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

Governments from the 20 wealthiest nations (G20) pledged to inject trillions of dollars into the global economy to recover from the economic impacts of the  Covid-19 crisis. This was a golden opportunity to use the funds to accelerate the clean energy transition. In order to track Covid-19 recovery packages from a climate and energy perspective, 14 expert organizations from around the globe launched, among them SEI, which contributed by compiling data for Estonia.

Andrea Lindblom / Published on 12 September 2022


Brigita Tool

Junior Expert (Climate, Energy and Atmosphere Programme)

SEI Tallinn

The Estonian data were collected and reviewed by Climate, Energy and Atmosphere team Programme Assistant Karina Suik, Expert Kristel Nõges and Programme Assistant Brigita Tool.

What did you find out about Estonia’s spending on a “green 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.

Can you give examples of where the government made green investments without any conditions?

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.

If we look at the Tracker, we see a spike in unconditional investments in fossil fuels from the fall of 2021 onwards. Why is that?

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.


Graphic: Energy Policy Tracker

If you were to grade Estonia’s green recovery spending compared to other European countries, what grade would you give the country?

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.

You participated in meetings with researchers compiling other countries’ data for the Energy Policy Tracker. Did anything that you learned in these meetings catch you by surprise?

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.

As we emerge into a world that is learning to live with Covid, what policies would you like to see from the Estonian government to drive a greener development of Estonia?

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.

Topics and subtopics
Energy : Renewables / Governance : Finance
Related centres
SEI Headquarters, SEI Tallinn

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