Q&A: Insights on Estonia’s “green” Covid recovery

In general, a lot of money has been given to what the Energy Policy Tracker classifies as “clean conditional”, which means that the spending can possibly be positive in terms of going to a green recovery. However, there are many ifs and buts. One good example is the electricity grid reinforcement programme to increase renewable energy generation. Developing the grid can be seen as neutral, but doing it on the condition of integrating more green energy in the grid definitely has a great effect on the share of renewal energy sources (RES) in electricity generation. Spending on clean energy come largely from pilot programmes and many of them are connected to the Recovery and Resilience Facility.

The conditional/unconditional aspect of the investments comes from the currently applicable methodology of the tracker. One of these examples is the new radar in Ida-Viru County in northeast Estonia, probably the most important one that came out of Covid recovery investments. Just over than €550 000 goes towards updating Estonia’s airspace radar systems in Ida-Viru County by 2024. The northern parts of the county are among the regions with the highest wind power density on the Estonian mainland, so this investment is really important for further developing wind energy generation. There has been a lot of back and forth about freeing up territory for wind turbines for several years now and with this program, it is finally happening.

However, the biggest chunk of spending that is considered unconditional went towards improving bike lanes and public transport outside the major cities. Smaller unconditional investments went into hydrogen towards developing a green hydrogen roadmap and looking at how green hydrogen can be introduced into public transport.

These are the reimbursements the government paid out to consumers to make up for higher expenditures for electricity and gas as prices started soaring in the fall of last year. This is problematic because reimbursing high prices to consumers without any conditions to reduce consumption or motivation to increase energy efficiency through renovating buildings or to set up small-scale RES solutions led to overall consumption remaining relatively the same for the last heating period. Overall, by the end of the reimbursement period in March 2022, the state supported the payment of consumers’ energy bills with €170 million.

As the Energy Policy Tracker only looks at investments made between 1 January 2020 and 31 December 2021, the response to the war in Ukraine that has highly affected the energy sector is out of scope for the Tracker.

According to the Tracker, Estonia is actually looking quite good. If you look at the Norway country page of the Tracker by comparison, the page is almost completely black, meaning most of the recovery spending has unconditionally gone into fossil fuel investments. However, there are certain limitations to the Tracker’s methodology so the picture for Estonia may have a darker taint than what it appears to have.

It was less about surprise than wondering about the necessity of certain policy measures. Sometimes the question that came into mind was, “Is this really the best way to spend the money?” For example, Italy made a large investment in building a new railway system, which may seem like a great step towards low-emission mobility, but all they are doing is substituting an already existing system with a faster and better one that runs parallel across Italy and it does seem like a bit of unnecessary spending.

Wind energy development could be a lot faster. The main obstacles have been the defence force’s radar restrictions that will now soon be solved, lack of comprehensive spatial planning on the state level, previously cheap energy prices and public opinion – or rather, public opposition to green projects such as wind energy development. The government could do more to encourage and increase public acceptance because we need to develop wind energy much faster if we want to reach Estonia’s and the EU’s 2030 climate targets.

Another challenge we still face is the low rate in renovating public buildings to increase energy efficiency. The EU has a 3% annual renovation target until 2030 for public buildings, but there is no clear plan of how to get there in Estonia and I don’t see how we can achieve the target without a plan and pathway to get us there.