Estonia

1) REFERENCES

Commission Opinion [COM(97)2006 final - Not published in the Official Journal]Commission Report [COM(98)705 final - Not published in the Official Journal]Commission Report [COM(1999)504 final - Not published in the Official Journal]Commission Report [COM(2000)704 final - Not published in the Official Journal]Commission Report [COM(2001)700 final - SEC(2001)1747 - Not published in the Official Journal]Commission Report [COM(2002)700 final - SEC(2002)1403 - Not published in the Official Journal]Commission Report [COM(2003) 675 final - SEC(2003) 1201 - Not published in the Official Journal]Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its Opinion of July 1997, the Commission expressed the view that Estonia would not have any major problems in approximating the energy related acquis in the medium term, provided that its current efforts were intensified. Areas of specific importance in the pre-accession period were the adjustment of monopolies including import and export issues, access to the network, energy pricing, State interventions, the restructuring of the oil-shale sector, emergency preparedness including building up mandatory oil stocks, energy efficiency and environmental norms. The Commission did not foresee any major difficulties for compliance with Euratom provisions.

The November 1998 Report confirmed that some progress had been made in this field with regard to adaptation of the legislation to internal energy market rules, although further efforts were needed in the areas mentioned in the earlier Opinion (adjustment of monopolies, access to networks, energy pricing, etc.).

The October 1999 Report, however, noted that no progress had been made with aligning Estonian legislation on the acquis. Further efforts would be needed if Estonia were to participate in the internal energy market. Further steps had been taken in the liberalisation of the energy sector, though a comprehensive plan for the restructuring of the oil-shale sector needed to be drawn up. No major difficulties were foreseen for compliance with Euratom provisions.

The November 2000 Report, however, noted that progress in this area had been limited. However, some progress had been made in restructuring the oil-shale sector. The first step of the sale had been completed with the sale of 49% of the shares in oil-shale power stations to a private strategic investor. There was, nonetheless, considerable progress still be made in many areas, including security of supply, energy efficiency, etc., in order to fully comply with the acquis in this field.

In the November 2001 Report, the Commission confirmed that Estonia had made some progress with regard to approximation with the acquis in this area. The government had adopted many legislative measures in areas such as the security of supply, the internal energy market, in particular that of electricity, and energy efficiency. The oil-shale sector was predominant in Estonia's energy supply and the long awaited restructuring plan for this sector had finally been presented. Efforts needed, nevertheless, to be stepped up to guarantee its implementation and to pay particular attention to some areas, notably that of the oil-shale sector.

The October 2002 Report emphasized that Estonia had made progress in harmonising with the acquis in the energy field, particularly in terms of abolishing price distortions and opening up the gas market. Legislation on the internal electricity and gas markets, energy efficiency and oil stocks had been harmonised.

The 2003 Report noted that Estonia was essentially meeting the commitments and requirements arising from the accession negotiations in the energy sector and was expected to be in a position to implement the acquis by accession. It needed to continue to build up oil stocks progressively, and open up the electricity and gas markets in line with the schedules agreed during the negotiations.

COMMUNITY ACQUIS

The key elements of the energy acquis consist of Treaty provisions and secondary legislation relating more specifically to competition and State aid, the internal energy market (including directives on electricity, price transparency, gas and electricity transit, hydrocarbons, licensing, emergency preparedness and, in particular, security stock obligations), nuclear energy, energy efficiency and environmental rules.

The Community acquis in the field of nuclear energy today consists of a framework of legal and political instruments, including international agreements. At present, it addresses issues of health and safety, including radiation protection, safety of nuclear installations, management of radioactive waste, investment, promotion of research, a nuclear common market, supplies, safeguards and international relations.

The White Paper (preparing the associated countries of Central and Eastern Europe for their integration in the internal market of the European Union) stresses in the section on energy the need for full application of key internal market directives in combination with EU competition law. As regards the nuclear sector, the White Paper refers to supply problems, safeguards and shipments of nuclear waste.

EVALUATION

Estonia has made progress in adopting legislative measures in order to align itself with the Community acquis. The Commission believes however that considerable efforts remain necessary to accomplish the implementation of the acquis.

Despite the efforts made by Estonia in the energy sector, it remains highly dependent on its major local fuel, oil-shale. The oil-shale question is closely connected to the security of energy supply situation. Since the last report, the Estonian Government adopted a law on minimum fuel stocks in March 2001. This law sets out the rules governing the constitution of oil supplies required by the acquis and lays down a schedule to achieve the minimum level in 2010. Estonia must step up its efforts to reach the oil reserves equivalent to 90 days' consumption required by the acquis.

As far as the internal energy market is concerned, restructuring of the oil-shale sector is continuing, but the process of privatising the sector which produces electricity from this substance risks, after its completion, giving rise to contradictions with respect to the opening of the market in EU law. The process of privatising the other electricity sector areas has been finalised. In the gas industry, the transposition of the EU directive on common rules for the internal natural gas market must be pursued. The high percentage of illegal fuels in the liquid fuels market is also a problem.

The Energy Act Amendment Act concerning the regulatory procedures of the Energy Market Inspectorate entered into force in 2002. Further amendments to energy legislation are necessary to fully implement provisions of the internal market for electricity and gas.

Estonia has been granted a transitional arrangement to implement the market-opening provisions of the Electricity Directive by the end of 2008. It needs to strengthen the Energy Market Inspectorate, including in terms of its independence, given the potential conflict of interest stemming from the State's ownership of Eesti Energy and the Inspectorate's position under the jurisdiction of the Ministry of Economic Affairs. Estonia should transpose the recently adopted electricity and gas directives in line with the timetable laid down by the acquis.

In February 2000, Estonia, Latvia and Lithuania decided to create a Common Baltic Electricity Market as well as to establish power transmission links between the three countries. This constitutes an important step in preparation for the internal energy market. Furthermore, in May 2000, the two governments signed a cooperation agreement between Eesti Energy and Latvenergo.

In December 1998 Estonia signed the Kyoto Protocol, which should enhance energy efficiency in relevant sectors of the national economy. In January 2000, the Estonian government adopted the National Energy Conservation Programme and, during the period covered by the report, it adopted a number of legislative measures in this field such as the law on the energy efficiency of electrical appliances and a law on labelling. Estonia does not currently participate in the EU's SAVE II or THERMIE programmes, though participation in EU energy programmes could play a role in improving energy efficiency and promoting renewable energy.

Although Estonia does not generate electricity from nuclear power sources, it has inherited several nuclear facilities which give rise to radiological concern. Estonia also has two radioactive waste storage facilities, one of which has been decommissioned and the other closed. There are plans to transfer this waste to Paldiski. As a result, Estonia is still concerned by nuclear safety measures and should take into account the pertinent recommendations of the Council report adopted in June 2001 on nuclear safety in the context of enlargement. Estonia has concluded a Full Scope Safeguards Agreement with the International Atomic Energy Agency (IAEA). Estonia will need to ensure compliance with Euratom requirements and procedures. In this respect, due attention must be given to preparing for the implementation of Euratom Safeguards. Estonia should continue to pay attention to further strengthening the capacity of the Radiation Protection Centre.

Last updated: 14.01.2004