EUROPEAN COMMISSION Brussels, 3.2.2017 SWD(2017) 40 final COMMISSION STAFF WORKING DOCUMENT The EU Environmental Implementation Review

Country Report - ESTONIA



Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions The EU Environmental Implementation Review: Common Challenges and how to combine efforts to deliver better results

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This report has been written by the staff of the Directorate-General for Environment, European Commission. Any comments are welcome to the following e-mail address: ENV-EIR@ec.europa.eu More information on the European Union is available on the internet ( http://europa.eu ). Photographs: p.9 – ©Urmas83/iStock, p.11 – ©LIFE00 NAT/EE/007083/Voldemar Rannap, p.11 – ©Urmas83/iStock, p.17 – ©Leonardo Patrizi/iStock, p.21 – ©Konstik/iStock For reproduction or use of these photos, permission must be sought directly from the copyright holder. ©European Union, 2017 Reproduction is authorised provided the source is acknowledged. Table of Contents Executive summary Part I: Thematic Areas 1.Turning the EU into a circular, resource-efficient, green and competitive low-carbon economy Developing a circular economy and improving resource efficiency

Waste management 2.Protecting, conserving and enhancing natural capital Nature and Biodiversity Estimating Natural Capital Green Infrastructure Soil protection Marine protection 3.Ensuring citizens' health and quality of life Air quality Noise Water quality and management Enhancing the sustainability of cities International agreements Part II: Enabling Framework: Implementation Tools 4.Market based instruments and investment Green taxation and environmentally harmful subsidies Green Public Procurement Investments: contribution of EU funds 5.Effective governance and knowledge Effective governance within central, regional and local government

Compliance assurance Public participation and access to justice Access to information, knowledge and evidence



Executive summary About the Environmental Implementation Review In May 2016, the Commission launched the Environmental Implementation Review (EIR), a two-year cycle of analysis, dialogue and collaboration to improve the implementation of existing EU environmental policy and legislation . As a first step, the Commission drafted 28 reports describing the main challenges and opportunities on environmental implementation for each Member State. These reports are meant to stimulate a positive debate both on shared environmental challenges for the EU, as well as on the most effective ways to address the key implementation gaps. The reports rely on the detailed sectoral implementation reports collected or issued by the Commission under specific environmental legislation as well as the 2015 State of the Environment Report and other reports by the European Environment Agency. These reports will not replace the specific instruments to ensure compliance with the EU legal obligations. The reports will broadly follow the outline of the 7th Environmental Action Programme and refer to the 2030 Agenda for Sustainable development and related Sustainable Development Goals (SDGs) to the extent to which they reflect the existing obligations and policy objectives of EU environmental law . The main challenges have been selected by taking into account factors such as the importance or the gravity of the environmental implementation issue in the light of the impact on the quality of life of the citizens, the distance to target, and financial implications. The reports accompany the Communication "The EU Environmental Implementation Review 2016: Common challenges and how to combine efforts to deliver better results", which identifies challenges that are common to several Member States, provides preliminary conclusions on possible root causes of implementation gaps and proposes joint actions to deliver better results. It also groups in its Annex the actions proposed in each country report to improve implementation at national level. General profile Estonia does not face major environmental problems, and environmental awareness has risen significantly in the last decade. Nature conservation, air and water quality are in a good status. There is access to good-quality drinking water, and compliance rates with the UWWTD are high. However, there is room for improvement especially on issues as resource and energy intensity, and waste management. Great potential lies in eco-innovation for finding more efficient resource management solutions. Estonia is rich in biodiversity with a high level of habitat assessments with favourable status. Estonian compliance is rather good, however, some cases of late transposition could be observed. Main Challenges The two main challenges with regard to implementation of EU environmental policy and law in Estonia are: Estonia is the one of the most resource intensive country in the EU and needs to make progress on this in order to improve the resilience of its industry faced with increasing resource costs; Incineration and MBT overcapacity could have a negative impact on reaching the EU recycling targets. Main Opportunities

Estonia could perform better on topics where there is already a good knowledge base and good practices. This applies in particular to: Waste management, where further efforts on recycling could deliver jobs and growth; Vehicle taxation could play an important role supporting a modal shift from private to public transport, as well as an important additional measures contributing to emissions reduction . Points of Excellence Where Estonia is a leader on environmental implementation, innovative approaches could be shared more widely with other countries. Good examples are: The strong start-up culture in the country has contributed to the fast development of the eco-innovation activities in Estonia, with support structures. Estonia has provided one of the most complete Prioritized Action Framework (PAF) which has been used successfully to ensure funding to Natura 2000 sites from different EU funds. Estonia is one of the few Member States having more than 50% of its habitats and species assessments reported as favourable. Part I: Thematic Areas 1.Turning the EU into a circular, resource-efficient, green and competitive low-carbon economy Developing a circular economy and improving resource efficiency The 2015 Circular Economy Package emphasizes the need to move towards a lifecycle-driven ‘circular’ economy, with a cascading use of resources and residual waste that is close to zero. This can be facilitated by the development of, and access to, innovative financial instruments and funding for eco-innovation. SDG 8 invites countries to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. SDG 9 highlights the need to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. SDG 12 encourages countries to achieve the sustainable management and efficient use of natural resources by 2030. Measures towards a circular economy Transforming our economies from linear to circular offers an opportunity to reinvent them and make them more sustainable and competitive. This will stimulate investments and bring both short and long-term benefits for the economy, environment and citizens alike . There is untapped potential for the whole economy, as well as for economic sectors and individual companies to benefit from the shift to the circular economy, which could reduce costs, facilitate growth and competitiveness, as well as job creation; while at the same time would address resource challenges. Resource productivity (how efficiently the economy uses material resources to produce wealth) in Estonia has slightly increased in 2015 with 0.49 EUR/kg compared to the EU average of 2 EUR/kg (as shown in Figure 1). Despite a slight increase of resource productivity in Estonia since 2013, it remains among the lowest in the EU together with Bulgaria and Romania. Estonia does not have a fully established policy framework for the circular economy. However, the adoption of the Circular Economy Package has led to widespread discussion on the subject in Estonia. It has also published its position in terms of the proposed directives, outlining that a large part of the package is in line with Estonia’s EU policy for 2015-2019 (Government Office of the Republic of Estonia, 2014).

Figure 1: Resource productivity 2003-15 The most recent policy initiatives in the field, notably the Estonian National Waste Management Plan 2014-2020, have already adopted the underlying principles of circular economy – for example, aiming to reduce the amount of waste produced and recycling it to the maximum level. Also, in the context of the Multiannual Financial Framework 2014–2020, Estonia has decided to support the investments for more resource-efficient solutions mainly in small and medium-sized enterprises (SMEs) and mainly in manufacturing industry with 111 million EUR. Activities include raising awareness of companies (events started in 2016), training resource specialists/auditors, supporting resource audits and investments in resource efficient solutions. Financial support schemes are under preparation and were scheduled in 2016. SMEs and resource efficiency In the Flash Eurobarometer 426 "SMEs, resource efficiency and green markets" it is shown that 49% of Estonia's small and medium-sized enterprises (SMEs) have invested up to 5% of their annual turnover in their resource efficiency actions (EU28 average 50%), 24% of them are currently offering green products and services, 30% took measures to save energy (EU28 average 59%), 19% to minimise waste (EU28 average 60%), 15% to save water (EU28 average 44%), and 24% to save materials (EU28 average 54%). From a circular economy perspective, 18% took measures to recycle by reusing material or waste within the company, 9% to design products that are easier to maintain, repair or reuse and 11% were able to sell their scrap material to another company. According to the Flash Eurobarometer 426, the resource efficiency actions undertaken allowed the reduction of production costs in 55% of Estonian SMEs. The Flash Eurobarometer 426 "SMEs, resource efficiency and green markets" defines "green job" as a job that directly deals with information, technologies, or materials that preserves or restores environmental quality. 14% of the SMEs in Estonia have one or more full time employee working in a green job at least some of the time. Estonia has an average number of 0.4 full time green employees per SME. Eco-innovation The biggest potential for eco-innovation initiatives within the smart specialisation framework arises in the areas of ICT, as an enabler of eco-innovative ICT solutions, and the use of smart technologies for more efficient resource management in the building and energy sectors. The field has seen numerous eco-innovation solutions in the past few years, largely due to initiatives that have raised awareness and the financial support available for companies. Furthermore, a more comprehensive support system for companies pursuing eco-innovation has emerged. An Energy and Environmental Technology Development Centre (RoheTAK) was established at the end of 2014, with an aim to support the growth of viable companies in the energy and environmental technology areas. The companies participating have launched an initiative to become a cleantech cluster. The Green Industry Innovation support programme, started in 2013 in cooperation with donor partner Innovation Norway, has successfully supported its first 15 companies and is expected to continue in the future. Moreover, the strong start-up culture in the country has contributed to the fast development of the eco-innovation activities in Estonia, with support structures – such as the Tehnopol business incubator, Mektory (Innovation and Business Centre of Tallinn University of Technology, founded in 2013) and other business incubators and university-business cooperation centres, such as Tartu Science Park having led the way in providing initial support for start-ups. The strengthening cooperation between universities, public sector and businesses in the area of eco-innovation initiatives has led to examples emerging in the areas of smart cities and e-service, such as the bike parking system BIKEEP, an e-planner for public transport and other e-government initiatives, and further growth of Ülemiste Smart City. As regards good practices in Estonia, Ocean Visuals developed complementary solutions for the oil-spill detection system Ocean Visuals, based on information and laser remote-sensing technology, as part of the Green Industry Innovation support scheme supported by European Economic Area (EEA) Grants. Estonian eco-innovation performance has increased steadily throughout 2013-2015, but out of 28 countries analysed, Estonia is placed 19th. Estonia scores below EU average overall, due to resource-intensive industrial structure, lack of seed funding opportunities for early-stage start-ups and low level of media coverage on eco-innovation subjects. Figure 2: Eco-Innovation Index 2015 (EU=100) Drivers of eco-innovation -Estonian companies are strongly dependent on their foreign stakeholders. Demand and standards set by foreign owners of companies are seen as one of the main drivers of enforcing resource-efficiency standards among Estonian companies. Kunda Nordic Cement and ABB are examples of international companies that have brought around initiatives of resource efficiency in their Estonian divisions (Krusberg & Krustok, 2016). Barriers to eco-innovation -Low demand towards eco-innovation solutions from consumers as well as low level of knowledge. Lack of eco-innovation awareness is also an issue among public sector officials and businesses (Recommend Reports, 2014). The lack of knowledge transfer practices among companies is a barrier to sharing best practices and the spread of more efficient technologies (Krusberg & Krustok, 2016). -Dependency on foreign financing mechanisms, such as EU funds or Norway Grants for financing the RD&I initiatives of businesses. This creates a barrier to entry for new and small companies with low project management capabilities.

-Lack of financing opportunities for start-up companies aiming to produce eco-innovative solutions, which characterises the scene of start-ups in Estonia in general. -Management routines in Estonian companies do not encourage recognising long-term strategies and trends, which is often a prerequisite of eco-innovation. -Capabilities of the state as a smart consumer in environmental and innovative procurements are limited. The current procurement practices are seen as law-centred and rigid. Waste management Turning waste into a resource requires: Full implementation of Union waste legislation, which includes the waste hierarchy; the need to ensure separate collection of waste; the landfill diversion targets etc. Reducing per capita waste generation and waste generation in absolute terms. Limiting energy recovery to non-recyclable materials and phasing out landfilling of recyclable or recoverable waste. SDG 12 invites countries to substantially reduce waste generation through prevention, reduction, recycling and reuse, by 2030. The EU's approach to waste management is based on the "waste hierarchy" which sets out an order of priority when shaping waste policy and managing waste at the operational level: prevention, (preparing for) reuse, recycling, recovery and, as the least preferred option, disposal (which includes landfilling and incineration without energy recovery). The progress towards reaching recycling targets and the adoption of adequate WMP/WPP should be the key items to measure the performance of Member States. This section focuses on management of municipal waste for which EU law sets mandatory recycling targets. As shown in Figure 3, the amount of municipal waste generated in Estonia increased for the second year in a row from 280 kg per capita in 2012 and amounted to 357 kg per capita in 2014 , while still remaining, below the EU average of 475 kg. Figure 3 depicts the municipal waste by treatment in Estonia in terms of kg per capita, which shows the shift form landfilling to incineration. However, recycling rate has also increased. A recent study assessing separate collection in EU capitals rated Tallinn as the second best performing capital in the EU. Figure 3: Municipal waste by treatment in Estonia 2007-14 The share of landfilled municipal waste in Estonia further decreased from 14% of the total waste in 2013 to 8% in 2014. While construction of an incineration plant and several MBT facilities has led to a significant reduction of landfilled municipal waste, at the same time incineration of municipal waste has increased dramatically from 16% in 2012 to 56% in 2014, becoming the main municipal waste treatment option. Figure 4 depicts the recycling rate of Estonia over time, which shows some variation. Estonia has significantly increased recycling from 18% in 2013 to 31% in 2014, while composting has remained at the same level of 6% in view of the 2020 target of 50% recycling . Figure 4: Recycling rate of municipal waste 2007-14 The level of municipal waste incineration may potentially pose a risk to Estonia's attainment of the target. In this regard, a clear scope remains for further waste management improvement, particularly for separate collection, recycling and composting, as well as consideration of an incineration tax to make recycling a more competitive option. In order to help bridging the implementation gap in Estonia, the Commission has delivered a roadmap for compliance. The Government’s new waste management plan for 2014–2020 mainly focuses on modern product design, clean resource-saving production and the recycling of already produced materials. It also discusses moving away from the model of municipal waste management based on tendering towards a free-market approach. The plan also includes Estonia's Waste Prevention Programme. Full implementation of the existing legislation could create more than 1.300 jobs in Estonia and increase the annual turnover of the waste sector by over EUR 140 million. Moving towards the targets of the Roadmap on resource efficiency could create over 1.600 additional jobs and increase the annual turnover of the waste sector by over EUR 174 million.

Suggested action Focus on improving the effectiveness of separate collection. Make more efficient use of the economic instruments (Extended Producer Responsibility schemes, PAYT) to further promote reuse and recycling. Shift reusable and recyclable waste away from incineration by introducing incineration taxes.



2.Protecting, conserving and enhancing natural capital Nature and Biodiversity The EU Biodiversity Strategy aims to halt the loss of biodiversity in the EU by 2020, restore ecosystems and their services in so far as feasible, and step up efforts to avert global biodiversity loss. The EU Birds and Habitats Directives aim at achieving favourable conservation status of protected species and habitats. SDG 14 requires countries to conserve and sustainably use the oceans, seas and marine resources, while SDG 15 requires countries to protect, restore and promote the sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. The 1992 EU Habitats Directive and the 1979 Birds Directive are the cornerstone of the European legislation aimed at the conservation of the EU's wildlife. Natura 2000, the largest coordinated network of protected areas in the world, is the key instrument to achieve and implement the Directives' objectives to ensure the long-term protection, conservation and survival of Europe's most valuable and threatened species and habitats and the ecosystems they underpin. The adequate designation of protected sites as Special Ares of Conservation (SAC) under the Habitats Directive and as Special Protection Areas (SPA) under the Birds Directive is a key milestone towards meeting the objectives of the Directives. The results of Habitats Directive Article 17 and Birds Directive Article 12 reports and the progress towards adequate Sites of Community Importance (SCI)-SPA and SAC designation both in land and at sea, should be the key items to measure the performance of Member States. By early 2016, 17,9% of the Estonia national territory is covered by Natura 2000 (EU average 18.1%), with Birds Directive SPAs covering 13,8% (EU average 12.3%) and Habitats Directive SCIs covering 17,2% (EU average 13.8%). There are altogether 568 Natura 2000 sites in Estonia. The latest assessment of the Natura 2000 network shows that the SCI part of the Natura 2000 network in Estonia is almost complete in the Marine Baltic region and close to be complete in the Boreal region as shown in Figure 5. Figure 5: Sufficiency assessment of SCI networks in Estonia based on the situation until December 2013 (%) Estonia has designated the large majority of sites as Special Areas of Conservation. However, only 105 Natura 2000 sites have management plans in place. Further, action plans for semi-natural habitats, protected marshes and number of threatened species have been established. However, there appears to be gaps in the implementation of the plans. National Audit Office's report (2015) identifies problems in managing of semi-natural grasslands in protected areas due to lack of interest of land owners linked to modest support rates, lack of inspection and also due to lack of clarity in responsibilities between the authorities. The level of nature-related complaints is low compared to many other countries. They are mainly linked to public participation and assessment of infrastructure projects. According to the Estonian report under Article 17 of Habitats Directive more than 50% of habitat assessments show favourable status (for comparison, 16% at EU27-level). 45% are considered to be Unfavourable–Inadequate (EU27: 47%) and only 3% are Unfavourable – Bad (EU27 is 30%) as shown in Figure 6 . In terms of habitat groups only some forest habitats are reported having bad conservation status. Concerning species assessments (other than birds) 54% are at favourable status (EU27: 23%), 28% at unfavourable-inadequate (EU27: 42%) and only 8% unfavourable-bad status (EU27: 18%). Agriculture, forestry (for species) and changes in natural systems are reported as main high impact pressures. Estonia is one of the four Member States having more than 50% of its habitats and species assessments reported as favourable. Figure 6: Conservation status of habitats and species in Estonia in 2007/2013 (%) The results from the Article 12 report under Birds Directive show that short-term trends of breeding birds are improving for 17% of the species and are stable for 41%, however decreasing for 37% of species as depicted in Figure 7. The same categories for long-term trends are 26%, 32% and 37%. Although data under Article 12 does not provide pressure information for all bird species, pollution (e.g. oil spills) is reported by Estonia most frequently as a pressure of high impact.

Estonia has provided one of the most complete Prioritized Action Framework (PAF) which has been used successfully to ensure funding to Natura 2000 sites from different EU funds e.g. RDP. Estonia has been active in applying for LIFE funding to manage its Natura 2000 sites. Figure 7: Short-term population trend of breeding and wintering bird species in Estonia in 2012 (%) About 25% of forests in Natura 2000 sites are on privately owned land. A recent study in Estonia concludes that connectivity of forest protected areas should be improved. Suggested action Complete the SAC designation process and put in place clearly defined conservation objectives and the necessary conservation measures for the sites and provide adequate resources for their implementation in order to maintain/restore species and habitats of community interest to a favourable conservation status across their natural range. Ensure that Natura 2000 management plans are being effectively implemented. Develop and promote smart and streamlined implementation approaches, in particular as regards site and species permitting procedures, ensuring the necessary knowledge and data availability and strengthen communication with stakeholders. Estimating Natural Capital The EU Biodiversity Strategy to 2020 calls on the Member States to map and asses the state of ecosystems and their services in their national territory by 2014, assess the economic value of such services, and promote the integration of these values into accounting and reporting systems at EU and national level by 2020. Estonian long-term climate change adaptation strategy and action plan on biodiversity and bioeconomy defined ecosystem services (provisioning, regulating and cultural services) in 7 ecosystem classes (marine, freshwater, forest, wetland, grassland, soil and urban ecosystems). Pollination was addressed separately. Services were prioritised according to their relative socio-economic importance and vulnerability to climate change. Recent knowledge improvement efforts include notably the development of methods for the assessment and mapping of ecosystem services of marine and inland waters (EMP) , completed in 2016, and a project on „Developing tools for the assessment and prognosis of biodiversity status, closely linked to socio-economic and climate change aspects, as well as for the improvement of biodiversity data accessibility” which develop among other duties also a roadmap for ecosystem services mapping and assessment by 2023 . Suggested action Continue support to the mapping and assessment of ecosystems and their services, valuation and development of natural capital accounting systems. Green Infrastructure The EU strategy on green infrastructure promotes the incorporation of green infrastructure into related plans and programmes to help overcome fragmentation of habitats and preserve or restore ecological connectivity, enhance ecosystem resilience and thereby ensure the continued provision of ecosystem services. Green Infrastructure provides ecological, economic and social benefits through natural solutions. It helps to understand the value of the benefits that nature provides to human society and to mobilise investments to sustain and enhance them. In Estonia, the establishment of the green network was launched back in 1999 in the form of a national spatial plan and county level thematic spatial plans. The nationwide spatial plan "Estonia 2030+" aims to achieve a rational use of space in Estonia. The main principles include "preserving the qualities of settlement pattern and landscape" and "preserving the good condition of the natural environment". The plan emphasises the importance of green infrastructure in the preparation of spatial measures. The basic legislation for this network is the Planning Act that defines the green network and its elements. Currently these thematic spatial plans have been established for all counties and have also been brought into the general spatial plans at the municipal level in almost all municipalities (as the county thematic plans are much more generalized than the land cadastre, they need to be refined at the municipal level). However, there is a great amount of confusion, questions and information gaps at the municipal level in connection with preservation of the green network . Therefore, although Estonia has spatially set up the green network at both national and local government level already more than ten years ago the main challenge still ahead is to analyse its effectiveness and based on that make spatial and functional corrections if needed. Soil protection The EU Soil Thematic Strategy highlights the need to ensure a sustainable use of soils. This requires the prevention of further soil degradation and the preservation of its functions, as well as the restoration of degraded soils. The 2011 Road Map for Resource-Efficient Europe, part of Europe 2020 Strategy provides that by 2020, EU policies take into account their direct and indirect impact on land use in the EU and globally, and the rate of land take is on track with an aim to achieve no net land take by 2050.

SDG 15 requires countries to combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land-degradation-neutral world by 2030. Soil is an important resource for life and the economy. It provides key ecosystem services including the provision of food, fibre and biomass for renewable energy, carbon sequestration, water purification and flood regulation, the provision of raw and building material. Soil is a finite and extremely fragile resource and increasingly degrading in the EU. Land taken by urban development and infrastructure is highly unlikely to be reverted to its natural state; it consumes mostly agricultural land and increases fragmentation of habitats. Soil protection is indirectly addressed in existing EU policies in areas such as agriculture, water, waste, chemicals, and prevention of industrial pollution. Artificial land cover is used for settlements, production systems and infrastructure. It may itself be split between built-up areas (buildings) and non-built-up areas (such as linear transport networks and associated areas). The annual land take rate (growth of artificial areas) as provided by CORINE Land Cover was 0.82% in Estonia over the period 2006-12, well above the EU average (0.41%). It represented 789 hectares per year the most of it being realized through extension of mineral extraction sites, with highly increased intensity compared to previous period . The percentage of built up land in 2009 was 0.89%, well below the EU average (3.23%) . The soil water erosion rate in 2010 was 0.21 tonnes per ha per year, well below EU-28 average (2.46 tonnes) . There are still no EU-wide datasets enabling the provision of benchmark indicators for soil organic matter decline, contaminated sites, pressures on soil biology and diffuse pollution. An updated inventory and assessment of soil protection policy instruments in Estonia and other EU Member States is being performed by the EU Expert Group on Soil Protection. Figure 8 shows the different land cover types in Estonia in 2012. Figure 8: Land Cover types in Estonia 2012 Marine protection The EU Coastal and Marine Policy and legislation require that by 2020 the impact of pressures on marine waters is reduced to achieve or maintain good environmental status and coastal zones are managed sustainably. SDG 14 requires countries to conserve and sustainably use the oceans, seas and marine resources for sustainable development. The Marine Strategy Framework Directive (MSFD) aims to achieve Good Environmental Status (GES) of the EU's marine waters by 2020 by providing an ecosystem approach to the management of human activities with impact on the marine environment. The Directive requires Member States to develop and implement a marine strategy for their marine waters, and cooperate with Member States sharing the same marine region or subregion. As part of their marine strategies, Member States had to make an initial assessment of their marine waters, determine GES and establish environmental targets by July 2012. They also had to establish monitoring programmes for the on-going assessment of their marine waters by July 2014. The next element of their marine strategy is to establish a Programme of Measures (2016). The Commission assesses whether these elements constitute an appropriate framework to meet the requirements of the MSFD. Estonian marine waters are part of the Baltic Sea and Estonia is party to the Convention on the Protection of the Marine Environment of the Baltic Sea . In the Baltic Sea, main risks for biodiversity relate to eutrophication, overfishing and bycatch, pollution by contaminants and oil, and introduction of non-indigenous species . First reporting under the MSFD in Estonia was done in 2012. The country assessed the status of its marine waters against specific thresholds/reference conditions and identified the main pressures on its marine environment. In its reporting, the country considered existing EU standards and made use of Regional Sea Conventions assessments. Estonia also made an effort to quantify Good Environmental Status boundaries . It is however too early to say whether Estonian marine waters are in a good state or not, as weaknesses were identified in Estonia's definition of good environmental status. Estonia established a monitoring programme of its marine waters in 2014. However, it seems that its monitoring sub-programmes for all descriptors apart from those on biodiversity, eutrophication and contaminants in seafood need further refinement and development to constitute an appropriate framework to monitor progress towards environmental targets and Good Environmental Status, especially since the monitoring programme will not be fully in place before 2018 for most descriptors. In 2012 Estonian marine protected areas covered 6758.5km². More specifically, 2716.81 km² of the 0-1 nm zone, 4030.61km² of the 1-12 nm zone and 11.10 km² of the 12- end of assessment area zone were covered by MPAs . Suggested action

Continue work to improve the definitions of GES in particular for biodiversity descriptors, including through regional cooperation by using the work of the relevant Regional Sea Convention. Identify and address knowledge gaps. Further develop approaches assessing (and quantifying) impacts from the main pressures in order to lead to improved and more conclusive assessment results for 2018 reporting. Continue to integrate monitoring programmes already existing under relevant EU legislation, and to implement joint monitoring programmes developed at (sub) regional level. Enhance the comparability and consistency of monitoring methods within its marine region. Urgently report and implement its programme of measures . Ensure that the monitoring programme is implemented without delay, and is appropriate to monitor progress towards its GES. 3.Ensuring citizens' health and quality of life Air quality Figure 9: Attainment situation for PM10, NO2 and O3 in 2014 The EU Clean Air Policy and legislation require that air quality in the Union is significantly improved, moving closer to the WHO recommended levels. Air pollution and its impacts on ecosystems and biodiversity should be further reduced with the long-term aim of not exceeding critical loads and levels. This requires strengthening efforts to reach full compliance with Union air quality legislation and defining strategic targets and actions beyond 2020. The EU has developed a comprehensive suite of air quality legislation , which establishes health-based standards and objectives for a number of air pollutants. As part of this, Member States are also required to ensure that up-to-date information on ambient concentrations of different air pollutants is routinely made available to the public. In addition, the National Emission Ceilings Directive provides for emission reductions at national level that should be achieved for main pollutants. The emission of several air pollutants has decreased significantly in Estonia. Reductions between 1990 and 2014 for sulphur oxides (-85%), nitrogen oxides (-56%), volatile organic compounds (-66%), as well as ammonia (-52%) ensure air emissions for these pollutants are within the currently applicable national emission ceilings . Air quality in Estonia is reported to be generally good, with exceptions. Nevertheless, for the year 2013, the European Environment Agency estimated that more than 690 premature deaths were attributable to fine particulate matter concentrations and 30 to ozone concentrations . For 2014, no exceedances above the EU air quality standards have been reported. Figure 9 shows the attainment situation for PM10, NO2 and ozone in 2014 . Figure 9 shows the attainment situation for PM10, NO2 and O3 in Estonia in 2014. It is estimated that the health-related external costs from air pollution in Estonia are in the range of above EUR 414 million/year (income adjusted, 2010), which include not only the intrinsic value of living a full health life but also direct costs to the economy. These direct economic costs relate to 170 thousand workdays lost each year due to sickness related to air pollution, with associated costs for employers of EUR 14 million/year (income adjusted, 2010), for healthcare of above EUR 1 million/year (income adjusted, 2010), and for agriculture (crop losses) of EUR 7 million/year (2010) . Suggested action

Maintain downward emissions trends of air pollutants, and reduce adverse air pollution impacts on health. Noise The Environmental Noise Directive provides for a common approach for the avoidance, prevention and reduction of harmful effects due to exposure to environmental noise. Excessive noise is one of the main causes of health issues . To alleviate this, the EU acquis sets out several requirements, including assessing the exposure to environmental noise through noise mapping, ensuring that information on environmental noise and its effects is made available to the public, and adopting action plans with a view to preventing and reducing environmental noise where necessary and to preserving the acoustic environment quality where it is good. Estonia's authorities have fulfilled all their obligations with regards to the Environmental Noise Directive for the current reporting period. Water quality and management The EU water policy and legislation require that the impact of pressures on transitional, coastal and fresh waters (including surface and ground waters) is significantly reduced to achieve, maintain or enhance good status of water bodies, as defined by the Water Framework Directive; that citizens throughout the Union benefit from high standards for safe drinking and bathing water; and that the nutrient cycle (nitrogen and phosphorus) is managed in a more sustainable and resource-efficient way. SDG 6 encourages countries to ensure availability and sustainable management of water and sanitation for all. The main overall objective of EU water policy and legislation is to ensure access to good quality water in sufficient quantity for all Europeans. The EU water acquis seeks to ensure good status of all water bodies across Europe by addressing pollution sources (from e.g. agriculture, urban areas and industrial activities), physical and hydrological modifications to water bodies) and the management of risks of flooding. River Basin Management Plans (RBMPs) are a requirement of the Water Framework Directive and a means of achieving the protection, improvement and sustainable use of the water environment across Europe. This includes surface freshwaters such as lakes and rivers, groundwater, estuaries and coastal waters up to one nautical mile. Estonia has provided information to the Commission from its second generation of RBMPs. However, as the Commission has not yet been able to validate this information for all Member States, it is not reported here. In its first generation of RRBMPs Estonia reported the status of 645 rivers, 89 lakes, 16 coastal and 39 groundwater bodies . According to information provided by Estonia, 62% of surface water bodies achieved a good or high ecological status or potential (in 2013) , . Chemical status is reliably assessed only for 7.8% of surface water bodies – 5.5% of those are in good chemical status, 1.7% in bad status (mostly coastal water bodies due to Hg concentrations in biota) . 80% of 39 groundwater bodies are in good qualitative and quantitative status. This will be verified during the assessment of the 2nd cycle RBMPs. Point and diffuse sources of pollution, flow regulations and morphological alterations contribute to pressures at similar level and affect 13%, 14% and 13% of surface water bodies respectively. The Estonian RBMP have significant weaknesses including methodological deficiencies related to the analysis of pressure, monitoring and status assessment resulting in uncertainties about the status of water bodies and effectiveness of Programmes of Measures. The programmes of Measures are expected to result in improvement of the ecological status of natural surface water bodies by 9% and the ecological potential of artificial and heavily modified bodies by 5%. As regards drinking water, Estonia reaches very high compliance rates of 99-100% for microbiological, chemical and indicator parameters laid down in the Drinking Water Directive . As shown in Figure 10, in 2015, in Estonia out of 54 bathing waters, 63.0% were of excellent quality, 20.4% of good quality, 11.1% of sufficient quality while it was not possible to assess remaining 3 bathing waters. Figure 10: Bathing water quality 2012 – 2015 With a total generated load of 1.6 million population equivalents (p.e.), the final deadline to fully comply with the Urban Waste Water Treatment Directive (UWWTD) in Estonia was end 2010 for all the agglomerations (59 above 2000 p.e.). In 2012, 89.4% of the waste water load collected was subject to more stringent treatment in accordance with Article 5 of the UWWTD. It should be noted that all the Estonian territory is considered as sensitive, i.e. more stringent treatment is applicable in all the agglomerations whose size is above 10000 p.e. Estonia demonstrates, in general, high compliance rates with the UWWTD (with compliance rates of 94.3% and 97.1% for collection (Article 3) and secondary treatment (Article 4), respectively). The estimated investment needs (reported under Article 17 of the UWWTD) to reach full compliance with the Directive in Estonia are of EUR 88 million. According to the last report on the implementation of the Nitrates Directive, referring to the period 2008-2011, Estonian groundwater is showing an increase in nitrates and the Baltic Sea eutrophication is also a concern.

Suggested action Improve the methods for analysis of pressures and assessment of water status as well as the monitoring system to ensure certainty about the status of water bodies. Further prevent and reduce nitrate pollution from agricultural sources by fully implementing the requirements of the Nitrates Directive. Enhancing the sustainability of cities The EU Policy on the urban environment encourages cities to implement policies for sustainable urban planning and design, including innovative approaches for urban public transport and mobility, sustainable buildings, energy efficiency and urban biodiversity conservation. SDG11 aims at making cities and human settlements inclusive, safe, resilient and sustainable. Europe is a Union of cities and towns; around 75% of the EU population are living in urban areas. The urban environment poses particular challenges for the environment and human health, whilst also providing opportunities and efficiency gains in the use of resources. The Member States, European institutions, cities and stakeholders have prepared a new Urban Agenda for the EU (incorporating the Smart Cities initiative) to tackle these issues in a comprehensive way, including their connections with social and economic challenges. At the heart of this Urban Agenda will be the development of twelve partnerships on the identified urban challenges, including air quality and housing . The European Commission will launch a new EU benchmark system in 2017. The EU stimulates green cities through awards and funding, such as the EU Green Capital Award aimed at cities with more than 100,000 inhabitants and the EU Green Leaf initiative aimed at cities and towns, with between 20,000 and 100,000 inhabitants. A number of initiatives are covered under the Union of the Baltic Cities Sustainable Cities Commission, which is a voluntary network of its member cities of the Baltic Sea Region addressing a number of issues, including environmentally sustainable development. This includes such initiatives as integrated management systems and spatial management, urban water management, maritime activities and sustainable urban mobility. Furthermore, Tallinn Urban Planning Department is also amongst partners of the Baltic Urban Lab project, which aims at identifying and promoting best practices on brown field regeneration. International agreements The EU Treaties require that the Union policy on the environment promotes measures at the international level to deal with regional or worldwide environmental problems. Most environmental problems have a transboundary nature and often a global scope and they can only be addressed effectively through international co-operation. International environmental agreements concluded by the Union are binding upon the institutions of the Union and on its Member States. This requires the EU and the Member States to sign, ratify and effectively implement all relevant multilateral environmental agreements (MEAs) in a timely manner. This will also be an important contribution towards the achievement of the SDGs, which Member States committed to in 2015 and include many commitments contained already in legally binding agreements. The fact that some Member States did not sign and/or ratify a number of MEAs compromises environmental implementation, including within the Union, as well as the Union’s credibility in related negotiations and international meetings where supporting the participation of third countries to such agreements is an established EU policy objective. In agreements where voting takes place it has a direct impact on the number of votes to be cast by the EU. Estonia has signed and ratified almost all MEAs. At the 8th Environment for Europe Ministers’ meeting in Batumi, Georgia, in June 2016, in the framework of the Batumi Action for Clean Air, Estonia took a voluntary commitment to ratify the CLRTAP-Protocol to Abate Acidification, Eutrophication and Ground-level Ozone (Gothenburg Protocol) and establish a national action programme on the reduction of emissions, which would help to achieve the targets set by the Gothenburg Protocol for 2020. National procedures for ratification of the Nagoya Protocol were planned to be finalised by the end on 2016.

Part II: Enabling Framework: Implementation Tools 4.Market based instruments and investment Green taxation and environmentally harmful subsidies The Circular Economy Action Plan encourages the use of financial incentives and economic instruments, such as taxation to ensure that product prices better reflect environmental costs. The phasing out of environmentally harmful subsidies is monitored in the context of the European Semester and in national reform programmes submitted by Member States. Taxing pollution and resource use can generate increased revenue and bring important social and environmental benefits. The share of environmental taxation in total tax revenue in Estonia is high (2.67% of GDP and 8.22% of total taxation in 2014). In the same year environmental tax revenues accounted for 8.28% of total revenues from taxes and social-security contributions (EU 28 average: 6.35%), as depicted in Figure 11. Environmental tax revenues have slightly increased since 2013. However, certain issues, such as the absence of vehicle taxation, which would promote the purchase and use of fuel-efficient cars and thus contribute to the EU´s energy and climate objectives, still remain.

In Estonia, transport taxes (excluding fuel taxes) remain amongst the lowest in the EU or are not applied (registration or circulation taxes for example). Heavy Goods Vehicles are charged with a tax according to number of axles, weight, and suspension type, however, the tax is below the EU average and CO2 emissions are not taken into account. Furthermore, there is no charge applying to road use. In 2014, the least efficient cars were bought in Estonia (141 g CO2/km), followed by Latvia (140 g CO2/km) and Bulgaria (136 g CO2/km). Estonia remains also amongst the most energy and resource intensive countries in the EU. A 2016 study suggests that there is considerable potential for shifting taxes from labour to environmental taxes. Under a good practice scenario , these taxes could generate an additional EUR 0.2 billion by 2018, rising to EUR 0.38 billion by 2030 (both in real 2015 terms). This is equivalent to an increase by 0.89% and 1.22% of GDP in 2018 and 2030, respectively. A circulation tax differentiated by CO2 emissions could be introduced to improve environmental performance of the vehicles, with inclusion of company cars and private vehicles within the scheme. New Government of Estonia put forward a proposal for vehicle registration based on CO2 emission, but it was removed from the agenda until the beginning of 2017. Figure 11: Environmental tax revenues as a share of total revenues from taxes and social contributions (excluding imputed social contributions) in 2014 Green Public Procurement The EU green public procurement policies encourage Member States to take further steps to reach the target of applying green procurement criteria to at least 50% of public tenders. Green Public Procurement (GPP) is a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life-cycle when compared to goods, services and works with the same primary function that would otherwise be procured. The purchasing power of public procurement in the EU equals to approximately 14% of GDP . A substantial part of this money is spent on sectors with high environmental impact such as construction or transport, so GPP can help to significantly lower the impact of public spending and foster sustainable innovative businesses. The Commission has proposed EU GPP criteria . A National Action Plan (NAP) or a National Strategy on GPP is currently not in force in Estonia . However, the Ministry of the Environment has set the targets of having 15% GPP from all the procurements in public sector by 2018, developing an e-procurement platform in collaboration with the Ministry of Finance. Trainings are also organised for local government and state authorities’ specialists, explaining the concept of an environmentally sound procurement, possibilities for conducting this, etc. Mandatory environmentally friendly requirements are currently imposed only for vehicles. There will be mandatory furniture, cleaning product and services, copying and graphic paper and office IT equipment criteria by 2017. There was 10 850 public procurement in 2015 from which 605 (5.6%) was green public procurement. According to a 2011 survey, Estonian authorities included at least one of the EU core green criteria in 40% of the contracts (regardless of the product group), and 11% of the contracts included all the relevant EU core green criteria . Investments: contribution of EU funds European Structural and Investment Funds Regulations provide that Member States promote environment and climate objectives in their funding strategies and programmes for economic, social and territorial cohesion, rural development and maritime policy, and reinforce the capacity of implementing bodies to deliver cost-effective and sustainable investments in these areas. Making good use of the European Structural and Investment Funds (ESIF) is essential to achieve the environmental goals and integrate these into other policy areas. Other instruments such as the Horizon 2020, the LIFE programme and the EFSI may also support implementation and spread of best practice. Estonia, through 3 national and regional programmes, benefits from ESIF funding of EUR 4.4 billion over the period 2014-2020 (see Figure 12). The biggest share – EUR 1.9 billion (42%) of funding is coming from the European Fund for Regional Development (ERDF). EUR 1.1 billion (24.1%) - from the Cohesion Fund (CF). EUR 823 million (18.5%) – from the European Agricultural Fund for Rural Development (EAFRD). EUR 587 million (13.2%) - from the European Social Fund (ESF). EUR 101 million (2.3%) from the European Maritime and Fisheries Fund (EMFF). In total, EUR 420 million a dedicated to the Thematic objective (TO)6 Environment Protection and Resource efficiency EUR 254 million through the CF EUR 141 million through the EAFRD programme, EUR 25 million through the EMFF. In addition, EUR 318 million is foreseen for TO4 Low Carbon Economy (CF, ERDF, EAFRD and EMFF) and EUR 197 million for TO5 Climate Change Adoption and Risk Prevention (EAFRD and CF).

Figure 12: EU Structural and Investment Funds 2014-2020: Budget Estonia by theme, EUR billion It is too early to draw conclusions as regards the use and results of ESIF for the period 2014-2020, as the relevant programmes are still in an early stage of their implementation. Current data suggest that the EU funds for the 2007-2013 period were almost fully spent . With regard to the integration of environmental concerns into the Common Agricultural Policy (CAP), the two key areas for Estonia (as for all Member States) are, first, using Rural Development funds to pay for environmental land management and other environmental measures, while avoiding financing measures which could damage the environment; and secondly, ensuring an effective implementation of the first pillar of the CAP with regard to cross compliance and 1st pillar 'greening'. The approved National Rural Development Program (EARDF) amounts overall to EUR 857 million. The planned spending on the ecosystem priority is EUR 287 million, which represents 33.5% of the total budget, and EUR 194 million, 22.7% of the total budget is dedicated to agri-environment-climate measures. The RDP is underpinned by a reasonable description and diagnosis of the environmental and climate conditions for biodiversity and ecosystems including the prioritized action framework as referenced in the strategy, soil, water and forestry. The Direct Payment envelope of Estonia for the period 2015-2020 is EUR 630 million 30% of which (EUR 189 million) being allocated to greening practices beneficial for the environment. An environmentally ambitious implementation of 1st pillar greening would clearly help to improve the environmental situation in areas not covered by rural development, including intensive area, and if appropriate Estonia could review its implementation of this.



5.Effective governance and knowledge SDG 16 aims at providing access to justice and building effective, accountable and inclusive institutions at all levels. SDG 17 aims at better implementation, improving policy coordination and policy coherence, stimulating science, technology and innovation, establishing partnerships and developing measurements of progress. Effective governance of EU environmental legislation and policies requires having an appropriate institutional framework, policy coherence and coordination, applying legal and non-legal instruments, engaging with non-governmental stakeholders, and having adequate levels of knowledge and skills. Successful implementation depends, to a large extent, on central, regional and local government fulfilling key legislative and administrative tasks, notably adoption of sound implementing legislation, co-ordinated action to meet environmental objectives like clean air and water and a healthy biodiversity and correct decision-making on matters such as industrial permits. Beyond fulfilment of these tasks, government must intervene to ensure day-to-day compliance by economic operators, utilities, individuals and others ("compliance assurance"). Civil society also has a role to play as does business. To underpin the roles of all actors, it is crucial to collect and share knowledge and evidence on the state of the environment and on environmental pressures, drivers and impacts. Equally, effective governance of EU environmental legislation and policies benefits from a dialogue within Member States and between Member States and the Commission on whether the current EU environmental legislation is fit for purpose. Legislation can only be properly implemented when it takes into account experiences at Member State level with putting EU commitments into effect. The Make it Work initiative, a Member State driven project, established in 2014, organizes a discussion on how the clarity, coherence and structure of EU environmental legislation can be improved, without lowering existing protection standards. Effective governance within central, regional and local government Those involved in implementing environment legislation at Union, national, regional and local levels need to be equipped with the knowledge, tools and capacity to improve the delivery of benefits from that legislation, and the governance of the enforcement process. Capacity to implement rules Estonia is sometimes late in transposing EU law but this has improved very much in recent years and the delays are usually only couple of months. Bigger delays are expected once non-conformities have been detected. This is due to the fact that amendments to existing laws take quite some time internally to be adopted. Estonia has very small amount of infringements. The pressure from environmental NGOs and complainants is extremely low. Most environmental issues fall within the area of governance of the Ministry of Environment headed by Minister of Environment that acts through a central body, and number of agencies. Local municipalities play a key role in building and territorial planning. The most important agencies within the area of governance of the Ministry of Environment are the Keskkonnaamet (Environmental Board), which has various functions in the field of nature protection, environmental protection, resource use and radiation; the Keskkonnainspektsioon (Environmental Inspectorate), which is the primary enforcement agency; and the Keskkonnaagentuur (Estonian Environment Agency), which implements national environmental monitoring programme, prepares reports and assesses the state of the environment. International and European cooperation is, in principle, the task of the Ministry of Foreign Affairs. This includes representing the Estonian formal position in infringement proceedings.

Estonian sustainable development strategy “Sustainable Estonia 21” was adopted in September 2005. The Commission encourages the streamlining of the environmental assessments to avoid overlaps in environmental assessments and accelerate decision-making, without compromising the quality of the environmental assessment procedure. The Commission has issued a guidance document in 2016 regarding the setting up of coordinated and/or joint procedures that are simultaneously subject to assessments under the EIA Directive, Habitats Directive, Water Framework Directive, and the Industrial Emissions Directive. Compliance assurance EU law generally and specific provisions on inspections, other checks, penalties and environmental liability help lay the basis for the systems Member States need to have in place to secure compliance with EU environmental rules. Public authorities help ensure accountability of duty-holders by monitoring and promoting compliance and by taking credible follow-up action (i.e. enforcement) when breaches occur or liabilities arise. Compliance monitoring can be done both on the initiative of authorities themselves and in response to citizen complaints. It can involve using various kinds of checks, including inspections for permitted activities, surveillance for possible illegal activities, investigations for crimes and audits for systemic weaknesses. Similarly, there is a range of means to promote compliance, including awareness-raising campaigns and use of guidance documents and online information tools. Follow-up to breaches and liabilities can include administrative action (e.g. withdrawal of a permit), use of criminal law and action under liability law (e.g. required remediation after damage from an accident using liability rules) and contractual law (e.g. measures to require compliance with nature conservation contracts). Taken together, all of these interventions represent "compliance assurance" as shown in Figure 13. Best practice has moved towards a risk-based approach at strategic and operational levels in which the best mix of compliance monitoring, promotion and enforcement is directed at the most serious problems. Best practice also recognises the need for coordination and cooperation between different authorities to ensure consistency, avoid duplication of work and reduce administrative burden. Active participation in established pan-European networks of inspectors, police, prosecutors and judges, such as IMPEL , EUFJE , ENPE and EnviCrimeNet , is a valuable tool for sharing experience and good practices. Figure 13: Environmental compliance assurance Currently, there exist a number of sectoral obligations on inspections and the EU directive on environmental liability (ELD) provides a means of ensuring that the "polluter-pays principle" is applied when there are accidents and incidents that harm the environment. There is also publically available information giving insights into existing strengths and weaknesses in each Member State. For each Member State, the following were therefore reviewed: use of risk-based compliance assurance; coordination and co-operation between authorities and participation in pan-European networks; and key aspects of implementation of the ELD based on the Commission's recently published implementation report and REFIT evaluation. Estonia has taken steps towards risk-based compliance assurance, in particular in relation to inspections of industrial facilities. Some relevant data collection and analysis are undertaken and risk assessment tools developed by IMPEL are used for planning and targeting of inspection work . Efforts are being made to evaluate the effectiveness of compliance monitoring work . Up-to-date information is lacking in relation to the following: data-collection arrangements to track the use and effectiveness of different compliance assurance interventions; the extent to which risk-based methods are used to direct compliance assurance at the strategic level and in relation to critical activities outside of industrial installations, especially specific problem-areas highlighted elsewhere in this Country Report, i.e. the threats to protected habitat types and species, and the pressures on water quality from diffuse sources of pollution. how the Estonian authorities ensure a targeted and proportionate response to different types of non-compliant behaviour, in particular in relation to serious breaches detected. Estonia does not actively participate in the activities of the European networks of environmental professionals. For the period 2007 to 2013, Estonia reported four cases of environmental damage, including imminent threat of damage, and four pending cases handled according to the Environmental Liability Directive. Estonia follows the Directive closely and has established a record of environmental damage incidents at national level. However, there is scope for additional measures to improve implementation. The country does not have mandatory financial security (to pay for remediation when an operator cannot) and it is not evident that insurance is either sufficiently available or taken out. Suggested action Improve transparency on the organisation and functioning of compliance assurance and on how significant risks are addressed, as outlined above. Encourage greater participation of competent authorities in environmental compliance networks. Step up efforts in the implementation of the Environmental Liability Directive (ELD) with proactive initiatives, in particular by drafting national guidance. It should moreover take further steps to ensure an effective system of financial security for environmental liabilities (so that operators not only have insurance cover available to them but actually take it out).