On Friday, the Riigikogu European Union Affairs Committee (ELAK) tasked the Ministry of Climate with initiating consultations with the European Commission and EU member states regarding the cancellation of the second emissions trading system directive (ETS2) or postponing its implementation by at least two years.

ETS2 extends the emissions trading system to include fuels used for buildings and road transport.

The Czech Republic and Poland have initiated discussions at the EU level to delay the implementation of ETS2. Any amendments to the directive require a corresponding proposal from the European Commission, which must then be approved by a majority of member states.

Kristi Klaas, deputy secretary general for green reform at the Ministry of Climate, stated that due to changes in the economic and security situation, Estonia does not support the expansion of the emissions trading system.

Klaas explained that when the system was originally agreed upon, the situation in the European Union was different.

"When ETS2, or the second emissions trading system in the EU, was agreed upon, the situation was entirely different. At that time, we were not experiencing such an economic downturn, nor were we dealing with the effects of war in the same way. The entire economic environment has changed," Klaas said.

She also pointed out that the system would not have the intended effect of reducing emissions in the transport sector.

"We have also become more aware of what kinds of measures are actually needed to reduce emissions in the transport sector. While the emissions trading system is highly effective in the energy sector, we do not see the same impact in the transport sector that would actually lead to emissions reductions," Klaas explained.

However, Klaas disagreed with the notion that canceling ETS2 would constitute a fundamental shift in Estonia's green policies.

"The goals of climate policy remain unchanged," Klaas said. "If we look at what the European Commission introduced at the end of February — the clean industry agreement — its core focus is on clean industry and competitiveness. The EU still sees climate targets as part of this clean industry approach."

She emphasized the importance of implementing climate policy in ways that make sense. "If we see that certain measures previously agreed upon are no longer suitable or if circumstances have changed, then we need to reassess how best to proceed. Climate policy is not an end in itself; it must align with both people's well-being and economic interests," Klaas stated.

Klaas clarified that the European Union Affairs Committee adopted a position stating that Estonia seeks to cancel the expansion, and if that is not possible, to postpone it.

She noted that finding other EU member states that also support these changes to the emissions trading system is crucial. "The process works in such a way that the European Commission must first introduce an initiative to amend the emissions trading system and then this initiative must be approved by a qualified majority. This means that if only a few countries support the change, it will not pass."

"Estonia's position essentially means that our diplomats, officials and ministers will work to find allies among other member states who also support either canceling or delaying the system," Klaas explained. She added that while no member state has explicitly called for cancellation, the Czech Republic has initiated efforts to postpone its implementation.

"Negotiations will determine in which direction it is possible to gather a qualified majority of countries. This will require efforts from officials, politicians and diplomats," Klaas said.

She stated that the next step is to map out the positions of member states. "At least regarding postponement, we know that two member states — Poland and the Czech Republic — have expressed willingness to support it. However, three countries are not enough; we need to find more."

She also noted that some countries oppose delaying the system due to the revenue it generates. In some states, ETS2 is seen as having a significant impact on emissions reductions.

"In Estonia, we do not see this system effectively reducing emissions because of our dispersed settlement patterns. Higher fuel prices alone do not push people to give up cars. To achieve that, there must be high-quality and accessible alternatives available," Klaas concluded.

Isamaa head: Estonia's stance should be clearer

Isamaa party leader Urmas Reinsalu stated that, in his view, Estonia's position should be more clearly defined.

"Estonia's stance should be unequivocally clear: the ETS2 system must be canceled. As it stands, the position leaves room for either option. I believe it would be more reasonable to pursue a single, definitive position when seeking support from other member states and explaining our stance," Reinsalu said. "Of course, if the cancellation initiative does not succeed, then naturally, the next steps follow logically and we should support the most practical course of action."

Reinsalu noted that in 2022, when Estonia confirmed its position on expanding the system, he had proposed that Estonia should not support its implementation in its current form. "At the time, the government's position was that Estonia was 'uncertain.' With such a vague and literary formulation — saying we are 'uncertain' — it was difficult to defend our position," he said.

"I believe the government has deliberately kept the position ambiguous," Reinsalu added. "I would really like to see whether Estonia's official, written position explicitly states that we are seeking cancellation — whether our government actually conveys this when engaging with other member states. Right now, we have this dual-structured position on the table."

Reinsalu pointed out that Estonia's stance in EU negotiations is weakened by the fact that in 2022, the country expressed support for expanding the emissions trading system. "This certainly makes our position weaker. However, I still hope that, especially given the current economic situation in Europe, this issue will receive serious consideration."

"Two member states — Poland and the Czech Republic — have put forward this initiative. Poland holds the EU presidency, and I believe our success depends on our diplomatic capability — how convincingly we can argue our position," he added.

ELAK chair: The committee has clarified Estonia's position

Chair of the European Union Affairs Committee Peeter Tali (Eesti 200) stated that the committee has clarified the wording of the government's position.

The government-approved position stipulates that the Ministry of Climate must begin consultations with the European Commission and EU member states to postpone the implementation of the directive for ETS2 sectors by at least two years — meaning it would not take effect before 2029 — and, if possible, to seek the cancellation of ETS2.

"ELAK made its decision based on the input we received from the government. The committee formulated the Riigikogu's decision in a clear and decisive manner," Tali said. "We have tasked the Ministry of Climate with initiating consultations for its cancellation, and if cancellation is not possible, then postponement for at least two years."

According to Tali, expanding the emissions trading system would impact people's livelihoods.

"The goal of reducing pollution is not inherently bad, but the way this system achieves it is not suitable for us. It would lead to unnecessary bureaucracy, a massive administrative burden, confusion and would certainly have an impact on our economy and people's financial well-being," he added.

"Security and national defense are our priorities. We cannot take on multiple initiatives at once, especially ones that are unreasonable. That is what we have stated," Tali said.

He noted that in order to cancel ETS2, Estonia must find allies among EU member states. "A qualified majority requires 15 member states and 65 percent of the EU population," Tali explained. He added that if diplomats and politicians fail to reach a consensus for cancellation, the next course of action would be to support the Czech and Polish proposal to delay the directive's implementation.

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