Estonia enters ETS reform talks without numerical targets

Estonia will enter negotiations on reforming the European Union’s emissions trading system without setting numerical targets, ERR reported. The European Affairs Committee of the Riigikogu amended the government’s mandate on Friday but declined to define specific numerical parameters.

Committee chairman Peeter Tali said the mandate requires the negotiations to take account of security of supply, security considerations and socioeconomic impacts.

For the oil shale industry, security considerations also include stability and employment in Ida-Viru, Tali said. Security of supply means ensuring access to energy while supporting the development of the economy and industry. He added that Estonia had separately highlighted the oil shale oil sector, which it wants to develop and keep operating for as long as possible.

Energy and Environment Minister Erkki Keldo said Estonia supports a European Commission proposal to slow the reduction of free emissions allowances. Estonia wants free allowances to remain available for as long as possible and in the largest possible amounts, he said.

Keldo said the distribution of free allowances was initially expected to end in 2039 but could now be extended to 2046 or 2047, with the reduction taking place more slowly. Estonia wants the decline to be especially gradual during the initial period so its sectors remain competitive.

Estonia also wants greater stability in the price of carbon allowances sold through the emissions trading system. Keldo said sudden changes in the price of a tonne of carbon dioxide make planning difficult for businesses.

One proposal under discussion would automatically release additional allowances onto the market if the price per tonne rose above a certain level, helping to make prices more predictable and reduce volatility.

Estonia also wants free allowances to cover its oil shale sector and for their distribution to reflect the country’s specific circumstances, including its security situation, possible socioeconomic impacts and security of supply.

Keldo said Estonia wanted the system to take account of investments already made to reduce emissions, rather than linking free allowances only to future investments. Under the European Commission’s current proposal, free allowances would be given only to companies that commit to future emissions reductions. Keldo said that could put Estonia’s oil shale sector at a disadvantage because major future investments and economically viable carbon capture technologies are not currently available.