On March 5, the Estonian government published the planned allocation of recovery funds through the EU Recovery Facility to different measures, along with rather brief and general descriptions of the measures, but not a full Recovery and Resilience Plan. A week of public consultations for selected measures that took place in March 2021 only provided little additional information. Overall, we find that the planned measures, with investments of €1.1bn, equaling 4% of Estonia’s GDP (2019), can make a positive contribution to the green transition, though more information on the specific implementation of the measures will be necessary for a final assessment.
Many measures aim to support the green transition, most notably by establishing a green fund for companies’ green transition and including investments into energy efficiency, energy grid, storage and renewables. However, due to a lack of details on measures and their implementation, there is a risk that several measures could adversely affect the green transition.
Green Spending Share
We find that Estonia’s draft recovery plan (RRP) achieves a green spending share of 25%, below the EU’s 37% benchmark. Furthermore, we find that 15% (€170) may have a positive or negative impact on the green transition depending on the implementation of the relevant measures, illustrating the importance of further scrutiny during the further planning, review and implementation of the recovery measures. Our calculation of the green spending share aims to mirror the approach used for the official assessment of national recovery plans (find more information here).
Our analysis covers the planned allocation of RRF funds published on March 5. It was written by Silver Sillak and Uku Lilleväli (Friends of the Earth Estonia - Estonian Green Movement) and Felix Heilmann (E3G). We are grateful to the Estonian Fund for Nature and to Magdolna Prantner (Wuppertal Institute) for providing valuable inputs.
Estonia’s draft RPP measures allocates €100m to a green fund which will provide investment support to companies that develop technologies for the green transition
Some of the planned measures for the RRP could potentially undermine the Green Deal. Due to the low level of detail provided about the measures, it cannot be ruled out that many of the proposed measures include only weak climate conditionalities that support resource-intensive, polluting and environmentally harmful projects, companies and sectors. These measures include supporting firms’ export capacity (€33m), adopting innovative and resource-efficient technologies (€23m), supporting more effective use of bioresources (€24m) and constructing a new transport terminal for Rail Baltic (€31m).
The Estonian Ministry of Economic Affairs and Communication has commissioned a study that will analyze the climate and environmental impact of digitization policies. The study will be finalized at the end of 2021 and will help Estonia choose the least environmentally harmful path towards digitalization.