Estonia has good intentions to use the recovery fund to become more resilient while supporting the green transition. However, these intentions are overshadowed by uncertainty and lack of scrutiny, as there is no publicly available strategic framework to bring all of the plan’s measures together, and many measures proposed could in fact undermine the European Green Deal.
Uku Lilleväli, national campaigner, Estonia | 20 April 2021
Unlike many other countries, as of mid-April, Estonia had only published brief documents outlining the proposed measures and budget allocation for the Recovery and Resilience Facility (RRF). It also organised weeklong consultations for selected measures, but these did not provide many further details.
While the lack of access to a full draft does not allow for a thorough review of the recovery plan itself, a general assessment of provided documents shows that the measures included in the Estonian recovery plan are mostly aligned with the European Green Deal.
However, as the devil is in the details, many measures could also jeopardise the green transition, there is a need to ensure that the detailed eligibility and implementation criteria planned for proposed measures is aligned with the Green Deal.
The estimated EUR 0.9 to 1.1 billion allocated to Estonia under the RRF will be channeled towards five areas: healthcare and social protection (EUR 446 million), business (EUR 337 million), e-governance (EUR 135 million), energy and energy efficiency (EUR 92 million) and transportation (EUR 96 million).
Mixed signals from the recovery measures
Proposed measures with a likely positive effect on climate goals take EUR 322 million, or 29 per cent, of the estimated total. These include much needed investments in the energy grid, energy storage and renewables (EUR 45 million), increasing the energy efficiency of buildings (EUR 47 million) and a green fund for investing in enterprises’ green transition (EUR 100 million). A further EUR 50 million is planned for introducing integrated renewables-based hydrogen technologies, but the measure’s design could be based on overly optimistic expectations and lead to implementation issues.
Measures that will positively contribute to the decarbonisation of the transportation sector and hence the climate goals include constructing an additional tram line in Tallinn (EUR 26 million), restoring a section of a former railroad line in Northern Estonia (EUR 34 million) and municipal investments in cycling paths (EUR 5 million).
Most other measures can be potentially harmful and could undermine the Green Deal. Due to the low level of detail provided, many of the proposed measures could be used to support the growth and longevity of harmful companies and sectors that significantly reinforce climate change, such as extracting and processing mineral resources and fossil fuels. Such measures include, for instance, supporting firms’ export capacity (EUR 33 million), adopting innovative and resource-efficient technologies (EUR 23 million), and digitisation and automation of enterprises (EUR 73 million).
There is also uncertainty around the impact of measures like advancing bioresources (EUR 24 million) and constructing a joint transport terminal of Rail Baltic (EUR 31 million). For the former, it is unclear whether the measure will fuel increasing logging intensity that carries the risk of adverse environmental and climatic impacts. The latter could support the decarbonisation of the transportation sector, but it encourages developing Rail Baltic, which likely negatively affects biodiversity as it can involve clearing bogs and forests of high conservation value to make way for the railroad.
The European Commission has highlighted the need to allocate a larger proportion of EU funds for protecting and restoring biodiversity in both the Technical Guidance for the RRF and the EU Biodiversity Strategy. Such investments would also contribute to the requirement to invest 37 per cent of the recovery fund in green transition. Despite all this and the central role of preserving biodiversity and ecosystems in climate change mitigation and adaptation, Estonia has not proposed any measures on these.
From the view of conservation, for instance, the status of most forest habitat types of the Habitats’ Directive in Estonia is either inadequate or bad, suggesting that the state has not fulfilled its duty to ensure and restore the favourable status of these. Also, 49 per cent of the forest area within the Natura 2000 network in Estonia is not covered by the Habitats’ Directive forest habitat inventory, indicating that forests with potentially high conservation value may not be adequately protected from intense logging.
Using the RRF to invest in improving the status of forests and other habitats and in taking inventory of the land within the Natura 2000 network would help to capture and store carbon and ensure that ecosystems needed to adapt to climate change would be preserved. It would also contribute to the climate goals required by the facility.
To realise the good intentions behind Estonia’s proposals, further scrutiny is needed to ensure that the measures effectively contribute to the Green Deal.
This requires, first, a comprehensive application of the ‘do no significant harm’ principle across all measures as well as applying the EU Taxonomy for sustainable activities criteria on measures classified as ‘green’. Second, it must have a stronger focus on investing in biodiversity and preserving and restoring the favourable condition of different ecosystems. Third, Estonia must have a public recovery plan that defines a strategic and operational framework specific to the RRF. Without this, the measures are likely to be ineffective in the long run.
Never miss an update
We expose the risks of international public finance and bring critical updates from the ground – straight to your inbox.