Blog entry

What’s holding back community energy in Estonia’s just transition region?

So what’s holding back progress? Is it a lack of awareness, mistrust or overly complex legislative processes? These questions formed the basis of a 2024 study conducted by Tallinn University of Technology, commissioned by the Estonian Green Movement as part of the LIFE RePower the Regions project, to explore the feasibility of community energy in Ida-Viru.

Challenges in the region

The study revealed a key challenge – many people struggle to see the benefits of cooperative energy production. Why join forces in a cooperative when individual energy production seems just as feasible? This attitude is largely due to the lack of positive local examples. Despite years of discussion about community energy in Estonia, success stories have mostly come from abroad, making them feel disconnected from the local reality. Participants in the study also noted that media coverage tends to focus more on obstacles rather than progress, reinforcing the perception that community energy remains a distant, theoretical concept rather than a viable opportunity.

The study also highlights a major hurdle – the conflict between renewable energy development and national defence regulations. In Ida–Viru, solar energy projects of up to 50 kilowatts face fewer restrictions and can be installed throughout the region. However, larger solar parks exceeding this capacity are evaluated on a case-by-case basis, adding uncertainty to their potential development. Wind energy faces even more severe restrictions. East of the Jõhvi–Iisaku line, wind turbines are completely banned due to their impact on national defence installations, further limiting the region’s renewable energy potential.

There are also infrastructure challenges. The existing electricity grid was not designed with small-scale energy production in mind, which means that connecting to the grid often requires reinforcement and significant investment. This is an issue not only for developers but also for grid operators, who must find ways to make connections more cost-effective and accessible.

There is also a lack of experts and leaders who can bring communities together and implement projects. As the region lacks a comprehensive plan and nationwide cooperation for establishing energy communities, progress has largely depended on enthusiasts and proactive local governments. In this respect, the municipalities of Alutaguse and Lüganuse have taken the first steps towards renewable energy. The Association of Local Authorities in Ida–Viru, who are also aware of the issue, are considering participating in energy community projects, but there are no concrete success stories yet for others to follow.

In addition to these obstacles, the more challenging economic situation facing residents in the region and the lack of trust within the community are holding back the development of cooperative energy production.

Opportunities

Despite these challenges, the study highlights several unique advantages that position Ida-Viru as a potential flagship for community energy development. The county has a large amount of suitable land, including former industrial and oil shale mining sites, on which renewable energy production facilities can be built. In addition, the region has extensive historical expertise in the energy sector due to its long connection with oil shale energy. Not only that, the county is already home to established gardening and housing cooperatives that are essentially ready to function as energy cooperatives. With the right guidance and awareness, they could soon begin generating their own electricity.

So why is cooperation within energy communities preferable to the individual approach? For a start, cooperative energy production allows costs and risks to be shared, storage solutions to be used more efficiently, and provides greater energy independence. For example, a community solar park with a shared storage system reduces the volatility of electricity prices and allows cheaper energy to be used when the sun isn’t shining – something that would be much more expensive and complex for individuals to manage on their own. In addition to the economic and environmental benefits, energy communities can provide social, health and educational benefits, such as strengthening community ties, raising awareness about energy use and production, and improving health by reducing air pollution, leading to fewer respiratory issues and other health problems.

In countries where community energy production has been successfully introduced, targeted national and regional measures have been crucial in supporting its development for example in Poland, where various EU funds, including REPowerEU, support the development of energy communities. In Estonia, although the region’s transition to renewable energy is seen as necessary and inevitable, it has yet to be prioritised and there are no specific measures in place to promote this shift, according to the study participants.

For the sector to truly develop in Estonia, it is essential to raise awareness, simplify regulations, and offer more funding to communities. Especially in rural areas, community-based renewable energy projects could improve the well-being of residents, increase energy security, and promote economic stability. Estonia should seize this golden opportunity to follow examples where community energy has helped to build stronger and more independent communities. The transition to renewable energy is not just necessary in theory – now it’s time to put it into practice!

Romania: Key Black Sea gas pipeline goes on trial

On Monday 24 February, campaigners from the environmental non-governmental organisation Bankwatch Romania, a Bankwatch member group, filed a lawsuit against Romania’s energy ministry and Transgaz, the national gas grid operator, over significant irregularities in issuing permits for the construction of the Tuzla–Podișor gas pipeline.

The 308-kilometre pipeline – meant to connect the planned Neptun Deep offshore gas drilling project in the Black Sea with Romania’s grid – is currently being built with a deficient environmental permit and without a valid construction permit.

The original construction permit, issued in 2018, expired in 2021. Romania’s energy ministry had failed to renew the permit in due time and Transgaz commenced works on the pipeline in 2023 without a valid permit, the lawsuit argues.

There is also an insufficiently evaluated risk that the project could take a heavy toll on biodiversity. The environmental impact assessment only evaluated the expected influence of the project on eight protected areas the pipeline would cut through. Yet, despite a legal requirement, it omitted five other protected areas located right next to the pipeline route.

In addition, the Romanian environmental authorities failed to conduct a transboundary environmental impact assessment, as legally required by the Espoo Convention and EU rules, despite the pipeline route coming within 10 kilometres of the Bulgarian border and undercrossing the Danube River.

The environmental impact assessment that Transgaz did produce for the Tuzla–Podișor pipeline does not include a proper assessment of the climate impact of its infrastructure. On the heels of the hottest year on record, the failure to account for the greenhouse gas emissions this pipeline is expected to generate is a glaring omission.

Starting in 2027, the pipeline is expected to ship an annual 8 billion cubic metres of fossil gas from the Black Sea coast to the BRUA gas pipeline, connecting Bulgaria, Romania, Hungary and Austria. A yet undisclosed share of this gas is expected to power the Oltenia and Mintia power plants, and Transgaz expects Romania’s fossil gas consumption to double from 2027, supported in part by the pipeline.

While there is no publicly available information about where all this gas will wind up, Romania’s ongoing discussions with Hungary, its recent deal with Germany’s Uniper, and a memorandum of understanding signed with Serbia on a BRUA-linked gas interconnector indicate that some of it is intended for export.

The bottom line, though, is that the Tuzla–Podișor pipeline project is fundamentally at odds with Europe’s energy transition. The planned Neptun Deep project, which the pipeline is meant to serve, is run by OMV Petrom and Romania’s state-owned Romgaz. They claim that it could produce about 100 billion cubic metres of fossil gas over 20 years – right when Europe needs to slash its gas demand.

If these plans materialise, Neptun Deep and its associated pipeline infrastructure would be responsible for between 209 and 227 million tonnes of carbon dioxide equivalent, primarily from gas combustion, according to a 2024 report commissioned by Greenpeace Romania.

Alarmingly, the Tuzla–Podișor pipeline has received millions in EU funding. The project costs EUR 500 million, already around 35 per cent more than estimated seven years ago. And even though EU leaders have repeatedly vowed to phase out fossil-fuel subsidies, this gas project still received EUR 85 million from the Modernisation Fund in 2023, a key financial instrument designed to accelerate the shift away from fossil energy in Europe’s lower-income Member States. It also secured EUR 150 million from the European Investment Bank back in 2018.

Notably, this is not the first time the Modernisation Fund has been leveraged to support fossil gas projects, effectively subverting Europe’s energy transition. In Romania alone, a range of gas infrastructure projects were enabled by the Fund between 2021 and 2023, according to a Bankwatch analysis released last year. As of late 2024, the Fund has already channelled at least EUR 1.45 billion into fossil gas investments.

EU institutions – specifically the European Commission’s Directorate-General for Climate Action and the European Investment Bank – must avoid directing EU money to harmful projects. For this to be achieved, they must first ensure that prospective projects are subject to rigorous assessment in compliance with EU climate targets and the Paris Agreement. Meaningful due diligence is also required to bring them into alignment with these goals and all other applicable EU and national legal requirements. Had such scrutiny been applied to the Tuzla-Podișor pipeline, the project would never have seen the light of day.

Guidelines for selecting just transition projects in Ukraine

However, early alignment with the EU’s just transition legislation is essential for avoiding costly and time-consuming revisions in the future. Therefore, these principles and criteria should be embedded in Ukraine’s national and local just transition planning from the outset.

Ukraine’s 2030 national energy and climate plan and 2050 energy strategy have set 2035 as the target year for phasing out coal-fired power generation. On the path towards EU membership, Ukraine has also adopted the EU’s goal of climate neutrality by 2050.

Achieving this transition requires a comprehensive set of measures and policies. To this end, regulatory documents should comply with EU standards and directives to ensure consistency with EU Member States. This alignment will prevent the need for revisions and readoptions of relevant documents at a later date, streamlining Ukraine’s European integration over the coming years.

As part of these efforts, the Ukrainian government is currently developing a national programme to support the just transition of the country’s coal regions. Coal communities are also developing, or intend to develop, their own just transition measures for inclusion in relevant just transition and recovery plans. But to align with EU priorities, just transition projects and measures under these plans must abide by the principles and criteria already established for EU Member States.

In October 2023, Bankwatch published a guide to help local authorities fairly and objectively select from a wide range of projects aimed at achieving a sustainable energy transition. The guidelines aim to raise regional ambitions for decarbonising the energy sector and ensure funds are allocated in line with just transition objectives.

Here, we expand on the original guidelines by incorporating several key points relevant to Ukraine’s unique circumstances:

Ukraine is not yet an EU Member State and is therefore not subject to just transition planning requirements or eligible for funding under the Just Transition Mechanism. However, Ukrainian coal regions can develop plans equivalent to the territorial just transition plans required of EU Member States, design just transition projects, and seek funding from various sources. With Ukraine planning to phase out coal-fired power generation by 2035 and join the EU in the coming years, early preparation is essential.

The experience of EU Member States shows that a just transition cannot rely on a single funding source.

Ukraine must develop its own mechanisms to finance the just transition of coal and carbon-intensive regions.

These mechanisms should leverage financing from multiple sources, including EU funds. Therefore, the next Multiannual Financial Framework must include provisions for just transition funding in accession countries like Ukraine.

The Just Transition Mechanism is part of the European Green Deal, where environmental solutions play a key role. As a future EU member and a nation already impacted by EU policies, Ukraine has a vested interest in implementing European Green Deal provisions, particularly those supporting the just transition of coal regions. The Mechanism aims to mitigate the social, economic and environmental impacts of decarbonising carbon-intensive industries.

With much of Ukraine’s industrial infrastructure already damaged by Russian attacks, the need for a just transition framework is more urgent than ever for coal regions planning their recovery and reconstruction.

With these specific considerations in mind, it is essential that projects developed by representatives of Ukraine’s coal regions, as part of their recovery and just transition plans, align with decarbonisation criteria, particularly those recommended for EU Member States.

CEE Bankwatch Networks guides to selecting Just Transition Projects – in English and Ukrainian.

Hungary’s fracking shame: Green groups challenge expansion of controversial Corvinus project

Ever since the Hungarian government began promoting the Corvinus fracking project in southeastern Hungary, Friends of the Earth Hungary, Bankwatch and other environmental groups have sounded the alarm over this disastrous fossil energy project. Now, Corvinus Energy – a joint venture between state-owned MVM CEEnergy and US-based Horizon General contractors – is set to dramatically increase shale gas production.

Environmental concerns prompt legal action

In early January 2025, after the authorities approved a massive expansion of the shale-gas operation in Békés county, Friends of the Earth Hungary filed an administrative appeal with Hungary’s energy ministry.

Fracking, a method used to extract fossil gas or oil from shale, is notorious for its adverse environmental impacts. In recent years, at least 12 EU countries have restricted shale gas extraction by winding down operations, imposing moratoria, or outright banning the practice. Currently, Corvinus is understood to be the only active fracking project in the EU.

Fracking presented as a false solution

The Corvinus fracking under the guise of an energy emergency measure, with extraction commencing in February 2023. Yet, civil society groups have long warned that the intervention would likely aggravate water stress in the already drought-stricken region and undermine Hungary’s shift from fossil-fuel dependence to a sustainable economy based on renewable energy.

Indeed, initial measurements have already shown that shale gas extraction operations in Békés have worsened air pollution and led to significant emissions of the potent greenhouse gas methane through In fact, in 2023 alone, a quarter of the extracted gas – 18 million cubic metres – was wasted through flaring, a practice that breaches the EU’s methane regulation.

Water scarcity is already affecting local agriculture. Last year, precipitation loss in the county ranged between 150 and 200 millimetres, missing around 25 per cent of the annual average, with maize and sunflower growers reporting major yield losses. Increasing shale gas production would put an enormous strain on dwindling water resources, further impacting farmers in the region.

Government plans further expansion

Despite these concerns, the county authorities have greenlit a major expansion of the fracking project. During its first year and a half in operation, Corvinus produced merely 100 million cubic metres of fossil gas. Now, Corvinus Energy is seeking to extract 2 million cubic metres of gas and 1,800 tonnes of oil per day, along with a fourfold increase in the capacity of the Sarkad–Nyékpuszta gas processing facility .

And the government is on board. In December 2024, the county authorities granted a permit for the massive expansion, but without conducting a proper environmental impact assessment. Instead of accounting for the full range of impacts from drilling several dozen new wells at a depth of between four and five kilometres and ramping up fracking operations, the assessment primarily focused on the expansion of the gas facility.

Flawed environmental impact assessment

Worse still, the assessment was carried out a year and a half after fracking on the site had already begun. The document contains no mention of the project’s total water consumption or its expected total carbon dioxide and methane emissions. Additionally, the assessment neglected to consider the transboundary effects of the project, located a mere 13 kilometres from the Romanian border.

Crucial information on this reckless project, fast-tracked only because of the project’s ‘national economic priority’ status, have yet to be disclosed. Currently, there is no publicly available information concerning the timeline for the expansion, the exact number and location of planned shale gas wells, the potentially hazardous chemicals to be used in the fracking process, or the total amount of water to be drawn.

Calling a halt

In an effort to obtain this information, we requested the public mining documents pertaining to the project, but the national mining authority rejected our request without offering any explanations. Subsequently, we petitioned the Metropolitan Court of Budapest, and in late January, the judges ruled in our favour, ordering the authority to provide all relevant documentation concerning the project.

The Hungarian government must halt, not expand, fracking. The first step is for the Deputy State Secretary, who is responsible for handling cases involving the environmental authorities, to revoke the illegitimate authorisation of the Corvinus project’s expansion.

One foot in Europe: EU Interreg programmes advance the partnership principle in Ukraine.

Ukraine and Interreg

Interreg programmes, key components of the EU’s regional development policy, offer vital financial and technical support for Ukraine’s recovery and integration into European structures. We have previously discussed European approaches to public fund management, emphasising the significance of the European partnership principle and the role of monitoring committees in these processes.

Ukraine currently participates in several Interreg programmes focused on cross-border cooperation and regional development. In May 2024, the Ukrainian parliament ratified five international agreements, which will see the country secure financing through the EU’s Interreg and Interreg NEXT programmes, aimed at supporting broader cross-border and transnational cooperation.

The Interreg NEXT programmes involving Ukraine include the Poland–Ukraine Programme, the Romania–Ukraine Programme, the Hungary–Slovakia–Romania–Ukraine Programme, the Black Sea Basin Programme, and the Danube Region Programme. Additionally, in January 2025, Ukraine officially joined Interreg Europe, an interregional cooperation programme that seeks to help regions across the EU improve their public policies.

Programme focus and impact

Each programme supports projects that address shared priorities, including environmental protection, healthcare, sustainable tourism, and cultural cooperation. For instance, the Interreg NEXT Poland–Ukraine Programme funds initiatives in six Ukrainian regions, while the Romania–Ukraine Programme fosters environmental sustainability and social development across borders.

Indeed, the outcomes of these programmes have been encouraging. As of October 2024, Ukrainian participants have implemented 167 projects, totalling over EUR 91 million in funding. These projects not only improve local infrastructure and services, but also equip Ukraine with valuable experience in managing EU funds in alignment with European standards. As noted in the European Commission’s 2024 Enlargement Package report on Ukraine, this adherence is a critical step towards securing future EU membership.

Governance and oversight

A key feature of Interreg programmes is the role of monitoring committees, which oversee project selection and implementation. The regulatory framework for these committees is primarily governed by the Interreg Regulation and the Common Provisions Regulation, which outline the roles, responsibilities, and operational procedures for these committees.

In November 2024, Ukraine’s Cabinet of Ministers formally approved the management and control procedures for implementing the Interreg and Interreg NEXT programmes.

Importantly, this new resolution contains provisions for monitoring committees, which can include representatives from national, regional, and local authorities, as well as civil society and academic institutions.

This balanced representation ensures that all participating parties have an equal say in decision-making. By including monitoring committees in these procedures, Ukraine will gain invaluable experience in EU governance practices, including sound financial management and transparent project oversight.

Challenges and future directions

Despite these successes, however, challenges remain. Ongoing geopolitical tensions, particularly due to Russia’s invasion of Ukraine, have complicated cross-border cooperation efforts. Consequently, the need for enhanced coordination among stakeholders has become more pronounced as political contexts shift.

For example, some projects have experienced delays due to bureaucratic hurdles and insufficient coordination among partners, impacting their effectiveness and sustainability. Against this backdrop, it is essential that Ukrainian programme participants recognise the need to attract sustainable financing while acknowledging their own capacity to implement projects. Ensuring projects account for these realities is key to long-term success.

Interreg programmes offer valuable opportunities for Ukraine to engage with European partners and secure funding for development initiatives. However, the country must first navigate significant challenges related to funding stability, infrastructure recovery, project management capacity, institutional reform, regional disparities, environmental issues, and integration. Overcoming these obstacles will be crucial for maximising the benefits of participation in these programmes.

Interreg programmes offer Ukraine a robust platform to further develop its monitoring committees, providing a practical example of EU regional policy in action. As Ukraine continues on its path towards European integration, these new learnings will help to strengthen institutional capacity and bring the nation closer to its EU accession goal.

Rebuilding Ukraine: Opportunities for public participation with international donors

The Ukraine Donor Platform will engage with Ukrainian civil society organisations quarterly, yet political platforms must strengthen their role to ensure legitimate decision-making. In 2025, priority should be given to establishing detailed procedures for civil society participation, including submission timelines, follow-up processes, and improved communication.

The Ukraine Facility and Donor Platform

The European Union is providing EUR 50 billion in financial support from 2024 to 2027 to aid Ukraine’s recovery from brutal war. The objective is to address the social, economic, and environmental consequences of Russia’s war of aggression, ensuring long-term reconstruction, modernisation, and resilience. These funds are critical for rebuilding infrastructure, restoring essential services, and supporting vulnerable communities.

The Ukraine Donor Platform, established by the G7 in December 2022, coordinates financial support from international donors. Since its launch in January 2023, the Platform has brought together Ukraine, EU and G7 countries, international financial institutions, and 10 observer nations. Engaging civil society in this process is crucial for ensuring resources are allocated in a coherent, transparent, and inclusive manner.

Public participation in the Ukraine Facility

The Ukraine Facility operates similarly to other European funds such as the Recovery and Resilience Facility and the European Fund for Sustainable Development Plus. Given its alignment with Ukraine’s EU accession process, implementation of the Facility has significant long-term implications. For this reason, the process must be comprehensive and include robust public consultation mechanisms.

Since January 2023, Bankwatch has organised informal dialogues between the Ukraine Service of the Directorate-General for Neighbourhood and Enlargement Negotiations and civil society organisations. These meetings, held on seven occasions over two years, initially aimed to provide civil society organisations with a voice in shaping the Ukraine Facility Regulation. However, these informal dialogues have not evolved into formal consultation mechanisms.

At the national level, the Ministry of Economy has been overseeing the development and implementation of the Ukraine Plan under the Ukraine Facility. While the Ministry for Development is responsible for recovery and restoration, the State Recovery Agency and local self-government bodies handle reconstruction projects, serving as an intermediary for local governments lacking the capacity to implement projects independently. of the Ukraine Plan under the Ukraine Facility. While the Ministry for Development is responsible for recovery and restoration, the State Recovery Agency and local self-government bodies handle reconstruction projects, serving as an intermediary for local governments lacking the capacity to implement projects independently.

One positive aspect of the Ukraine Plan is its adherence to EU regulations on meaningful stakeholder engagement. This commitment to transparency, in line with EU funding best practices, requires authorities to co-design projects with affected communities. Implementation will be overseen by monitoring committees typically comprising socio-economic partners, managing authorities of EU Member States, regional and local bodies, and civil society organisations.

‘Opinions’ as an instrument for empowering civil society

Civil society and other socio-economic partners have the opportunity to submit opinions on implementation of the Ukraine Plan, as outlined in Article 4 of the Ukraine Facility Regulation. This provision allows organisations to report irregularities and provide feedback on government actions related to the execution of the Plan. However, despite this formal avenue of participation, the lack of clear procedures limits its effectiveness.

Some opinions have already been submitted to the Directorate-General, particularly regarding environmental concerns. For instance, Ukrainian non-governmental organisations have raised issues about deviations from environmental impact assessment and strategic environmental assessment requirements. However, these submissions have had minimal impact on decision-making structures, as no dedicated follow-up mechanisms currently exist. And while the European Commission acknowledges these inputs, there is no protocol for ensuring they are considered in funding assessments.

Recent updates indicate that a dedicated website and email will be introduced to facilitate submissions. However, this alone will not resolve the issue of accountability. Without specific guidelines on how opinions influence decision-making, organisations may be discouraged from investing time and resources in providing concrete recommendations.

Ukraine Donor Platform: Steps towards engagement

The Steering Committee of the Ukraine Donor Platform met with civil society organisations for the first time in April 2024. Held in Kyiv, the event brought together key stakeholders from civil society organisations as well as international partners and financial institutions to discuss economic growth. Discussions focused on reforms, economic challenges, and the most pressing areas of need, particularly regarding capacity limitations.

Following this initial dialogue, the Platform committed to holding regular meetings, including two Steering Committee dialogues and two expert-level dialogues on an annual basis. The second expert-level dialogue, held in November 2024, invited selected organisations to discuss regional recovery strategies. However, concerns persist about the selection process and the representativeness of the participants.

To improve future engagements, a more transparent and inclusive process should be established. Civil society organisations should have a clear pathway to propose discussion topics and drive the agenda. The Directorate-General, which steers the Platform’s Secretariat, should ensure that international donors consider the priorities of civil society when communicating with the Commission on future policies and funding allocations. A more structured approach in 2025 will be critical for streamlining the involvement of civil society going forward.

Local-level opportunities for civil society

Reconstruction efforts occur primarily at the local level, making municipal engagement crucial. The Ukraine Facility mandates consultations with local and regional stakeholders, including authorities, social partners and civil society organisations, yet implementation is inconsistent. While Ukraine has made progress in decentralisation, challenges remain in ensuring meaningful citizen participation.

The Ukrainian government has introduced legal frameworks to facilitate this engagement. For example, the 2023 amendments to the Cabinet of Ministers Resolution on Public Participation aim to improve consultation processes. However, according to the National Agency for Corruption Prevention, 30 per cent of regulatory decisions in 2023 bypassed public consultations, highlighting ongoing gaps in transparency and inclusivity.

Encouragingly, the Ukrainian Parliament recently adopted legislation to strengthen democratic processes at the local self-government level, providing additional engagement tools, including public hearings and citizen evaluations of authorities. It also grants the 6.5 million internally displaced persons in the country the right to participate in decision-making in their host communities.

Another progressive step is the pending local democracy law, which over 160 public organisations have urged the President to sign. The law would see the introduction of new mechanisms for public hearings, consultations, and participatory budgeting.

Partnership shows the way forward

Despite these advancements, practical challenges remain in institutionalising effective civic engagement in Ukraine’s public policymaking and stakeholder recovery partnerships. Inspiration can be drawn from how partnerships have been forged during the implementation of other EU funding instruments.

Importantly, the European partnership principle, which requires close cooperation between public authorities, economic and social partners, and civil society at all levels, offers valuable lessons for Ukraine’s reconstruction throughout the programming cycle.

However, while some civil society participation mechanisms exist, they remain incomplete and ineffective. In short, significant improvements are needed at the national level. Bringing about meaningful change will require amplifying the voices of civil society organisations in decision-making processes and ensuring robust consultations at all levels.

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