The Estonian state had committed to 12 years of support for electricity production from waste incineration, but last summer, the support was revoked before the deadline, due to the state's unfulfilled obligations in providing recycled waste.

According to Chancellor of Justice Ülle Madise, this amendment is unconstitutional, as she stated in a proposal to the Riigikogu.

In her statement before the Riigikogu on Tuesday, Madise pointed out that the amendment to the Electricity Market Act, which withholds renewable energy support from electricity producers if waste recycling targets are not met, violates the constitution.

She noted: "This means that an electricity producer cannot receive renewable energy support if the state fails to meet its targets for reusing and recycling municipal waste."

Renewable energy support is a time-limited right, granted for a 12-year period. Companies receiving time-limited support cannot control how waste is recycled or the state's recycling performance, the Chancellor emphasized.

Madise noted that since the amendment applies retroactively to a producer already receiving support, it violates the principle of legitimate expectation. "Producers gained the right to receive support before the provision took effect and could not have anticipated such a restrictive condition," Madise added.

The principle of legitimate expectation is violated as the state had previously confirmed that support would be paid for the entire 12-year support period under the conditions in effect at the time of granting the support.

"The state must not act in bad faith," Madise stressed.

Madise also pointed out that the state's support scheme did not foresee changes to the conditions during the support period that would limit recipients' rights. The amendment would thus only be legitimate if it applied to new support agreements going forward, and not retroactively.

Madise suggested that the law should be amended to be made clearer, to confine the amendment to new agreements only.

Madise highlighted that the Iru thermal power plant just outside Tallinn (with the prominent cooling tower visible when driving east out of the city-ed.) is the only facility producing electricity from waste, and its support ends on July 2, 2025. She argued that stopping the support just before the end would not promote environmentally friendly waste management but would violate the recipient's legitimate expectations and signal to the market that the state is unreliable.

The issue is thus one of legal certainty, which is also crucial for investment security; applying unclear legal provisions violates the principle of legal certainty, she added.

The Riigikogu amended the Electricity Market Act last summer so that the Iru power plant will no longer receive cogeneration support from 2025.

However, the power plant's owner, Eesti Energia's subsidiary Enefit Green, found the amendment unconstitutional and turned to the Chancellor of Justice for an opinion.

Ultimately, the Supreme Court can rule on the matter, where needed, Madise added.

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