Fuel retailer Neste Eesti meanwhile has said the bill aims low in its ambitions; environmental organizations have said that substantive impact assessments, legal analysis and calculations on the climate impact of measures are lacking.

Officially called the climate-resilient economy act, the deadline for coordinating feedback on the draft law expired on September 5.

The Estonian University of Life Sciences nonetheless called the law important, and the initiation of public discussion around it is viewed as a positive thing.

The university did express confusion on some of the law's fundamental positions, which it says are presented only in the explanatory memorandum, and not addressed in the bill itself.

Rein Drenkhan, vice rector for research at the Estonian University of Life Sciences, said: "We find that this bill principally focuses on the legal establishment of general and intermediate targets for reducing CO2 emissions, rather than shaping a more climate-resilient society and creating the preconditions for a CO2-free economic growth."

In the university's estimation, the law lacks a balance between environmental, economic, and social goals, with environmental aspects clearly dominating the bill as it stands.

Additionally, the university found that several aspects of the law and its explanatory memorandum are of a general and environmental educational nature, as opposed to setting the law's objectives in stone. In this aspect, the reflections would be more suitable as training materials, or in an annotated explainer of the law, rather than as the law itself, the university added.

The Estonian University of Life Sciences said it supports the principle outlined in the bill whereby local resources should be diversified, the use of natural resources and locally produced raw materials in Estonia should be prioritized. However, it is unclear either from the bill or its explanatory memorandum how this goal will be achieved.

"The greenhouse gas emissions deriving from the land use sector and the goals for reducing emissions and boosting greenhouse gas sequestration are laid out in very general terms in the bill," the Estonian University of Life Sciences found.

"All substantive and numerical material, including metrics and goals, are excluded from the bill yet left in place in the explanatory memorandum, serving only as an indication of the desired direction for the sector."

"We believe the carbon footprint of products per unit of output needs to be addressed," the university pointed out.

In the Estonian University of Life Sciences's view, the bill's most important aspect should be adaptation to climate change, yet instead it states that adaptation goals will be set within sector development plans and action programs.

The law does not take into account the fact that forests themselves are vulnerable to climate change; the explanatory memorandum's goal of reducing logging volumes by one million cubic meters per year only serves to boost these risks.

As a contradiction, the university also highlighted the goal of continuing to restore meadows of heritage, noting that converting forest land to wood pastures may help in preserving biodiversity, but is in direct conflict with national climate goals.

"It must be stated that reading the bill raises more questions than it and its explanatory memorandum answers. The range of measures vectored on meeting greenhouse gas reduction targets for the agricultural sector remains unexpounded on, and even raises additional questions," the university concluded.

In their assessment, the explanatory memorandum itself contains several declarative or unsupported statements, while in many places, the extent of the impact of achieving targets is not rendered clear.

Also, the economic aspect is missing from the bill, the Estonian University of Life Sciences said. "The costs of the Climate Act should also be known. It must be clear under what economic conditions the goals may be achieved," noted the university.

Neste Eesti: Estonia does not appear set on meeting emission agreements

Feedback on the bill from fuel retailer Neste Eesti was particularly pointed.

Ülle Tamme, a Neste board member, said consumption and transport emissions are growing significantly, even as there is an economic recession.

Tamme said: "If this trend goes on, 28.5 million liters more diesel fuel and 5.3 million liters more gasoline will get sold in Estonia this year compared with in 2022."

"All this at a time when, according to the latest (2022) greenhouse gas inventory, Estonia's transport sector emissions were already at a historically high level," Tamme continued, adding that fossil fuel natural gas consumption is also likely to increase.

With this, transport sector emissions will continue to grow, unless the consumption and share of renewable fuels increase strongly and permanently, she said.

At the same time, Estonia has agreed with other member states to reduce emissions in the transport sector.

Tamme said: "From the bill and the explanatory memorandum, it is not clear how we will get there. Rather, it seems that we don't even have any intention of that kind."

In its current format, the bill and its stated aims of cutting transport sector emissions can neither be tracked in progress nor can it be verified, according to Neste.

"It will not achieve climate targets for 2030, according to our calculations, nor will it guarantee a rational, pre-agreed principles-based, and pre-evaluated climate policy," the fuel seller stated.

Neste said that neither the bill nor the explanatory memorandum suggests that Estonia will achieve the promised CO2 reduction targets.

It also fails to pursue a climate policy which, among other things, would not unnecessarily increase inflation more than, for example, the planned broad-based national defense tax would, it was found.

At the same time, nowhere does the bill indicate that its imposition would improve the competitiveness of the economy overall, rather than just selected sectors, Neste said.

In summary, the fuel retailer estimated the climate act as low in ambition and, from a 2030 perspective, essentially non-existent, since the bill suggests that CO2 emissions in 2030 will not exceed levels seen in 2022.

With this, the bill's focus is on punting potential decisions, actions, and changes further down the road, Tamme noted.

The target set for emission reductions in the transport sector, according to her, is unreasonably low, given the sector's capabilities, while the goal's deliberate shortfall is based on the expectation that more will be done in other areas, such as forestry and land use, than has been agreed upon at EU level.

Furthermore, Neste said that the ministry's proposal to set the 2030 transport sector target shortfall is based on an arbitrary and incomplete list of appropriate measures and faulty inputs, including an analysis of the socio-economic impacts.

Tamme also called the socio-economic analysis of additional measures in the transport sector unfit, as it is incomplete and is critically flawed.

Sunly: Lacking clear guidelines and plans

Renewables generator Sunly pointed out that one of the goals of the law is to make electricity production CO2-free by 2040, but this envisions the construction of new gas plants that use fossil fuels, including via public procurement.

According to the bill's explanatory memorandum, these plants will transition to renewable fuels from 2040.

Sunly's head of regulatory relations Peeter Raudsik said: "There is no corresponding clear directive or requirement in the text of the draft.

"There is a risk that the new fossil-fuel-based gas power plants will not actually switch to renewables, leading instead to increased dependency on imported natural gas for electricity generation," Raudsik continued.

Sunly said it recommends formulating clear guidelines on public procurement within the bill, to ensure that new fossil-fuel-based power plants gradually transition to renewable fuels.

Sunly also highlighted that the electrification of energy and the economy contributes to achieving climate goals, and in this respect, the goals set for heat production and transport are reasonable.

At the same time, there are no clear references to the electrification of these sectors, while the list of planned investments does not contain any reference to demand-side management, which Estonia has great potential for, according to Sunly.

Raudsik said: "Sunly recommends using the electrification rate of various sectors as an indicator and adding demand-side management as a priority area in the draft and its explanatory memorandum."

Third, Sunly highlights that the bill's explanatory memorandum lacks references to upcoming 2025-2026 onshore wind farm and hybrid farm auctions, even as it does reference offshore wind auctions. Sunly argues for including these references in the bill's explanatory memorandum.

Bank of Estonia: Risks to public finances need to be mapped

In a letter signed by its president, Madis Müller, the Bank of Estonia (Eesti Pank) stated to the Ministry of Climate that the under-preparation climate act should highlight areas where national goals are more ambitious than international agreements.

The central bank argued that since several changes may lead to increased costs or may limit local businesses' economic activities, more ambitious goals must also be clearly justified.

Müller wrote: "In the energy sector, it is well worth considering the conclusion of the competitiveness council (Konkurentsivõime eksperdikogu) that to ensure the lowest price to consumers, renewable electricity production goals should be coordinated with those in Latvia, Lithuania, and Finland."

The Bank of Estonia chief noted that there is still a lot of uncertainty over what measures are needed to reduce CO2 emissions, making it difficult to assess the bill's overall impact.

Until some critical information is available, drawing conclusions should be avoided, he added.

Also, according to Müller, impact analysis should be supplemented where the economic viability of large investments is justified only superficially.

"Measures with a significant impact on price growth and the overall price level require more detailed explanation and background information."

"For example, the offshore wind farm auction scheme entails additional costs for electricity consumers, thereby worsening the price competitiveness of local businesses," Müller went on.

According to Müller, the effects on public finances should also be mapped, as should the risks, while the potential need for additional support needs to be assessed.

"So that the impact of the planned measures on the sustainability of public finances can be understood, all information on public sector revenues and expenditures should be consolidated into a single summary table in the bill's explanatory memorandum. It would be especially useful to separately highlight the planned/projected amounts from CO2 sales and EU funds," suggested the Bank of Estonia chief.

Environmental bodies: Goals are too modest

Environmental organizations are also dissatisfied with the draft law. The Estonian environmental organizations chamber (Eesti keskkonnaühenduste koda), Päästame Eesti Metsad, and Fridays for Future Estonia (MTÜ Loodusvõlu) say they consider the climate bill's goals to be so modest that they fail to protect people, nature, and the economy alike, from the effects of the climate crisis.

Furthermore, they argue that the goals do not allow Estonia to meet its obligations as per the Paris Agreement.

"It is unclear how and on what basis the Ministry of Climate has calculated Estonia's overall and sector-specific greenhouse gas (GHG) emission reduction targets. The explanations and data provided in the draft materials are incomplete, lack substantive impact assessments, legal analysis of the adequacy of the targets, and calculations of the climate impact of the proposed measures," the environmental organizations enumerated as shortcomings of the bill as it stands.

The organizations pointed out that the bill's goals are so vaguely and broadly worded that they cannot be clearly grasped. In addition, the wording gives the impression that mitigating climate change and promoting economic growth are equally important goals, whereas fulfilling the obligations of the Paris Agreement is a legal requirement which leaves no wiggle-room for discretion.

Regarding the aspect of the law aimed at promoting a competitive business environment, the environmentalists suggested this should be removed altogether, as the provision is unclear, and does not specify the indicators by which competitiveness would be assessed, they said.

The environmental organizations also disputed the Ministry of Climate's claim that greater emission reductions are not viable using existing tech. Similarly, they believe that the draft law represents a retreat from Estonia's previously set climate goals, particularly the target in the national energy and climate plan (REKK) to reduce Estonia's CO2 emissions by 70 percent by 2030.

"The bill instead sets a goal of 59 percent. It also retreats from the recently established goal in the 'Estonia 2035' strategy to keep total emissions below eight million tonnes by 2035, relaxing this to 10.2 million tonnes—an increase of over two million tonnes. Backtracking on previously adopted climate goals would mean violating EU regulations," the organizations stated

Timber industries: Climate law accelerates economic decline

The Estonian forest and wood industries association (EMPL) stated in a press release on Thursday that the bill will push Estonia's economy into an even faster decline than it already is in. According to the association's chairman, Jaano Haidla, while the organization's members support the goal of mitigating climate change and adapting to it, the bill will not achieve these aims.

Haidla said: "Instead of that, the bill's drafters have focused on legally fixing the general and interim goals of slashing CO2 emissions. However, the focus should be on the realistic actions that would create the preconditions for both addressing climate challenges and fostering economic growth, including the overall well-being of Estonians."

The bill's outcome will mean a further fall in export-oriented industrial sector confidence, which in the broader picture means the prolonging of the economic downturn that has already gone on for three years, Haidla went on. This also means that the investments necessary for climate resilience will not get made in any case.

Haidla noted that according to the bill's explanatory memo, the state needs to invest €3 billion by 2040 and the private sector €11 billion. Thus, achieving climate goals without the private sector is impossible.

"It is all the more puzzling that the climate law and the related amendments to the Forestry Act and the Nature Conservation Act are being processed without assessing their combined impact. It is also unclear what the specific targets of the bill may be in absolute terms, what the timeline for implementing the measures is, and where the necessary resources are to be found," Haidla added.

The EMPL added the bill should not proceed until the relevant impact assessments are completed and presented to both stakeholders and the general public.

This week, the Estonian Employers' Confederation (Eesti tööandjate keskliit) also announced that they, too, would not be giving their blessing to the climate bill, stating that the goal of boosting economic competitiveness and fostering growth remains just a theoretical assumption, and not a practically thought-out result.

According to employers, the bill in its current format does not provide the legal and investment certainty the private sector needs, being merely an empty framework, and this raises questions about the necessity of the law and its positive impact on the business environment.

Ministry of Culture highlights risks of urban sprawl

The Ministry of Culture noted in its own response that the goals of climate adaptation as in the climate bill are too broadly defined, while it is essential to clearly establish the principles of building lifecycle and sustainable renovation and reuse.

The ministry stated: "Fifty percent of natural resources are directed into construction, and 50 percent of final energy consumption takes place in buildings."

"Thus, ensuring the continued use of existing buildings and promoting reconstruction is one of the most effective measures to mitigate climate change," the Ministry of Culture explained.

At the same time, the ministry believes that issues related to planning must not be overlooked when designing a society that is more resilient to climate change.

Minister of Culture Heidy Purga (Reform) said in her response: "For example, the careless granting of permits for high-density areas brings a significant indirect impact on carbon emissions—passive houses do not meet their purpose if they are built in areas where a person can only live if they own a car."

The ministry said that curbing urban sprawl is an essential precursor to achieving climate goals.

The Ministry of Foreign Affairs meanwhile approved the bill but with remarks. Specifically, the ministry pointed out that it should be clarified whether Estonia's CO2 reduction targets are in line with the Paris Agreement and with EU law.

Foreign Minister Margus Tsahkna (Eesti 200) noted: "We believe that the explanatory memorandum does not currently adequately describe the alignment of the bill with international obligations, including the goals set by the Paris Agreement."

"This is still needed. In recent years, there have been examples from various countries where, due to court rulings, states (for instance Germany or the U.K.) have been forced to strengthen already adopted climate or energy goals."

The Ministry of Foreign Affairs also highlighted that most of its real estate and vehicle fleet is located outside Estonia (ie. at diplomatic missions – ed.), so it should be clarified how meeting the goals will affect these.

The ministry noted that, in addition to its diplomatic functions, it also handles land vehicle secure transport for classified information and diplomatic dockets, as well as VIP guests, often needing police escorts.

Distances can be long, and security considerations prevent vehicles from peeling off from a convoy.

E-vehicle charging station infrastructure may not always be adequate in a host country, the ministry added.

Consequently, the ministry requested that its diplomatic vehicle fleet be excluded from the zero-emissions vehicle target.

Ministry of Defense requests exemption for national defense

The Ministry of Defense approved the bill, but noted that it lacks a goal for achieving climate neutrality, which should be added in, it said. Furthermore, the bill does not include a specific exemption for the national defense sector, given that the implementation of the targets must ensure the maintenance of defense capabilities.

Thus, the Ministry of Defense proposed adding a clause to the bill stating that the climate law's goals must be met without reducing the country's defense capabilities. The ministry also wants the bill to provide an overview of the investments needed by both the public and private sectors to achieve climate goals and how they will affect Estonia's economy and competitiveness.

The Ministry of Defense also requested that the explanatory note include more detailed CO2 reduction measures so that their impact on the defense sector can be assessed.

"We would like to point out that the defense sector's task is to ensure the country's defense capability, which involves the use of special equipment, including in peacetime training – something which requires the use of fossil fuels to maintain 100 percent operational capability. So we propose establishing an exemption for fossil fuel use when it comes to defense activities," Defense Minister Hanno Pevkur (Reform) said.

Additionally, the Ministry of Defense noted that the draft contains nebulous wording, such as "emissions will be reduced," without specifying who is responsible for that. This means the law should include a precise reference to the persons or institutions responsible.

The climate bill also aims to amend the Building Code and the Planning Act so that in the future, the lifecycle and carbon footprint of new buildings must be calculated, and with this change set to take effect at least in part, by the middle of next year.

The association of Estonian cities and municipalities (Eesti linnade ja valdade liit) drew the Ministry of Climate's attention to the fact that, in connection with the calculation of the carbon footprint of building lifecycles, the workload of local government officials will increase.

"It is necessary to first assess whether, and to what extent, new tasks will be imposed on municipalities related to the enforcement of these requirements, and how and from what sources the goals and obligations set by the law will be funded. It also remains unclear how much and from which sources the financial obligations to achieve the goals set out in the draft will be covered," the association stated.

The City of Tallinn has also not yet provided feedback on the climate bill, but Mayor Jevgeni Ossinovski wrote in an opinion piece published on Tuesday that the bill is so underdeveloped that its adoption would not add anything to the work already being done at various levels.

"The title of this law already completely misses the core of the issue, because our entire society, not just the economy, needs to become climate-resilient. The economy (as with any other field of human activity) must adapt to the needs of climate policy, which closes certain doors but also opens many new ones," Ossinovski wrote in his piece.

He highlighted a more serious problem, namely that the bill does not clearly regulate the roles of the state and local governments, and leaves significant issues unaddressed. Furthermore, in the mayor's view, the involvement in the development of the draft law was merely formal and superficial.

Ministry of Climate Sec. Gen. Kasemets rejects criticism

Secretary General at the Ministry of Climate Keit Kasemets, commenting on the critical feedback in an interview on Vikerraadio program "Reporteritund," said that the discussions surrounding the climate bill have been very intense.

He noted that those involved in the bill's drafting have claimed that not all of their opinions were taken into account, and everyone is thus somewhat dissatisfied, though over the course of the year the discussions evolved.

Kasemets said: "Whereas we started from the position that nothing was possible /.../, the discussions quickly became constructive, identifying real solutions."

Kasemets said he believes the ministry can be satisfied that they have managed come what may to put together a plan that will certainly meet climate goals.

"I don't agree that this law somehow diminishes or restricts the economy," he said.

"Vice versa, it provides a framework that allows us to remain competitive in the era of major climate change, and it certainly shows that we cannot continue as before in all areas," the secretary general added.

Kasemets said that not only in Estonia but also more broadly across the world and in Europe, climate goals have so far not been met because there has not been sufficient focus on new tech and economic competitiveness.

"In some ways, this gives us the message that we need to pay more attention to this; protecting the environment alone is not enough," Kasemets continued.

As of the deadline of September 5, the following stakeholders had not submitted their feedback on the climate bill: The Ministry of Social Affairs, the Ministry of Regional Affairs and Agriculture, the Ministry of the Interior, the Ministry of Justice, the Ministry of Education and Research and the Ministry of Economic Affairs and Communications.

--

Follow ERR News on Facebook and Twitter and never miss an update!