Climate change is one of the greatest environmental, social and economic threats. Global surface temperature increased by 0.74 ± 0.18 °C during the last century. The Intergovernmental Panel on Climate Change (IPCC) has concluded that most of the observed temperature increase since the middle of the 20th century is caused by increasing concentrations of greenhouse gases (GHG) resulting from human activity such as fossil fuel burning and deforestation.

Figure1 shows that annual mean air temperature in Estonia has risen in recent decades.

Figure 1. Trend of annual mean air temperature at Võru and Ristna monitoring stations, 1951-2006 (Estonian Meteorology and Hydrology Institute)

Drivers

·         Population

Population decreased significantly in Estonia since 1991 due to emigration and a negative natural increase. The decrease continued in 2008 (Figure 2).

Figure 2. Population of Estonia in 1995-2009 (Statistics Estonia)

At the same time the number of births continued to increase – in 2008 there were 16 028 births and the total fertility rate rose to 1.66. In 2008 there were 16 675 deaths, 734 fewer than in 2007. The natural increase was negative, but the difference between the number of births and deaths has been below one thousand for many years (Statistical Yearbook of Estonia, Statistics Estonia 2009).

·         Economic growth

The growth of gross domestic product (GDP) accelerated after accession to the European Union in 2004, rising by more than 10 % in 2005 (Figure 3). Double-digit growth rates persisted for more than a year. Economic success was made possible by cheap loans. The situation was favourable for loan stock to increase with the expanding real-estate boom. During 2000–2007 the loan stock of households increased by more than a factor of ten. Enterprises could spare resources for expansion and their value-added thrived. In the prosperous economic climate the income of households increased rapidly which also contributed to the growth of domestic demand. But economic growth, brought on largely by loans, proved to be fleeting and ten years after the last crises the Estonian economy is once again in recession. At the beginning of 2008 a soft landing was expected but in the 2nd quarter GDP started to fall compared to the same period in 2007. During 2008 Estonian GDP fell by 3.6 % in real terms.

Economic cooling was a global phenomenon in 2008, affecting the majority of developed countries. By autumn 2008 the world’s economic climate indicator fell to the lowest level for 18 years – assessments of the current situation and future expectations worsened (Statistical Yearbook of Estonia, Statistics Estonia 2009).

Figure 3. Gross domestic product chain-linked volume (reference year 2000), €’000 000 (1995-2008), Statistics Estonia

·         Transport

 Road transport

The number of road vehicles – passenger cars, trucks, buses and motorcycles – has increased considerably since 1990 (Figure 4). The use of public transport, in contrast, has decreased.

Figure 4. Total number of road vehicles (1990-2007), Estonian Environment Information Centre

In 2008 buses carried about 122 million passengers – 12 % fewer than in 2007. Fewer passengers used city buses, trams and trolley buses compared to 2007. Bus within counties and rural municipalities and long-distance ones between counties transported fewer passengers than in 2007. Increases in public road transport fares at the beginning of 2008 as well as a decrease in the number of county and national long-distance buses contributed to the decreasing number of passengers. The increase in the number of vehicles was mainly due to increase in the number of passenger cars (Statistical Yearbook of Estonia, Statistics Estonia 2009).

·         Energy demand

The energy sector is the main source of GHG emissions in Estonia. The substantial amounts of energy-related emissions are caused by extensive consumption of fossil fuels for power and heat production. Estonia is among the top ten EU countries for primary energy production per capita, exceeding production in the other Baltic states by about a factor of three. The trend for primary energy production is shown in Figure 5. Economic growth is the reason for the step by step increase in primary energy production.

            Figure 5. Electricity, gross production, including own use by power plants(1995-2008) (Statistics Estonia)

In 2008 primary energy production of Estonia fell, mainly due to the fall in the use of oil shale as a fuel in electricity production. The fall in electricity generation was caused by a decline in exports of 16 %. Exports to Latvia decreased by nearly a factor of two compared to 2007. At the same time, imports from Lithuania increased by about a factor of four.

Fuel combustion

An amount of oil shale extracted in 2007 was the largest for 10 years and was caused by the increase in electricity production (Figure 6).

Figure 6. Consumption of oil shale, 2000-2008 (Statistics Estonia)

Combustion of natural gas and other fuels depends on energy demand and the economic situation. There was a stabilisation period in the first half of the 1990s and a period of economic growth after 2000 which resulted in increased combustion of natural gas and diesel oil (Figures 7 and 8). There has been less change in the consumption of other types of fuel (Figure 8).

Figure 7. Consumption of natural gas, 2000-2008 (Statistics Estonia)

Figure 8. Consumption of different fuel types, 2000-2008 (Statistics Estonia)

Household consumption

The overall economic growth and real estate development has resulted in an increase in electricity consumption in households (Figure 9).

Figure 9. Electricity consumption in households, 1960-2008 (Statistics Estonia)

Consumption of different types of fuels in households is shown in Figure 10.

Figure 10. Consumption of coal, peat, liquefied gas, light fuel and diesel and in households, 1999-2008 (Statistics Estonia)

 Transport

Consumption of fuels by transport is shown in Figure 11. The use of light fuel oil and diesel increased rapidly at the beginning of the century. The number of vehicles is increasing steadily but the efficiency of engines is also increasing.

Consumption of motor gasoline and aviation gasoline is rather stable. Heavy fuel oil is now almost out of use.

Figure 11. Consumption of transport fuels,1999-2007 (Statistics Estonia)

Industry

Consumption of fuels by industry has been increasing for several years due to economic growth (Figures 13 and 14). Electricity consumption by industrial activities is also increasing (Figure12).

Figure 12. Electricity consumption in industry including the mining industry, excluding own use by power plants, 1995-2008 (Statistics Estonia).

Figure 13. Consumption of coal, oil shale and light fuel and diesel by industry, 1999-2008 (Statistics Estonia)

Figure 14. Consumption of natural gas by industry, 1999-2008 (Statistics Estonia)

·         Agricultural demand

The area of utilised agricultural land increased by 4 % between 2004 and 2008 to 802 300 ha., with the sown area of field crops increasing by 17 % to 577 400 ha in 2008. All areas where agricultural products are produced are included in agricultural land.

The number of cattle, including dairy cows, has been stable or decreased slightly between 2004 and 2008. At the end of 2008, there were 237 900 cattle in Estonia of which 100 400 were dairy cows. The number of pigs decreased by 4 % compared to 2007 to around 365 000 at the end of 2008. The number of sheep and goats has almost doubled between 2004 and 2008. The number of poultry reached the level of 2005-2006 (Statistical Yearbook of Estonia, Statistics Estonia 2009).

Agricultural production per inhabitant has increased steadily in recent years. Overall agricultural output for 1995-2007, in basic prices of the previous year, is shown in Figure 15.

Figure 15. Agricultural output in basic prices of the previous year, 1995-2007 (Statistics Estonia)

·         Industrial activities

Overall economic growth has resulted in an increase in industrial activity in recent years (Figure 16). The steady growth in industrial output, around 10 % for some years, has slowed slightly: in 2007 it increased by about 7 % due to a slowdown in the growth of manufacturing. The production of manufactured goods increased by 12 % in 2004, but only 6 % in 2007. There were more than 6 200 operating industrial enterprises in 2007, about 5 900 of them in manufacturing. The manufacture of wood and wood products was the largest branch of manufacturing with more than 1 100 enterprises, followed by the manufacture of metals with about 960 enterprises.

Figure 16. Volume index of industrial production by economic activity, 1992-2008. 2000 index = 100 (Statistics Estonia)

Of all the branches of manufacturing industry, the ones with the fastest output growth have been electrical machinery and optical instruments; pulp, paper and paper products; metals and fabricated metal products; motor vehicles, trailers and semi-trailers; and other transport equipment. Manufacture of wood and wood products, which had been growing steadily for years, was already slowing in 2006 and went into decline in 2007 due mainly to a shortage of raw materials. Growth in the most important branch of manufacturing in Estonia – manufacture of food products and beverages – which remained around 5-6 % during previous years (Statistical Yearbook of Estonia, Statistics Estonia 2009).

·          Forestry

About 48 % of the territory of Estonia, or about two million hectares, is covered by forests (forest stands).

Forest total felling has been between 60 and 80 ha per year for several years, depending mainly on the price of wood (Figure 17). Reforestation areas assessed for the years 1991-2008 are shown in Figure 18 (Statistics Estonia).

Main reasons for forest destruction are windfalls, forest disease, wildlife damage, unfavourable weather conditions, forest fires and insect pests. Tree damage is caused by leaf pests, root rot, wildlife and unfavourable weather conditions.

Figure 17. Forest total felling, 1999-2006 (Statistics Estonia)      Figure 18. Reforestation, 1991-2007 (Statistics Estonia)

Pressures

·         Emissions and sinks of GHG

GHG emissions decreased by 47.49 % between 1990 and 2007. This decrease was mainly caused by the transition from a planned to a market economy and the successful implementation of the necessary reforms.

In 2007 the total emission of GHGs, measured as carbon dioxide equivalent (CO2-eq), was 14 115.63 Gg. Without CO2 from land use, land-use change and forestry (LULUCF) the total was 22 018.68 Gg. Figure 19 shows trends in total emissions for 1990–2007 while Figure 20 shows GHG trends by source group.

In 2007, the most important GHG in Estonia was CO2, contributing 86.71 % to total national GHG emissions expressed in CO2-eq, followed by methane (CH4), 7.83 %, and nitrous oxide (N2O), 4.79 %. Fluorocarbons (‘f-gases’) account for about 0.66 % of total emissions (Figure 21, a). The Energy sector accounted for 86.69 % of total GHG emissions, followed by agriculture, 6.05%, industrial processes, 4.09 %, and waste, 3.17 % (Figure 21, b).

Figure 19. Overall development of GHG in Estonia, CO₂-eq (without CO₂ from LULUCF) (Nation Inventory report, 2009 submission)

 

Figure 20. Greenhouse-gas emissions trends, by source groups, CO₂-eq (Nation Inventory report, 2009 submission)

Figure 21. GHG emissions in 2007 by sectors (a) and by gases (b).

Scenarios

Two scenarios for GHG emissions are presented in Estonian Report to Article 3.2 of monitoring decision (year 2009 submission). The With Measures (WM) scenario evaluates future GHG emission trends under current policies and measures. In the second, the With Additional Measures (WAM) scenario, a number of additional measures and their impacts are taken into consideration.

• WM scenario formulation for 2006–2020

Several studies made on the development of the Estonian energy supply have shown that the level of GHGs and especially CO₂

emissions cannot not be reduced without applying special measures. For the elaboration of the required complex of measures, the plan for renewable source utilisation outlined in the Estonian energy development projections was applied. Minimum limits were set for the amount of electricity produced from renewable sources and for the share of biofuels used in the transport sector. According to these outlines, the following minimum limits for renewable energy source utilisation for electricity production were projected:

Table 1. Renewable energy sources [PJ/y] for electricity and heat production (Estonian Report to Article 3.2 of monitoring decision, 2009)

Similarly minimum shares of biofuel use in the transport sector were introduced.

Table 2. Minimum level of biofuel use in the transport sector (Estonian Report to Article 3.2 of monitoring decision, 2009)

Tables 1 and 2 together form the essence of the WM scenario. This scenario also includes the building of an additional fluidised bed unit in the period up to 2020.

• WAM scenario

For constructing the WAM scenario the following additional requirements were added to the set of data used for the WM scenario: building of additional offshore wind farms with an annual electricity production of 4 PJ. As a result, the energy contributions for this scenario were set up as follows:

Table 3.  Energy from renewable [PJ/y] by WAM scenario (Estonian Report to Article 3.2 of monitoring decision, 2009)

The same conditions as for scenario WM apply to the use of renewables in the transport sector. The WAM scenario also assumes the building of the second block in the Narva powerplant.

The starting points of the WAM scenario are:

Energy

Table 4. Consumption of primary energy source by sources in the WAM scenario in absolute and relative amounts in 2006-2020 (Estonian Report to Article 3.2 of monitoring decision, 2009)

Table 5.  Electricity consumption in the WM and WAM scenarios in 2006–2020, GWh (Estonian Report to Article 3.2 of monitoring decision, 2009)

Table 6.  Supply of electricity by the WAM scenario in 2006–2020 (Estonian Report to Article 3.2 of monitoring decision, 2009)

Emissions from the Industrial Processes sector

Considering emissions from other sources in the WAM scenario compared with those in WM scenario, it can be concluded that the emissions from the Industrial sector do not change significantly between the scenarios. The emissions trends and values in the WM scenario could be followed in WAM scenario. In general, the changes in CO2 coming from other sources do not influence the development of Estonia’s energy supply.

Table 7. CO2 emissions from other sources in the WAM scenario in 2006-2020 (Estonian Report to Article 3.2 of monitoring decision, 2009)

Projections of GHG emissions

Projections of total aggregated emissions, converted to CO2-eq for three scenarios WA, WAM and Without Measures (WOM) for 2005-2020 are summarised in Table 8 and Figure 22. The latter illustrates the level of aggregated emissions corresponding to the national reduction target under the Kyoto Protocol (2008-2012) and Post-Kyoto target (2012-2020).

Table 8. Projections of total aggregated GHG emissions, Gg CO2-eq (Estonian Report to Article 3.2 of monitoring decision, 2009)

Figure 22. Historic and projected emissions of GHG, in Gg CO2-eq (Estonian Report to Article 3.2 of monitoring decision, 2009)

According to the Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their GHG emissions to meet the Community’s GHG emission reduction commitments up to 2020, Estonia can increase its GHG emissions by not more than 11 % compared to 2005 (Annex II of the Decision). That means that Estonia should not exceed the level of 21 797.39 Gg CO2-eq of total GHG emissions.

Projected removals from sinks

Projected removals from sinks are presented in the Table 9.

Table 9. LULUCF projections (Report pursuant to Article 3.2 of Monitoring Decision, 2009)

Kyoto Protocol

Estonia ratified the Kyoto Protocol on 14 October 2002 (RT II 2002, 26, 111, RT I 2004, 43, 298). The aim of Kyoto Protocol is to decrease amounts of GHG emissions by 5 % during the years 2008 - 2012 compared to the base year of 1990 among Annex I parties.

There are 3 Flexible Mechanisms aimed to reach this purpose:

• joint implementation – JI
• clean development mechanism – CDM
• emissions trading – ET

Two of these mechanisms are used in Estonia: JI and ET.

On 5 May 2004 the Government approved Ambient Air Protection Act (RT I 2004, 43, 298) where § 153 changed the Law for Ratifying Kyoto Protocol. Amendment to the Ambient Air Protection Act from 11 March 2007 regulates the use of JI and the issue of double counting concerning linking the EU Emission Trading Scheme with Kyoto flexible mechanisms.

Joint implementation

In 1993 Estonia started cooperation with Sweden on pre-JI projects – activities implemented jointly – where no actual emission reductions were transferred. Altogether 21 projects were implemented. Information on these projects is available at the UNFCCC website.

Estonia has signed Memorandums of Understanding with Austria, Denmark, Finland, the Netherlands and Sweden. Estonia is one of the Parties of the Agreement on a Testing Ground for Application of the Kyoto Mechanisms on Energy Projects in the Baltic Sea Region. So far JI projects have been implemented in cooperation with Austria, Finland, Sweden and the Nordic Environment Finance Corporation as Fund Manager for the Testing Ground Facility. Execution of JI projects brings additional investments to Estonia in the form of technology and knowledge. The main reason for the Estonian companies and project owners being interested lies in the fact that implementing the JI mechanism is a good opportunity for raising additional financing of environmentally friendly energy projects, which might otherwise be economically unfeasible. Estonia has seven early-mover projects that started generating emission reductions before 2008 and for those years Assigned Amount Units (AAUs) will be transferred to the investor countries. During the commitment period 2008-2012 all projects will generate Emission Reduction Units (ERUs). Up to now, eight projects have been approved and implemented, resulting in total emission reductions of 1.47 Mt CO2-eq by 2012 (Figure 23).

Figure 23. Emission reductions from JI projects implemented in Estonia (2002-2012)

Emission trading under the EU Emission Trading Scheme

Estonia’s first National Allocation Plan (NAP) for the EU Emission Trading Scheme (EU ETS – Directive 2003/87/EC) for years 2005-2007 included 43 installations. District heating installations with a capacity exceeding 20 MW formed the largest group – 20 units – while five major installations owned by AS Eesti Energia generate electricity only, and there was also one combined heat and power plant included; the rest of installations were industrial ones. The first NAP for GHG emission allowances delivered the right to emit 56.9 Mt CO2 during 2005-2007. This was based on the assumption of satisfying increasing electricity consumption in Estonia as well as meeting the opportunity for increasing electricity exports.

The second allocation plan (NAP 2) for the 2008-2012 period adopted by the government comprises 122.8 million allowances (24.6 million per year) from 47 installations. In May 2007 the European Commission endorsed Estonia's national plan with the condition that certain changes would be made, including an essential reduction in the total number of emission allowances applied for. The cleared annual allocation is 12.7 Mt CO2 allowances, 47.8 % less than Estonia had applied for. Based on the decision of the EC, the NAP 2 was brought into force on 20 December 2007 (Decree no. 257). Nevertheless, the legal action was initiated in the European Court of Justice (case T-236/07) against the EC over its decision to reduce the CO2 emission gap under the phase 2 of the EU ETS. In its judgment of 23 September 2009 the European Court of First Instance annulled the European Commission decision, deciding that by imposing a ceiling on emission allowances to be allocated, the Commission had exceeded its powers.

Regarding activities under the Kyoto Protocol, in August 2009 the Government decided to sell excess Assigned Amount Units through the Green Investment Scheme. A special working group with participants from the Ministries of the Environment, Finance, Foreign Affairs and Economic Affairs and Communications was created for conducting negotiations with possible buyers. Agreements will be approved by the government and signed by the Minister of the Environment. The Ambient Air Protection Act is in the process of being amended to add the procedure for international emission trading through Green Investment Scheme.

Draft National Long-term Development Plan for the Fuel and Energy Sector until 2020

The development of the main energy indicators until 2020 as forecast in the Draft National Long-term Development Plan for the Fuel and Energy Sector until 2020 is presented in Table 10.

Table 10. Main goals of the Estonian Energy sector (Report pursuant to Article 3.2 of Monitoring Decision, 2009)

Policies implemented to reduce emissions of GHGs

·         National Programme of Greenhouse Gas Emission Reduction for 2003-2012

In April 2004 the Government approved the National Programme of Greenhouse Gas Emission Reduction for 2003-2012 (RT L 2004, 59, 990).

The National Greenhouse Gas Abatement Programme 2003-2012 is the only programme where reaching the Kyoto target has been set as a main objective. The main goal of the programme is to ensure compliance with targets set by the UNFCCC and the Kyoto Protocol. The long-term objective of the national programme is a reduction of GHG emissions by 21 % by 2010 compared with the 1999 emission level.

The sub-objectives of the programme are:

• determining the possibilities for reducing anthropogenic emissions of GHGs and promoting measures for reducing human impact of potential climate change;
• developing the flexible mechanism of JI according to the principles of the Kyoto Protocol to reduce GHG emissions;
• determining project themes for Estonia, suitable for JI on the basis of the Kyoto Protocol and preparing a relevant database;
• increasing the energy efficiency of the Estonian economy – reducing energy intensity.

The quantitative targets of the programme by sectors are given in relevant sections of the current report. It has to be emphasised that as the programme was developed in 2002 several items and targets are out of date and the programme therefore needs up-dating. Till now, no research for analysing its implementation has been carried out.

No other legislative arrangements, administrative procedures or programmes have been developed specifically for meeting the commitments under the Kyoto Protocol.

International, national and local responses

·         European Community legislation

The list of main climate- and energy-related targets set in various legal acts of the EU for Estonia are given in Table 11.

Table 11. Energy- and climate-related quantitative targets in EU legal acts for Estonia (Report pursuant to Article 3.2 of Monitoring Decision, 2009)

·         Climate and energy package, 2020 targets

In December 2008 the European Parliament adopted a set of legislative documents – the so-called EU climate and energy package – for the gradual transformation of Europe into a low-carbon economy and for increasing energy security. An agreement has been reached on legally binding targets, by 2020:

• to cut GHG emissions by 20 %;
• to establish a 20 % share for renewable energy in final energy consumption;
• to improve energy efficiency by 20 %.

Regarding reduction of GHG emissions, the package contains an offer to go further and commit to a 30 % cut in the event of a satisfactory international agreement being reached.

The Directive 2009/28/EC sets legally binding targets for each EU member state, in order to reach the EU aggregated target of a 20 % share of renewable energy by 2020. It creates cooperation mechanisms for achieving the targets in a cost-effective way. Several administrative barriers and other burdens will be removed, confirming the 10 % target for renewables in transport. Biofuels sustainability criteria are set to ensure that only biofuels that have no negative environmental impact are supported. The directive also has implications for small-scale emitters in sectors including transport, buildings, agriculture and waste. By 2020, emissions from these areas are to be reduced by an average of 10 % compared to 2005, shared out between Member States according to differences in GDP per persona. National targets were set for Member States, together with a linear legally binding trajectory for the period 2013-2020 with annual monitoring and compliance checks.

Estonia has committed itself to achieve by 2020 a share of energy from renewable sources in gross final energy consumption of 25%.

·         Energy efficiency

National Energy Efficiency Programme for 2007-2013

An improvement of energy efficiency can be considered as a goal of increasing priority for the government. A new National Energy Efficiency Programme for 2007-2013 has been prepared, through which investments will be made in energy efficiency, relevant information will be made more widely available and consumers will be informed about opportunities to conserve energy. The programme is one of the documents prepared for implementation of the National Long-term Development Plan for the Fuel and Energy Sector Until 2015 that was approved in December 2004. The energy efficiency programme determines areas that need to be prioritised in order to meet fuel and energy saving goals. The programme also sets strategic aims and objectives for priority areas, as well as measures for achieving these objectives. It also takes into account the task of achieving the indicative energy conservation objective set by the Directive 2006/32/EC, the saving of 9 % of final energy consumption during the period of 2008-2016.

The main objectives of the programme are:

• dissemination of energy efficiency information;
• availability of skills and experts;
• increasing efficiency in the consumption, production and transfer of fuels and energy;
• performing tasks arising from the EU energy efficiency policy.

In the programme it is estimated that for investments aimed at increasing efficiency in the fields of consumption, production and transfer of fuels and energy a total of 1.5 billion EEK (€96 million) is needed during the period up to 2013.

Abbreviations