Reaching climate neutrality in Estonia: a progress update

Greenhouse gases in Estonia are following a negative trend as the total emissions fell from 18 687.4 kilotons CO2 equivalent in 2018, to 11 555.8 kt CO2e in 2020. Emissions have decreased for various reasons, such as increasing the share of district heating, greater renewable energy capacity, and efforts to renovate buildings for energy efficiency. Yet when analysing the main emitting sectors, it can be seen that there is much work to be done to reach climate neutrality in Estonia by 2050.

We identified the following key issues in each of the analysed sectors:

• The energy sector is showing a positive trend in terms of renewable energy produced and consumed, yet the pace of investment into new renewable energy capacities needs to grow considerably in the upcoming years (e.g. wind energy capacities which are expected to reach 2640 GWh by 2030 from 760 GWh in 2020) in order to effectively address price hikes and supply shortages.
• Currently the funding mechanism for renovations in the buildings sector is focusing entirely on apartment buildings and private houses, yet additional incentives are needed for renovating office, industrial, and commercial buildings in order to fulfil the climate neutrality target and the national target of 54 million m2 of buildings to be reconstructed by 2050. Targeting commercial, industrial and office buildings is also cost efficient because the investment required is modest compared to the CO2 savings potential.
• There is currently no government support for decarbonizing heavy industry in Estonia. There are existing plans for the upcoming years, for example the Ida-Virumaa region, in which the majority of Estonian heavy industry is located, receives EUR 340 million through the EU Just Transition Fund. Furthermore, the Estonian Recovery and Resilience funding includes the green transition for enterprises with an allocation of EUR 220.2 million.
• The Land use, land-use change, and forestry (LULUCF) sector needs attention. Since 2012 sequestering of carbon in the sector has decreased from -4 million tons of CO2e so that in 2020 it had become an emitting sector. There are no supporting measures in place to boost sequestering, and there is a need for greater efforts to curb emissions in the sector.
• The transport sector is struggling because of an ongoing decline in the number of people choosing to walk, cycle or use public transport. As part of the EU Effort Sharing Regulation, the transport sector has the largest emissions reduction potential.
• When it comes to agriculture sector, almost all of the suggested measures from 2019, as described below, have been adopted to some extent, yet emissions are still rising slowly yet steadily. Additional effort is needed to curb emissions in the sector, yet in many cases the savings from proposed measures would have an impact in other sectors, thus would not be reflected in the agriculture sector’s greenhouse gas inventory.

This study is commissioned and funded by the British Embassy Tallinn.