Estonia earned €256.5 million from carbon allowance sales in 2025

Estonia received €256.5 million from the 2025 auction of carbon dioxide allowances, ERR reported, citing the Ministry of Climate. The country has earned more than €2.3 billion from the sales since 2013.

Since the European Union’s auction platform was launched, the largest share of the revenue has gone to transport and mobility, which received €1 billion. A further €446 million was allocated to improving the energy efficiency of buildings and €175 million to renewable energy and energy efficiency projects.

Almost €164 million was allocated to monitoring, research and development, while €37 million went to climate change adaptation and nature conservation.

Last year, carbon allowance revenue continued to fund construction of the Rail Baltica rail project, railway electrification and the purchase of six new electric trains. The trains are expected to arrive in Estonia by the end of 2026.

Work also continued on shore-based electricity infrastructure at the Virtsu and Kuivastu ports to prepare them to serve a new electric ferry.

To improve building energy efficiency, local government and central government buildings were renovated, and near-zero-energy buildings were constructed.

In renewable energy and energy efficiency, radar systems enabling the construction of wind farms in northeastern Estonia were completed. Work also continued on renewable energy solutions on Vaindloo Island.

Theatres and other performance venues significantly reduced their lighting costs. Funding also supported monitoring of Lake Võrtsjärv and the sea, preparation of a climate atlas, development of geothermal energy pilot plants, and flood-risk reduction works in Paide, Sindi, Pärnu, Haapsalu, Keila, Kuressaare and Hiiumaa. Climate cooperation projects were also supported in Ukraine and developing countries.

Revenue from the sale of carbon dioxide allowances comes from the European Union Emissions Trading System, or ETS. Under the system, companies that emit greenhouse gases must pay for those emissions, encouraging investment in cleaner technologies and lower-emission production.

Part of the revenue from the allowances sold is paid to Estonia, which is required by law to use it to finance climate and energy projects.

In Estonia, the system currently covers 37 major industrial and energy production companies and one aviation company. Maritime transport has been included since 2024. As of mid-2026, 16 Estonian shipping companies with a total of 53 vessels were participating in the system.