TALLINN, 7 December 2009 - According to the National Audit Office (NAO), the Government of Estonia has not expressed clear will or provided an appropriate action plan for limiting greenhouse gas emissions, which are considered to be one of the co-factors in global warming.

 By acceding to the Kyoto Protocol in 2002, the objective of which is to reduce the amount of greenhouse gas emitted into the atmosphere, Estonia agreed to reduce greenhouse gas emissions by 8 % compared to the 1990 level. In reality, at the time the protocol was signed emissions had already decreased by nearly a half (estimated 47 %) due to the collapse of the Soviet economic system, as the decrease in industrial production and energy export reduced the amount of oil shale burnt and consequential greenhouse gas emissions.

The recently completed audit reveals that as the objective established by the Kyoto Protocol had already been achieved at the time the objective was set, the state had no intention to address the climate policy – this remained an area of small importance in relation to which no minister has expressed a wish to take action.

However, achieving the objective without doing anything provided Estonia with a financial advantage in the trade in emission allowances, as the rest of the pollution quotas could be sold. Despite formally achieving the set objective, Estonian economy is still very rich in carbon: one of the biggest pollutants in Europe per capita.

The EU climate policy is heading towards even stricter objectives. For Estonia, this means that we must reduce the level of greenhouse gases generated here. Therefore it shall be the duty of the state to guide the entire process so that investments and rearrangements would benefit the environment and enhance competitiveness. In addition to the obligation to reduce emissions, Estonia, and especially local energy production, is more affected by the fact that the rules for trading in emission allowances will become stricter. While greenhouse gas quotas used to be handed out for free in the past, they must be bought as of the year 2013 and this makes producing electricity from oil shale more expensive and thus Estoniathe EU will be less competitive in the EU open energy market.

Prior to the United Nations Climate Change Conference that started today in Copenhagen the ministers have depicted Estonia to adhere to the international climate obligations in an exemplary manner. In reality, the national greenhouse gas emissions reduction program drawn up in 2002 is out of date and long forgotten and as most of Estonian greenhouse gas emissions is generated from the production of electricity, the emissions increase as energy export grows.

The development of a new strategy is stuck because no one has been able to assess how much emissions have decreased thanks to the implemented measures, nor forecast potential future greenhouse gas emissions. Furthermore, the calculation of the generation of greenhouse gas emissions may be inaccurate – according to the NAO, the quantities may be considered smaller than in reality by as much as 30 %.

Trade in emission allowances in the European Union has first and foremost served as means of short-term additional income for the state. In the period of 2005-2007 the state contributed more than two billion kroons to the state budget at the expense of Eesti Energia’s income from the sale of quotas. This amount would have covered more than one fourth of the construction of a new fluidized bed boiler for Eesti Energia. To maintain the competitiveness of oil shale electricity, acquisition of necessary investment money from the stock exchange is currently under consideration.

According to the European Commission, trade in emission allowances in the EU is one of the most important instruments to reduce emissions. Estonian Ministry of the Environment, however, has handed out more emission quotas than the companies need, based on the amount of their actual emissions, but neither trading licences nor legislation have been used to direct the companies to reduce emissions with the help from the income from the sale of quotas.

European Commission did not agree to the continuation of current practices and did not approve the greenhouse gas emission quota in the volume requested by Estonia, which is why companies now have to make do with only half of the expected quota volume. Disputes following the decisions cause uncertainty among traders and companies included in the trading system suffer because of the state’s omissions.

The NAO is of the opinion that another relevant problem in the organization of trade in emission allowances is the state’s lack of control over the reliability of the credits of traded emissions: the area of administration of the Ministry of the Environment does not verify whether companies submit inaccurate information in relation to their emissions or whether they generate unjustifiable income from the sale of quotas. Pursuant to the European Union directive on trading, it is not allowed to trade in emission credits that have not been duly justifiedverified.

As of 2008, in addition to the European trading system, states can trade in greenhouse gas credits on the world market as well. In relation to the opportunity to sell Kyoto Protocol’s trading units (AAU), the Estonian government ”woke up” only after Latvia had sold its extra units. The sale would help the state to earn billions of kroons that could be invested in the reduction of pollution of the environment, but by acting slowly the state has significantly reduced its chances to get rid of its trading units. An amount of 500 million kroons, income from the sale of the AAUs, has been entered in ntext year’s state budget. Due to the absence of a climate policy the state does not have a clear understanding of how to use the received funds to limit the greenhouse gas emissions.

The NAO made several recommendations to the ministries regarding the management of climate policy and calculation and control of greenhouse gas emissions. The Minister of the Environment, Minister of Economic Affairs and Communications and the Minister of Agriculture all basically agreed with the NAO’s recommendations. The Minister of the Environment has planned activities which, if carried out, would significantly improve the management of the climate policy. However, the ministers feel that it is difficult to carry out relevant basic research as there are no funds available for this.
The NAO audited whether the state’s activity has been directed at reducing greenhouse gas emissions and whether it helps to prevent global warming.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]
 

• Posted: 12/7/2009 1:06 PM
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