Peep Mardiste

Estonian options in climate policy 27.11.2008

There were many events which suggested such development. In 1972 the UN held its Conference on Human Environment in Stockholm which raised the issue and eventually lead to establishment of UN Environment Programme (UNEP) in Nairobi, Kenya. Even more groundbreaking was 1972 report “Limits to Growth” by the Club of Rome. Based on careful modeling, the report suggested that many key non-renewable natural resources will be depleted rather soon if current over-consumption is maintained. [1] However the raising environmental consciousness of early 1970s didn’t lead to necessary changes that we are discussing again three decades later.

Differently to the days of oil crisis in 1970 the environmental issues will not drop from policy-makers’ spotlight in 21st Century as climate change will be shaping the very way our societies function. Rather relaxed attitude towards use of limited natural resources is slowly changing and that change is probably irreversible. Having caused major part of historical pollution, the developed countries in North are to take the lead in action for combating climate change.

Even being a relatively small country, Estonia is a rather big air polluter. Magnitude of the potential challenges caused by man-made atmospheric pollution has been widely recognized globally just in last decade or so. However the cause of today’s challenges is the cumulative pollution load released into atmosphere throughout the last century. Thus the claim sometimes used that Estonia’s responsibility for challenges such as climate change are small as it’s current pollution load is relatively small is invalid. Estonia’s main historical man-made source of both carbon and sulphur emissions, oil shale industry dates back already to the 1910s. With extremely heavy pollution loads during Soviet industrialization period especially in 1970s and 1980s alone shall make Estonians feel the responsibility for playing active role in today’s actions to curb the climate change. If judged by practical implementation of practical measures for limiting climate change such recognition is unfortunately not there in Estonia.

Evolution of global climate policy and Estonia’s role

Main anthropogenic cause of climate change is release of carbon to the atmosphere via burning of fossil fuels such as coal, oil or gas. Energy sector (both in process of extraction of fossil fuels and in energy production in power plants) and transport sector through use of gas or diesel in engines are key sectors of such carbon release. As the problem became slowly recognized as potential global challenge, the first major global attempt to introduce measures for limiting the use of fossil fuels dates back to 1980s. Long discussions and preparations for some king of international carbon tax unfortunately were unfortunately not successful. Thus almost a decade was lost in preparations for creation of global regime for climate protection.

As the idea for carbon tax had failed, perhaps less ambitious measures were brought into discussion and in 1992 Rio Conference the UN Framework Convention on Climate Change (UNFCCC) was adopted. The climate convention is an international treaty aiming at international cooperation for stabilizing and later decreasing the emissions of greenhouse gases that cause climate change. The long-term goal of the convention is to achieve stability in atmospheric concentration of greenhouse gases to a level which would avoid dangerous anthropogenic interference with natural climate system. Such stability has to be achieved in timeline during which ecosystems would be capable to naturally adapt to the changed climate and for humans to remain able to feed the global population and to develop its economies in a sustainable way.[2]

The major part of the historical emissions of greenhouse gases originated from the North. Thus it’s obvious that for international action those countries should take the biggest responsibility. While negotiating the setup of the climate convention in early 1990s it was however already visible that in the near future many industrializing countries in the global South are to become major polluters, too. Back in 1994 total anthropogenic emissions in developed countries[3] were 11.7 Billion CO2 equivalent tons of greenhouse gases.[4] To compare, the emissions of the single biggest polluter, the USA, were 6.5 billion tons in 1995. As a compromise, only developed countries took a binding commitment with the Kyoto protocol to start limiting the emissions of greenhouse gases.

Under the UNFCCC the participating governments are:[5]

·        gathering and sharing information on greenhouse gas emissions, national policies and best practices

·        launching national strategies for addressing greenhouse gas emissions and adapting to expected impacts, including the provision of financial and technological support to developing countries

·        cooperating in preparing for adaptation to the impacts of climate change

To create a practical framework for achieving the aims of UNFCCC, the Kyoto protocol was signed by signatories of UNFCCC in 1997. As an average, developed countries agreed to cut emissions of greenhouse gases by 5.2% by 2012 compared to original emissions in 1990. As an illustration of difficulties linked to the implementation of such wide global agreements the Kyoto protocol entered into force only in 2005, 14 years after the climate convention was signed by heads of state at the Rio Conference. Challenges however remain as the biggest emitter of greenhouse gases, USA has not yet ratified the Kyoto protocol.

Despite the fast growing anthropogenic emissions of greenhouse gases in industrializing countries such as China or India, developing countries have no international commitment to limit their emissions. It’s however evident that such countries are to take commitments of kind or another for the second stage of Kyoto protocol after 2012.

After re-gaining its independence in August 1991, Estonia started to develop its approaches to international environmental policy. Estonia joined the preparations for the UN climate convention at a rather late stage but became however a signatory to the convention at its launch in Rio de Janeiro of June 1992. The Rio Conference was the first United Nations summit where Estonia participated on the highest political level, which lead to the official birth of two of the most important global environmental regimes – the climate change regime and the biodiversity regime.[6]

Development of its national climate policy has actually been so far rather relaxed exercise for Estonia. As in many other policy arenas, Estonia started to follow the example of the EU in its approach to international negotiations already long before it joined EU in 2004. When Kyoto protocol was negotiated and agreed in 1997, Estonia took exactly the same commitment of 8% reduction of greenhouse gases emission as the European Union on average. After joining the EU, Estonia has rather been in the laggards’ camp vis-à-vis development of strong climate policy.

Key parties in international climate policy

Similarly to any other international policy field, there are key players whose commitment is vital for success in climate policy. French economist and current member of the European Parliament Alain Lipietz has very strikingly classified countries into different camps when describing the situation in the early years of climate policy formulation.[7] According to him, the lead was taken by the rich and in their energy production greenhouse gas-efficient countries, willing to develop their technologies further. This camp included Scandinavian countries, Germany, France, Switzerland and Japan that called for a precautionary principle to be used already in late 1980s when climate change wasn’t as visible and unquestionable challenge as it is today. Lipetz has also described another distinctive camp of countries that started to block the development of international climate regime. Those included USA, ex-Socialist countries, South Africa and China as fossil energy wasters and which were at the same time not among those whom the adverse effects of climate change would hit first.

One could say that the driving force in international climate policy has been the European Union as in most global environmental questions. With strong backing of EU’s environmental policy champions, the EU was pushing hard for ambitious and binding emission cuts in the Kyoto protocol. The German red-green federal government of 1998-2005 and the attention to climate by Tony Blair in his last years in office surely played a positive role. In its March 2007 Summit the European Council took voluntarily rather ambitious targets for limiting the emissions of greenhouse gases, showing a positive example that it hopes other key players will follow. Although the strong commitment by the EU is welcome as encouragement to others, its action alone can not bring about significant change. In 2007 the EU counted for 12% of global anthropogenic emissions of greenhouse gases.

Besides the European Union the key player in global climate policy is the US with a global share of 21% of greenhouse gas emissions in 2007. On the one hand, the US has been classified by Lipietz as key party working against the creation of global climate treaty in 1990s and heavily criticized throughout the last decade for undermining international joint efforts to combat climate change. The most notorious illustration of such a position was perhaps the statement by George Bush senior at the 1992 Rio Conference: ‘Our way of life is not subject to negotiation.’ On the other hand, the picture is not that white and black and one can today observe the slow comeback of the US to international negotiation tables.

An interesting example of the undefined nature of US climate policy is visible during the ongoing 2008 presidential race, similarly to the one back in 2000. Perhaps everyone interested in politics carries his own memories linked to epic of counting of the votes in Florida during 2000 American presidential election. Environmental policy scholars and practitioners have perhaps very specific memories of the long lasted uncertainties of the election results. During dragging recounting of votes the annual UN climate convention conference of the parties was held in the Hague, Netherlands. One of the key questions was once again whether and under which circumstances the United States would join Kyoto protocol. Daily maneuvering of rather big US delegation at the conference wasn’t easy. Republican presidential candidate George W Bush promised to stay out of the Kyoto protocol while his Democrat contender Al Gore was expected to join negotiating team in Hague for joining of Kyoto protocol if elected as the president. As days passed with re-count of votes in Florida, the US delegation had difficult times for setting clear goals in the negotiations. By the end of conference the win of Bush junior was announced and US delegation remained in its earlier position of continuing with bilateral approach to climate policy.

Yet the harsh rhetoric of George Bush junior hasn’t played the US hopelessly into the corner. Even though the Republican administration considers the Kyoto protocol to decrease competitiveness of US businesses, it’s increasingly the private sector which is the driving force for implementation of climate policy in United States. It didn’t take long for private sector to figure out that while their competitors abroad are pushing for innovation in order to become more carbon neutral, US businesses are loosing in globalized market in the long run. It’s difficult to win with polluting track if markets are becoming increasingly environmentally conscious and call for carbon neutral products. Quite differently to earlier Global Climate Coalition, an anti-Kyoto business group, other business initiatives such as US Climate Action Partnership help to spread the message quick and call for strong national legislation.[8] Range of practical measures initiated by Governor Arnold Schwarzenegger in California[9] and ongoing legislative discussions in Congress show that the deadlock may soon be over.

I am confident that the US will join the next international climate treaty no matter who takes the seat in the Oval Office in January 2009. It’s important not just because US is second biggest source of anthropogenic greenhouse gases. It’s important because it would be taken as a signal in emerging markets and wide across global South. It’s far easier to convince China and India to taking climate targets if both EU and US are part of the game. According to Lipietz, China, along with countries like India, Brazil, Mexico and Malaysia have been using an ‘accusation strategy’ from the 1990s, denouncing the responsibility of the North in the past for the high concentration of greenhouse gases in atmosphere to avoid the precautionary principle to be used by global South. China is however showing signs of interest in becoming more greenhouse gas-efficient. The country which opens as average one new coal-fired power plant a week surely must be the target of much needed technology transfer from North.

Climate policy options and Estonia

According to scientists, the situation with climate change looks rather grim. The predictions by the most respected collection of climate scientists, the Intergovernmental Panel on Climate Change (IPCC), are getting more alarming by year. While parties of the Kyoto protocol took after difficult bargaining commitment to reduce emissions of greenhouse gases by 5.2% on average, the IPCC calculates that 50-85% global reduction on 2000 levels is needed by year 2050 in order to stabilize the climate.[10] In a report commissioned by UK government, Sir Nicholas Stern showed in 2006 that global action for stabilizing the climate would cost annually 1% of global GDP up to 2050 while no action would cost at least 5% of global GDP annually as result of climate change.

As the Kyoto expires in 2012, preparations are underway for a new global climate regime to take effect after 2012. While negotiations are continuing in framework of UN climate convention, there are voices calling for deal to be achieved outside the clumsy UN system. For example, the US held international high-level talks in September 2007 and in January 2008 with major greenhouse gas emitting nations outside the UN negotiating framework. However more recently the declaration of Hokkaido G8 Summit of July 2008 hints that G8 member states (US included) want to continue under the UNFCCC framework.[11] The goal of achieving at least 50% reduction of global greenhouse gas emissions by 2050was repeated by the Chair’s summary of the G8 Summit. One can thus expect that the post-Kyoto deal will be reached in annual meetings of signatories of the convention during Conferences of Parties (COP), the most crucial of those being probably the one to be held in Copenhagen in late 2009. It’s possible that a universal goal of keeping global warming below 2°C compared to average air temperature before the industrial revolution will be reached, accompanied by a range of measures.

In the short term, the key issue is the ability of developed countries to unite and agree about ambitious targets for fast reductions of greenhouse gas emissions at home. Even more vital is whether and in which scale the developing countries will join with binding emission limits. According to some researchers, China overtook the US as the largest greenhouse gas emitter in 2006.[12] With its booming economy backed by electricity from growing number of extremely polluting coal-fired power plants, China is the key player in future of the global climate policy. In 2007 China’s CO2 emissions accounted for two thirds of global carbon dioxide increase of 3.1%.[13]

While ongoing UN climate negotiations are concentrating on practicalities of emission cuts in coming decades, the question about historical responsibility, emission and development rights is crucial in longer term. Developing nations have every right to claim that once the North was able to develop while degrading the climate, it has no moral right to call for emission limits from today’s developing countries. Transfer of efficient technology from North to South is one of the solutions, but not the only one.

Probably, rather later than sooner a global system of equal pollution rights is inevitable. In 1990s the Wupperthal Institute came up with a simple, yet radical concept of ‘environmental space’.[14] In essence it’s a socio-economic concept for equal distribution of global natural resources among the planets’ inhabitants. For every resource a sustainable rate of use would be calculated and use permits “distributed” equally among people. Ideally the global resource use would be at a sustainable level and permits tradable.

Many advocate that a similar concept of equal per capita pollution rights shall become the cornerstone of global climate policy. According to a respected international NGO network specialized in climate issues, Climate Action Network (CAN), one of the key principles in climate policy shall be equity. According to CAN, [15] the equity principle requires, amongst other things, that all have equal access to the atmospheric commons. Those that have already contributed to the climate change problem substantially need to create the space for others to develop and to emit more in the future. In addition, the setting of the relative emission targets for countries should be designed to give increasing weight to the aim of per capita emissions convergence over the course of the 21st Century. According to CAN the intergenerational equity is also important and means that the present generation should not pass to future generations unfair burdens. Delaying action on climate change now would transfer large costs to future generations.

While the reaching of per capita emission rights and accepting of historical responsibility are important, the urgent nature of the problem calls for immediate action from all. For Estonia it means no less than a revolution in the way its daily policy-making is carried out vis-à-vis global climate stability. Attitude has to be changed so that ‘climate change’ is genuinely considered as a key challenge to be solved rather than just an obligatory expression to be used in public speeches by government representatives to audiences outside Estonia.

It sounds trivial, but as the first step, the Estonian government has to recognize that climate change is major challenge to fight against. Somewhat surprisingly it seems that as of Spring 2008 such recognition is not yet there. When discussing Estonia’s positions towards the legislative climate package of the European Union in February 2008, the government agreed to push for 1990 to be used as the base year for calculation of reduction targets for greenhouse gas emissions. Compared to 1990 as a peak of Soviet industrial production and related pollution, greenhouse gas emissions were 54.6% lower in Estonia in 2006.[16] Keeping 1990 as the base year may help Estonia to avoid serious investments into climate safe energy solutions. Thus the prioritization of year 1990 as base year (over other options of 2005 or 2007) for negotiations in the European Council is a clear indication of the governments’ reluctance to act. Another illustration comes from a few years ago when Estonia was given a very generous greenhouse gas emission limit by the European Commission as part of the first phase of EU’s Emissions Trading Scheme (ETS), helping to generate 2.7 billion kroons (173 million EUR) worth of revenue from selling the unused emission rights. Unfortunately, the money earned wasn’t earmarked by the government for investments into climate protection measures.

In addition to true recognition of the need to act, there is a need for some sort of masterplan in Estonia. Potential central goal of drastically reducing the carbon intensity of Estonia’s economy needs to be integrated into daily routines in many fields. Not surprisingly, the energy and transport sectors are key sectors where purposeful moves towards smaller carbon footprint is needed. Perhaps a nation-wide ambitious goal is needed, similar to the one Sweden set when establishing a Commission on Oil Independence chaired by then Prime Minister Göran Persson to find the best strategies for reducing dependence on oil and actual use of oil in Sweden by the year 2020.[17]

Decisions that Estonian policy-makers shall take within the next few years in the energy sector are crucial for climate impact. 92% of Estonia’s total CO2 emissions originate from the energy sector, mostly from large oilshale-fired power plants in North-East Estonia. Estonia shall decrease its dependence from fossil fuels in the energy sector. The option for large-scale use of renewable energy are there, waiting to be prioritized and implemented. According to a study to be published soon by Stockholm Environment Institute Tallinn Centre,[18] the share of fossil fuels in electricity generation can be reduced in Estonia from 99% in 2005 to 39% in 2020. The study estimates that wind energy could cover 51% of electricity needs in 2020 while biomass covers the remaining 10%. The study sees no need for new nuclear units in the Baltic States.

Preparations for development of wind energy especially offshore is gaining speed. Both state-owned Eesti Energia and a private company OÜ Nelja Energia are investigating the seabed in potential locations off Estonia’s West coast. Nelja Energia is preparing a project with estimated total capacity of 600-1000 MW[19] which would count for roughly a quarter of today’s Estonian electricity consumption. In Spring 2008 Eesti Energia started investigating feasibility of offshore windfarms in 8 location in the Baltic Sea, each with  capacity of some 200-300 MW. As pre-requisite Estonian needs to speed up the adaptation of legislation, setting up regulation for construction such large-scale offshore installations. It’s equally important to develop new electricity connections to neighboring Nordic countries. For large offshore wind developments in Estonia’s West coast to be success, a direct link from those windfarms to Sweden is key. With decreasing transmission losses due to developing new technologies, the vision for European offshore supergrid[20] is gaining speed and Estonia shall actively promote the concept.

It would probably be good for environment and current account balance if Estonian government would redirect its attention from potential new Ignalina nuclear plant to creating needed legislative and business environment for realizing the large in-country potential for renewable energy. To meet the challenge, poorly staffed energy department at the Ministry of Economy urgently needs extra human capacity, including independent foreign experts. Otherwise the threat remains that national policy is driven by narrow interests of powerful Eesti Energia and by local scholars from predominant oilshale school.

While new renewable energy sources are to increase share in Estonia’s energy mix, decrease of carbon emissions from fossil fuels must take place in parallel. Similarly to rest of Europe, Estonia probably can’t avoid temporary increase in the use of natural gas as energy source. As relevant utilities are relatively easy and quick to construct, the gas can be used as “bridge” to cover energy gap in a coming decade or two. Gas pipeline from Russia is probably not a politically realistic option due to attempt to avoid energy dependency of from Russia. Other sources of natural gas can to be found, even if economically slightly more costly. Estonian government might thus consider an investment into infrastructure for using liquefied natural gas (LNG) instead. Regasification terminal and possibly an own LNG tanker could be used for a decade or two until renewable energy sources such as large-scale offshore wind has won considerable share in energy mix. Even though a fossil fuel, LNG shall be considered as an alternative to replacing of further oilshale boilers. It might be more feasible to switch off LNG plant than planned oilshale boilers if renewables such as offshore wind are capable of providing needed input.

While changes in the energy sector are more a target of centralized policy choices and decisions than the transport sector needs more complex approach. Approximately 12% of the overall EU anthropogenic emissions of CO2 come from passenger cars. Besides obvious attempts to prioritize public transport, great attention is currently paid by European Union to make cars and fuels less damaging to the climate. Relevant car design and fuel quality requirements are moves in right direction but do not solve the problem per se. Car users do not pay for all problems that car use creates for the societies and such indirect external costs should be internalized into costs of car use. Perhaps the idea of the carbon tax that was abandoned in early 1990s has some space as a market mechanism to limit developments that cause climate change in transport sector. Leaders of the European Union need also more political courage to find ways for including car transport to its Emissions Trading Scheme.

In Estonia both national government and city councils must start making the connection between transport sector investments and climate change. Compared to 1990, Estonia’s CO2 emissions from road transport have almost doubled. It’s perhaps a more difficult paradigm shift for Estonian policy-makers than in case of energy sector. Integrated transport planning, limiting of car use, supporting of public transport and non-motorized transport are to receive priority over huge unquestioned public sector investments into infrastructure for private car use. More differentiated taxation of cars according to their energy use and pollution load could be first step to show governments’ willingness to seriously challenge the climate change.

As any other developed industrial country, Estonia can’t avoid taking some difficult choices to stabilize the climate. As discussion has shown the recognition for such need is still not quite there among Estonian decision-makers. If not for any other reason, Estonia’s membership in the EU will hopefully start directing its policy choices towards implementation of measures across the economy to help limiting the scale of climate change.