Reaching climate neutrality in Estonia

The study also concludes that the longer the delay with the strategically important decisions and the implementation of proposed measures, the more complex and costly becoming climate neutral and reducing greenhouse gas (GHG) emissions will become.

Moving towards the goal of climate neutrality requires a much faster and broader investments in energy efficiency and the use of renewable energy, as the measures and speed of implementation that we have today, would result in significantly higher GHG emissions in 2050 compared to the net zero emissions scenario.

Based on the data available today and based on the assumptions of this study, the public and private investment volume for the implementation of the measures covered by this analysis amounts to approximately 17.3 billion EUR for the period of 2021-2050. The prerequisite for this investment volume is that 85% of the measures analyzed in this report will be fully implemented and the remaining 15% will be implemented partially or not at all. The volume of investments is highly dependent on the key assumption of the climate neutrality scenario that was built in this study that assumed Estonia would meet most of its energy demand with the domestic energy production in 2050 also. Assuming large-scale import of electricity, the needs for the volume of investments would decrease by about 30-50%.

The cost of the climate neutrality scenario is not an additional investment compared to the 80% reduction target that Estonia has already adopted so far. It must be considered that over the 30-year period the costs of the technologies and other relevant parameters will change, so this investment volume is an indicative estimate that needs to be updated in the future.

In order to achieve this goal, it is necessary that all the stakeholders, both the private and public sectors, including all ministries, local governments, citizens and companies, contribute to the process. In addition, a change both in the production and consumption sector is required. From the total amount of 17.3 billion EUR that is expected to be invested in the analyzed measures, the main share in the amount of 13.1 billion EUR falls to the private sector. Activities funded by the public sector organizations (which include both public sector own investments and grants) amounts to approximately 4.2 billion €. These annual investments would account for about 4% of GDP in the next decade, about 2% between 2031-2040 and less than 1% between 2041-2050.

Achieving this objective during the implementation of the measures will in the long-term provide an opportunity (in addition to job creation)  to restructure and improve the competitiveness of the economy and to be better prepared for the future developments. Strategic investments in the next decade will support innovation and the creation of new high-value-added jobs in low-carbon sectors.

By investing in the development of human capital, it is possible to prevent the lack of technical competence (absence of necessary specialists). Changes in the structure of the economy is a natural process that can be designed
by the proposed (and other supporting) measures in such a way that the process has a positive long-term impact on direct cost-benefit accounting, on GDP and on employment.

Read the report in Estonian (summary in English on page 8-9).