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OECD: Estonia must reduce dependence on oil shale

Oil shale mining by VKG in Northeastern Estonia.
Oil shale mining by VKG in Northeastern Estonia. Source: (Postimees/Scanpix)

According to a review of Estonia's environmental policy performance published by the OECD on Wednesday, while it has made notable strides in certain sectors, Estonia must work to reduce its dependence on oil shale.

In the framework of its review, the OECD evaluated both the general functioning of Estonia's environmental sector as well as analyzed horizontal fields such as environmental management and green growth. Waste management and the environmental impacts of oil shale mining were focused on in particular. Based on its analysis, the OECD provided recommendations on how to continue to develop these fields, the Ministry of the Environment said.

The Estonian ministry added that two important source documents for the fulfillment of these recommendations have reached the Riigikogu: "'General Principles of Estonian Climate Policy through 2050' and the 'Estonian National Climate Change Adaptation Strategy through 2030,' upon the approval of which we can begin addressing the implementation of concrete measures in the energy sector, transport, agriculture, forestry and land use."

The OECD finds that Estonia must set more ambitious objectives regarding the productivity and environmental impact of oil shale mining.

"There is no doubt that this is a heavy burden on our environment and as a result we have the most carbon-heavy economy in the OECD," said Minister of the Environment Marko Pomerants. "This is a complex subject which also involves broader economic and social aspects, which is why we must act prudently, taking into account that such large-scale changes do not occur overnight. At the beginning of the year, the new Earth's Crust Act entered info force. Also compiled for directing the development of the sector were 'Earth's Crust Policy Fundamentals through 2050' and 'Oil Shale Development Plan 2016-2030,' whose primary objective is to ensure the most environmentally friendly and economically effective possible use of oil shale."

Some goals achieved, others achievable

In its report, the OECD highlights that Estonia has successfully achieved its goals ahead of schedule in nature conservation-related fields.

In the green economic growth field, the OECD recommends Estonia continue its ecological tax reform, i.e. increase taxes on consumption, use of natural resources and pollution, and promote eco-innovation.

In order to ensure the fair taxation of environmentally harmful activities, the Ministry of the Environment has begun identifying the comprehensive and interconnected environmental impact of activities that significantly impact the environment. The goal of the project is to calculate by mid-2018 the monetary value of the social cost, i.e. the external cost, of pollution and mining. Once these external costs have been determined, it will be possible to calculate the tax burden of environmentally damaging activities and, if necessary, both adjust environmental charges and make changes to other regulations such as environmental restrictions and norms.

In order to achieve waste recycling targets, the OECD recommends taxing the burning of waste and strengthening local governments' role in waste management organization. As of 2020, at least 50 percent of domestic paper, metal, plastic and glass waste must be reused.

Editor: Aili Vahtla

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