly pointed to this in the Climate Council. A big part of the industrial sector will make the green transition happen even without state intervention, simply because it is what the customer expects.

The transport sector is among the biggest polluters. What are realistic solutions there?

Transport sector emissions come primarily from private vehicles. I'm not too optimistic in terms of achieving a meaningful reduction there.

But it should be seen in tandem with the development of buildings and cities. Right now, plans include having apartment buildings with electric vehicle charging stations. Personally, I think we should consider whether it would be more sensible to rely on shared charging infrastructure instead, such as public charging stations.

EVs can go quite far on a single charge these days and do not need to be charged every night, especially when used for short trips. In the future, charging them could look more like popping to the gas station does right now. EV batteries will also keep getting better.

A lot of our [transport] emissions come from people commuting to work in Tallinn from the suburbs around it. Plug-in hybrid vehicles could suffice as a solution, instead of full EVs. Such a vehicle is much cheaper, while it helps reduce emissions just like using an electric vehicle does.

And it would solve the problem of range anxiety when people need to drive to Tartu a few times each year. It may be risky using an EV as you cannot keep driving without charging it.

Climate Council working groups proposed use of biofuels as the most effective measure to reduce transport sector emissions. This virtually amounts to a proposal to make the Estonian fleet dependent on palm oil waste from Indonesia and Malaysia, which is what most biofuels are made of.

It is a controversial measure. I understand it's also possible to use different recycled fuels in Europe, next to palm oil waste. The question is whether other countries are planning to do the same thing, and what will become of the market.

The answer is simple, Europe's dependence on tropical island nations in Asia will mirror that on Arab countries 50 years ago.

I don't think the plan is to use palm oil from Indonesia and Malaysia. Rather, we're talking about recycled oil waste, a different kind of diesel fuel.

But the question remains whether we would have enough of such fuel in Europe in a situation where everyone would be planning a similar measure. We don't know exactly what the others are planning, while we believe such plans exist, meaning that biofuels will be more expensive and there will not be enough to go around.

It is likely that other solutions besides betting solely on biofuels are needed.

Various behavioral solutions have been proposed in the Climate Council. We need to diversify modes of transport to have alternatives to the car. It is quite difficult to take a bicycle today (the interview was conducted on snowy April 23 – ed.), while I know several people who did it regardless.

We also need to render public transport more comfortable, walk sometimes. It's not always necessary to take the car. And there is great potential locked in city planning.

Last question. We are still living in a consumption-based market economy. Is it your goal as chairman of the Climate Council to make sure Estonian market economy survives?

Yes, I believe it is my goal. I know how the green transition is sometimes seen as a simple thing. While it might seem possible to do it by way of orders and bans on paper, it is just not realistic in today's society.

Allow me to give an example of such an economy. Climate Council member Maia-Liisa Anton recently took to social media and proposed only allowing people to fly somewhere once every five years. Flying more often simply wouldn't be permitted because of its massive carbon footprint. (Anton sent a clarification after the publication of the interview that when talking about travel restrictions in the social media post, she meant people's voluntary self-regulation - ed.)

That is something you'll need to ask Maia-Liisa. It is not the position of the Climate Council.

Making changes requires measures society finds acceptable. There are no plans for planned economy or socialism. Were these measures such, it would not be possible to carry them out.

I would emphasize once more that measures need to pass democratic control. They need to be such that politicians are willing to pass them in the parliament without having to worry about losing voters. In other words, society will have to find them acceptable in the end.

I do not believe that politicians are willing to pass laws that will destroy our economic model. The law will rather favor new technologies and create new opportunities in society, instead of limiting them.

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