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EU Cohesion Policy: €354 million for Estonia to phase out oil shale in energy production

  • 10 October 2022
EU Cohesion Policy: €354 million for Estonia to phase out oil shale in energy production

Estonia will receive €354 million in EU grants to support the phase out of oil shale, a fossil fuel, in energy production in Ida-Viru, thanks to the Territorial Just Transition Plan (TJTP) adopted by the Commission. Oil shale related companies located in this easternmost region account for over 50% of Estonia's total greenhouse gas emissions.

Estonia will receive €354 million in EU grants to support the phase out of oil shale, a fossil fuel, in energy production in Ida-Viru, thanks to the Territorial Just Transition Plan (TJTP) adopted by the Commission. Oil shale related companies located in this easternmost region account for over 50% of Estonia's total greenhouse gas emissions.

Estonia has set the objectives to cease electricity production from oil shale by 2035, to phase out oil shale in energy production by 2040 and to reach climate neutrality by 2050. Investments financed by the Just Transition Fund (JTF), will support the country to address the social, economic and environmental challenges related to the transition to a climate neutral economy.

Investments in green energy production and a diversified economy

The plan invests in solar, wind and hydro power, and in renewable hydrogen, and it supports the development of renewable heating solutions. It also includes the restoration of contaminated brownfield sites.

With the JTF support, Estonia will diversify its economic activity away from fossil fuels, which account for almost half of Ida-Viru's GDP. It will create a new business environment in the region, based on a circular economy, which will support research and development in collaboration with local education and research institutions.

Mitigating the social impact of the climate transition

The Plan foresees the reskilling and upskilling of around 11,000 local workers and jobseekers. It will also provide large-scale labour market mobility solutions for oil shale workers to new businesses with high value-added green jobs. Moreover, it will create around 1,100 direct jobs notably in the renewable energy sectors.

In addition, the JTF will support and improve in the region the quality and accessibility of social and health services.

Members of the College said:

President of the Commission, Ursula von der Leyen said: “Europe is investing in accelerating the transition to clean energy. And we are making sure no one is left behind. Estonia's Just Transition Plan is providing investments from the EU to support industrial change in the Ida-Viru region. This is an investment in the future of the region, to bring new jobs and new skills for workers, to succeed in the economy of tomorrow.”

Executive Vice-President for the European Green Deal, Frans Timmermans, added: “The transition to climate neutrality has to happen in a fair way, or it just will not happen. The Just Transition Fund will help Ida-Viru develop new and sustainable economic activities and enable its citizens to benefit from the opportunities brought by the green transition. The European Commission is on Estonia's side to work for a healthy, green, and fair future.”

Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “The Just Transition Fund's objectives are more important than ever. As we step up the pace of our energy transition, we need to make sure that the regions and workers more exposed get the necessary support to cushion the economic and social impacts. In Estonia, the Just Transition Plan for Ida-Viru, developed in close cooperation with local stakeholders, will contribute to diversify the regional economy by creating business opportunities in sustainable, growing sectors and reskilling the work force. Territories matter, people matter.”

Background 

The JTF supports the territories which are most affected by the transition towards a climate-neutral economy. These territories are identified in the TJTPs following a dialogue with the Commission in the framework of the negotiations of the 2021-2027 Partnership Agreements and the associated programmes. The TJTPs, developed in close consultation with local partners, set out the challenges in each territory, as well as the development needs and objectives to be met by 2030. They also identify the types of operations envisaged along with specific governance mechanisms.

The approval of TJTPs opens the door to dedicated financing under the other two pillars of the Just Transition Mechanism (JTM): a just transition scheme under InvestEU and the Public Sector Loan Facility for Just Transition that combines Commission grants with European Investment Bank loans.

The JTM is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. It provides targeted support to help mobilise around €55 billion over the period 2021-2027 in the most affected regions to alleviate the socio-economic impact of the transition.

More information

Territorial Just Transition Plan

The Just Transition Mechanism: making sure no one is left behind

The Just Transition Platform: Accompanying Member States and regions to achieve a just transition

Breakdown of Just Transition Fund allocations per Member State