COMMISSION STAFF WORKING DOCUMENT Country Factsheet Estonia Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK State of the Energy Union
Date: 2015-11-18
Institutions: European Commission, Secretariat-General
Subjects: Estonia, competitiveness, economic and social cohesion, electrical energy, energy policy, gas, innovation, reduction of gas emissions, regional cooperation, single market

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 18.11.2015  SWD(2015) 222 final   COMMISSION STAFF WORKING DOCUMENT Country Factsheet Estonia Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK State of the Energy Union  {COM(2015) 572} {SWD(2015) 208 à 209} {SWD(2015) 217 à 221} {SWD(2015) 223 à 243}  
 
 
Towards an Energy Union  
           Estonia  

Macroeconomic relevance of energy 

IMPORTANCE OF THE ENERGY SECTOR 

At  3.5%  of  total  gross  value  added  in  2012,  value  added  of  the  energy  sector  in  Estonia  is 
considerably higher than the EU average, and has increased from 2.8% in 2005. At the same time, the 
share  of  employment  in  the  energy  sector  in  total  employment  has  decreased  by  nearly  half  a 
percentage point, but it remains almost three times the EU average (0.6% in 2012). 

Source: EUROSTAT – National Accounts 

According to EurObserv'ER, in 2013, the share 
of  direct  and 
indirect  renewable  energy 
related  employment  in  total  employment  of 
the  economy  in  Estonia  was  at  about  0.71%, 
above the EU average of 0.53%. 

Source:  European  Commission,  based  on  EurObserv'ER  and 
EUROSTAT 

TRADE BALANCE OF ENERGY PRODUCTS 

Similarly to the EU average, the energy trade balance of Estonia is overall negative, with oil and gas 
being  important  drivers.  On  the  other  hand,  Estonia  is  a  net  exporter  of  electricity.  The  current 
account deficit has significantly decreased between 2005 and 2014. The reduction was largely due to 
lower import and capital income outflows, with energy trade balance contributing only slightly to the 
rebalancing. 

0.01.02.03.04.020052012EEEU27Value added of energy sector% of grossvalue added (total economy)0.00.51.01.52.020052012EEEU27Employment in energy sector% of total employment 
 
 
 
 
 
 
 
 
 
 
 
Towards an Energy Union - Estonia 

Source: EUROSTAT 
Note: Current account balance for EU28 from European Commission (AMECO) 

1. Energy Security, solidarity and trust 

ENERGY MIX 

The energy mix of Estonia differs from the EU28 average with the main difference of a much higher 
share of solid fuels and much lower of petroleum and products. Compared to 1995, the share of solid 
fuels petroleum and products decreased (from 64% to 60% and from 22 to 17% of the  gross inland 
energy  consumption,  respectively),  while  the  share  of  renewable  energy  sharply  increased  (by  7 
percentage points). The share of gases decreased from 10 to 8% of the energy mix. 

Gross inland energy consumption in 2013  

Source: European Commission, based on EUROSTAT  

IMPORT DEPENDENCY 

Since  1995,  energy  import  dependency  has  decreased  in  Estonia,  with  overall  import  dependency 
much lower than the EU average. Energy dependence rate was 11.9% in 2013. The dependency for 
solid  fuels  and  petroleum  products  has  decreased,  mainly  due  to  Estonia's  domestic  oil  shale 
production and biomass use. Estonia is highly dependent on gas imports from Russia1. However, gas 
only represents 8% of the gross inland consumption and plays a marginal role in energy imports. The 

1  

Top non-EU gas suppliers table is based on EUROSTAT data. The share of imports from non-EU countries is calculated 
as the ratio between  volumes of imports from that specific non-EU supplier and total imports  (from EU and non-EU 
countries). 

2 

-20-16-12-8-404EEEU28% of GDPCoalOilElectricityGasC. A. BalanceTrade balance of energy product and currentaccount balance, 2006 -20-16-12-8-404EEEU28% of GDPCoalOilElectricityGasC. A. BalanceTrade balance of energy product and currentaccount balance, 2014  
 
 
 
 
 
 
 
 
 
 
 
                                                                 
Towards an Energy Union - Estonia 

energy trade deficit (expressed in % of GDP) is lower than EU average.  

Source: European Commission, based on EUROSTAT 

2. A fully-integrated internal energy market 

INTERCONNECTIONS 

Interconnection capacity for 
electricity in 2014 

Source: European Commission 
based on ENTSO-E scenario outlook 
and adequacy forecast 2014 
Note:  Reference  to  2030  target 
is  based  on  October  2014 
European  Council  conclusions 
stating  that  "the  Commission 
will  also  report  regularly  to  the 
European  Council  with 
the 
objective  of  arriving  at  a  15% 
target by 2030" 

limited  capacity  of 

The interconnection capacity for electricity in the Baltic States increased 
to  around 10%  after  the  Estlink2  interconnection  with Finland was  put 
into  operation  in  2014.  The  launch  of  Estlink  2  interconnection  has 
increased  remarkably  Estonian  connectivity  with  the  Nordic  power 
market. This has increased competition and at the same time benefitted 
Estonian  electricity  consumers.  The 
the 
interconnection  between  Estonia  and  Latvia  has  an  adverse  impact  on 
the electricity markets of Estonia and the other Baltic States. The third 
electricity interconnection between Estonia and Latvia will enhance the 
development  of  the  regional  market  and  market  integrity  in  the  Baltic 
States.  The  three Baltic  States  agreed in the  first  quarter  of  2015  on a 
common  strategic  goal:  de-synchronisation  from  the  Russian  system 
IPS/UPS  and  the  synchronisation  of  their  power  systems  with  the 
Continental  European  Network.  The  project  of  synchronisation  is 
included as a key infrastructure project in the European Energy Security 
Strategy, as well as is highlighted as one of the key energy priority areas 
Baltic Energy Market Interconnection Plan (BEMIP).   
Estonia has natural gas network connections with Russia and Latvia. Two 
PCIs  are  key  in  increasing  diversification  and  security  of  supplies  and 
ending  Estonia's  isolation  in  the  gas  sector:  the  regional  Baltic  LNG 
terminal and the natural gas pipeline Baltic connector between Finland 
and  Estonia.  In  addition,  the  building  of  the  Poland  –  Lithuania  gas 
interconnector  (GIPL)  will  help  to  end  the  gas  isolation  of  the  Baltic 
States.  

ELECTRICITY AND GAS MARKETS 

3 

Top non-EU gas suppliers in 2013 (% in total imports)EstoniaEuropean Union country[%]country[%]Russia100.0Russia39.0Norway29.5Algeria9.7Qatar6.726%12%71%60%100%100%52%53%82%87%57%65%200520132005201320052013All fuelsPetroleum andproductsNatural gasEEEU28Import dependency 2013 
 
 
 
 
 
 
 
 
Towards an Energy Union - Estonia 

Market concentration index for power generation 
(left) and gas supply (right) (2013) (Herfindahl index – 
10000 means monopoly) 

Sources: European Commission based on ESTAT, CEER and 
Platts Power Vision 

Sources:ESTAT and European Commission Calculations 

indicators,  market 
According  to  the  selected 
concentration  on  electricity  and  gas  markets  was 
high in 2014 and 2013 respectively (latest available 
data).  The  Estonian  electricity  market  was  fully 
liberalized  from the  beginning  of  2013  eliminating 
regulated  prices  and  opening  the  market  to 
competition. Estonia is part of  the Nord Pool Spot 
power exchange and from 2013 all the prices have 
In  2014, 
been  determined  by 
wholesale  electricity  prices  were  below  EU 
average.  
In  2014,  wholesale  gas  prices  were  above  EU 
average.  Estonia 
gas  market 
finalised 
liberalisation  process  at  the  beginning  of  2015. 
Several companies have now licenses for importing 
gas.  In  2013,  household  electricity  and  gas  prices 
were  below  the  EU  average,  being  the  3rd  and  8th 
lowest electricity and gas prices respectively. 2 

the  market. 

its 

in 

the  EU 

The  retail  gas  market  is  assessed  among  the 
highest 
terms  of  customer 
in 
satisfaction 3 .  In  contrast,  the  retail  electricity 
market  is  assessed  below  the  EU  average  (23th 
position).  

The  completion  of  smart  metering  roll-out  by  the 
beginning  of  2017  has  been  decided  by  the 
Estonian national grid code. 

CONTRIBUTION OF ENERGY TO CONSUMER PRICE EVOLUTION 

Inflation  of  consumer  prices  has  decreased  importantly  in  Estonia  compared  to  the  pre-crisis 
period. Past volatility in inflation was largely due to non-energy items. In Estonia and in the rest of 
the Euro area, oil prices have declined in 2014, driving overall inflation at historically low levels. 

Source:DG ECFIN based on Eurostat 

VULNERABLE CONSUMERS 

Source: Eurostat http://ec.europa.eu/eurostat/statistics-explained/index.php/Energy_price_statistics  
10th Consumer Markets Scoreboard (June 2014),   

2  
3  
http://ec.europa.eu/consumers/consumer_evidence/consumer_scoreboards/10_edition/index_en.htm 

4 

-505101520052007200920112013% increase on a year earlierNon EnergyEnergyAll itemsEstonia : Price evolution & the contribution of energy prices-10123420052007200920112013% increase on a year earlierNon EnergyEnergyAll itemsEA : Price evolution & the contribution of energy prices 
 
 
 
 
 
 
 
                                                                 
Towards an Energy Union - Estonia 

Based  on  a  EUROSTAT  survey  on  income 
and living conditions, three proxy indicators 
are  used  to  assess  fuel  poverty.  The  fuel 
poverty  meter  is  below  the  EU  average. 
Less than 3% of households were unable to 
keep  their  homes  adequately  warm  while 
17.5%  experienced 
leakages  and  damp 
walls  in  their  properties.  Measures  against 
disconnection  in  winter  are  in  place  for 
electricity, gas and district heating. 

Source: European Commission, based on on EUROSTAT SILC survey 

3. Energy Efficiency and moderation of energy demand 

ENERGY EFFICIENCY TARGET 2020  
(6.5 Mtoe primary energy and 2.8 Mtoe final energy) 

Estonia's  2020  energy  efficiency  target 
states  that  2020  final  energy  consumption 
will have to remain at the 2010 level.  This 
means  consumption  of  no  more  than  2.8 
in  primary 
Mtoe  (6.5  Mtoe  expressed 
energy  consumption).  Additional  actions 
are  required  to  ensure  that  the  target  is 
met, 
the 
trends 
transport  sector,  since 
observed  in  final  energy  consumption  in 
2005-2013 continue, the target is at risk of 
being missed.  

in  buildings  and 
if 

including 

the 

 Source:  European  Commission,  based  on  EUROSTAT  and  on  national 
energy efficiency targets as declared by the MS under the Energy Efficiency 

Directive 

ENERGY INTENSITY 

Primary  energy  intensity  in  Estonia  increased  from  2005  and  remains  significantly  above  the  EU 
average. Nevertheless, a high energy intensity reduction is recorded in the industrial sector, i.e. about 
24% between 2005 and 2013, significantly more than the average energy intensity reduction in the 
EU28. 

Primary energy intensity of the economy (primary energy 
consumption/GDP)  

Final energy intensity in industry (final energy 
consumption/value added) 

Source: European Commission based on  EUROSTAT and European 

Commission/AMECO 

Source:  European  Commission  based  on    EUROSTAT  and 
European Commission/AMECO 

5 

 
 
 
 
 
 
 
 
 
 
 
 
 
Towards an Energy Union - Estonia 

Specific energy consumption by households is above EU average and remained quasi-stagnant from 
2005  onwards.  The  specific  energy  intensity  of  passengers  cars  increased  between  2005  and  2010 
which  reflects  a  less  efficient  usage  of  cars.  The  specific  energy  intensity  for  freight  transport 
increased consistently between 2005-2010 (by 44%), i.e. from the same unit of energy fewer tonnes 
of good are transported and/or on shorter distances. However, energy efficiency of freight transport 
in Estonia  remains  below  EU  average.  Estonia’s  performance  in  terms of  using  energy  efficient and 
clean transport technologies is relatively poor compared with other EU Member States. Estonia has 
made some progress in terms of improving the effectiveness of its transport infrastructure but  it is 
unlikely to lead to consistent improvements if passenger transport by car remain taxed at a low level.  

Final  energy  consumption  per  m2  in  residential 
sector, climate corrected 

Specific energy intensity for passenger cars and freight 
transport4  

Source: European Commission based on  Odyssee database 

Source:  PRIMES  model  background  data  and  estimations  based  on  EU 
Commission and EU MS inputs   

EU  legislation  sets  mandatory  CO2  emission  reduction  targets  for  new  cars  and  vans.  By  2021,  the 
fleet average to be achieved by all new cars is 95 grams of CO2 per kilometre. For new vans, the fleet 
average is set at 147 g/km by 2020. 

Source: European Environmental Agency. 2014 values are provisional. 2013 EU average refers to EU-27. 

Regarding transport performance, in EU-28 the inland freight modal shares are 71% by road, 17% by 
rail, 7% by inland waterways and 5% by pipelines. The respective inland passenger modal shares are 
82% by private car, 9% by buses and coaches, 7% by railways and 2% by tram and metro. In Estonia, 
as in the other Baltic states, rail is widely used in freight transport.  

Modal share Estonia 

4  

Statistics  on  energy  demand  for  passengers  and  freight  transport  are  not  available  and  model  estimates  have  been 
used instead. These issues should be borne in mind when comparing energy intensity in freight or passenger transport 
between Member States, which should be regarded as merely indicative. 

6 

 
 
 
 
 
 
 
 
                                                                 
Towards an Energy Union - Estonia 

Source:  Eurostat  and  EU  transport  in  figures  2015.  Data  refers  to  2013.  Modal  shares  based  on  tonne-kilometres  for  freight  sector  and 
passenger-kilometres for passenger sector, freight data based on activity within country territory. Estimates are made when data is missing. 

4. Decarbonisation of the economy 

NON-ETS GHG EMISSION REDUCTION TARGET 2020  
(+11% by 2020 as compared to 2005 in the non-ETS sector) 

Estonia 

Estonia  has  decreased  it  emissions  by  5% 
between  2005  and  2014  (based  on  2014 
approximated  data).  According  to  its  2015 
projections, 
to 
overachieve  its  2020  target,  with  a  13%  gap 
its 
between  the  projected  emissions  and 
target  as  compared  to  2005.  Emissions  are 
expected  to 
in  the 
transport sector. 

in  particular 

expected 

increase 

is 

Source:  European  Commission    based  on  EEA.  Based  on  preliminary 
inventory data. 

ESD  (Effort  Sharing  Decision)  emissions  are  the  emissions  from  sectors 

not covered by the EU ETS. 

Non-ETS 
Emissions (vs. 
2005) 

Projections with 
existing measures 
2020 

Proxy 2014 

Projections/pro
xy 

target 

-2% 

-5% 

+11% 

+8% 

7 

 
 
 
 
 
 
 
      
 
 
Towards an Energy Union - Estonia 

RENEWABLE ENERGY SHARE TARGET 2020 (25%) 

With  a  renewable  energy  share  of  25.62%  in 
2013, Estonia is already above its 25% target for 
2020. 

Source: European Commission based on  EUROSTAT 

GREENHOUSE GAS EMISSION  INDICATORS 

  Estonia is the second largest carbon-intensive economy in the EU, and has one of the highest 

 

carbon intensity of energy use.  
In 2014,  the  revenues from the auctioning of  ETS allowances amounted to  EUR 7.4  million, 
out  of  which  around  50%  are  used  or  planned  to  be  used  for  energy  and  climate  related 
purposes, mainly in support of energy efficiency projects.   

Largest Sectors of GHG 
Emissions in 2012 (*) 

Energy/power industry 

Transport 

Industry 

Agriculture (incl. forestry & 
fishery) 

Residential & Commercial 

Waste & others 

Estonia 

EU 
Average 

69% 

12% 

8% 

8% 

2% 

1% 

33% 

20% 

19% 

12% 

13% 

3% 

(*)Sectoral breakdown for 2013 data not available 

GHG Emissions 

Estonia 

EU 

EU ETS auctioning  revenues 
in 2014 (EUR millions) 

Share of ETS emissions in 
2013 

7.4 

3205 

73% 

42% 

16.5 

GHG emissions/capita in 
2013 (tCO2equivalent) 
Carbon intensity of the 
economy in 2013 
(tCO2equivalent/EUR 
millions) 
Source: European Commission  based on EEA 

1285 

8.5 

328 

ENERGY & TRANSPORT TAXATION 

Energy and transport related taxes as a share of GDP are slightly above the EU-average, largely due to 
the high share of fuel taxation. Receipts from vehicles taxation, on the other hand, are negligible. The 
overall tax burden has increased since 2005, largely on account of increased  receipts from heat and 
electricity taxation, but also from transport fuel taxation. 

8 

 
 
 
 
 
 
 
 
 
 
Towards an Energy Union - Estonia 

Source: Eurostat 

5. Research, innovation and competitiveness 

RESEARCH AND INNOVATION 

Estonia  is  near  the  EU  average,  above  the  US  and  below  Japan  and  South  Korea  in  terms  of  public 
support share allocated to research and innovation in the field of energy and environment. In terms 
of  intensity  of  low-carbon  technologies  patents,  Estonia  is  much  behind  the  EU  average  and  main 
worldwide partners. 

Source: European Commission based on  EUROSTAT   

COMPETITIVENESS 

Real unit energy costs (% of value added) 

The  real  unit  energy  costs,  that  is  the  amount  of 
money spent on energy sources in order to obtain 
one unit of value added, is close to the EU average 
but  higher  than  in  the  US,  and  has  proved  to  be 
very  stable  since  2000.  The  energy  intensity5 of 
Estonia's  manufacturing  sector  is  higher  than  the 
EU's  and  the  US,  which  is  compensated  by  lower 
real energy prices. 
Regarding  electricity  and  gas  prices  paid  by 
industrial  customers,  they  are  slightly  below  EU 
average  and  more  or  less  in  line  with  OECD 
average. 

5  

The  energy  intensity  presented  here  is  derived  from  Use  Tables  of  WIOD,  see  "Energy  Economic  Developments  in 
Europe SWD(2014)19". 

Source: European Commission 

9 

0.01.02.03.0EEEU-28Energy & Transport related taxes % of GDP, 2005TransportvehiclesTransport fuelHeat &Electricity0.01.02.03.0EEEU-28Energy & Transport related taxes % of GDP, 2012TransportvehiclesTransport fuelHeat &Electricity13.99.58.214.113.28.814.113.78.00246810121416EEEU27US200020092011 
 
 
 
 
 
 
 
 
  
 
                                                                 
Towards an Energy Union - Estonia 

Source: European Commission based on EUROSTAT and IEA 

6. Post-2020 Energy and Climate policy Strategy  

COMPREHENSIVE MEDIUM TO LONG-TERM STRATEGY (post-2020) 
FOR CLIMATE AND ENERGY  

  The  current  National  Development  Plan  of  the  Energy  Sector  (2009)  covers  energy  and 

energy-related climate policy objectives for Estonia until 2020.  

  A  new  National  Development  Plan  of  the  Energy  Sector  (ENMAK  2030+)  is  expected  to  be 
consulted with the Parliament and approved by the Government in 2015. The new plan will 
include energy and climate policies and objectives for the period up to 2030, with an outlook 
to 2050. In the current draft it is proposed to set an indicator of 45% of renewables in final 
energy  consumption  by  2030.  Final  energy  consumption  is  to  remain  at  the  2010  level  by 
2030  (the  same  as  the  2020  target)  whereas  it  is  proposed  to  reduce  greenhouse  gas 
emissions in the energy sector by 70% by 2030 (base year 1990). Estonia is also preparing its 
Low Carbon Development Strategy, to be adopted by the parliament by the end of 2016. 
  More general environment and climate-related objectives for the long run are contained in 
the  Estonian  National  Strategy  on  Sustainable  Development  (2005)  and  in  the  National 
Environmental Strategy (2007), both covering the period up to 2030. 

  The elaboration of Estonia’s Draft National Climate Change Adaptation Strategy (NAS) and of 
a complementary action plan, is currently in progress. The final documents are expected to 
be completed by the end of 2016. 

  The elaboration of the Estonian Low Carbon Development Strategy up to 2050 is currently in 

progress and expected to be approved by the Parliament by the end of 2016. 

NATIONAL TARGETS, especially for 2030 

Objectives, 2030-2050 

Targets 

Comments 

GHG reduction  
Renewable energy share 
Energy Efficiency / savings 

No 
No 
No 

7. Regional cooperation  

Regional  cooperation  on  infrastructure  development  is  necessary  to  optimise  the  identification  of 
regional infrastructure priorities and to coordinate cross-border investments. Estonia is a member of 
two  Regional  Groups  which  have  been  established  under  the  TEN-E  Regulation:  the  Baltic  Energy 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Towards an Energy Union - Estonia 

Market Interconnection Plan (BEMIP) Regional Groups for electricity and gas. 

EU  Member  States  cooperation  in  the  energy  sector  in  the  Baltic  Sea  region  has  brought  many 
benefits  for  the  participating  countries.  The  work  and  achievements  within  the  framework  of  the 
Baltic  Energy  Market  Interconnection  Plan  (BEMIP)  agreed  in  June  2009  and  with  subsequent 
amendments  in  2011  and  2013  respectively  proved  that  enhanced  regional  cooperation  can  be  a 
catalyst for positive developments both in energy infrastructure projects or market related aspects. 
The  MoU  on  reinforced  BEMIP  was  signed  on  8  June  2015  with  the  overall  goal  to  ensure  further 
market and system integration of the Baltic States into European Continental network and ensure its 
full market functioning also strengthening the organisational structure of the BEMIP. The new MoU 
and Action Plan also foresees regional  cooperation in new  energy policy areas, including electricity 
and gas markets, security of supply, power generation, renewable energy and energy efficiency. 

8. Cohesion policy contribution  

The EU Cohesion policy provides for important investment possibilities to implement energy policy 
objectives in Estonia which will be complemented by national public and private co-financing, aiming 
at  optimal  leverage.  It  also  ensures  integrated  territorial  solutions  to  challenges  by  supporting 
capacity  building,  technical  assistance  and  territorial  cooperation,  including  the  Baltic  Sea  Region 
macro-regional strategy in which Estonia takes part. 

Energy  efficiency:  Over  2014-2020,  EU  Cohesion  Policy  will  invest  some  EUR  238  million  in  energy 
efficiency  improvements  in  public  and  residential  infrastructure,  as  well  as  in  high-efficiency 
cogeneration and district heating in Estonia. A further estimated EUR 232 million will be invested in 
supporting the move towards an energy-efficient, decarbonised transport sector. These investments 
are  expected  to  contribute  to  around  40  000  households  with  improved  energy  consumption 
classification, as well as to around 110 km of reconstructed or upgraded railway lines. 

Decarbonisation:  Overall,  the  EU  Cohesion  Policy  investments  in  Estonia  over  2014-2020  are 
expected to contribute to an estimated annual decrease of GHG of around 40 000 tonnes of CO2eq. 
Over 2014-2020, EU Cohesion Policy will invest some EUR 10 million in renewable energy in Estonia.  

Research,  Innovation  and  Competitiveness:  Over  2014-2020,  EU  Cohesion  Policy  will  invest 
significantly in R&I and in SME competitiveness in Estonia. This will be based on the national strategy 
for smart specialisation. For Estonia, the strategy includes a focus on more efficient use of resources. 
At this stage, at least EUR 145 million is foreseen for investments in R&I and adoption of low-carbon 
technologies in Estonia, but this might increase further in line with the evolving content of the smart 
specialisation strategy. 

11