When I arrived at the focal point of the Estonian Just Transition region, the Kohtla-Järve culture centre, on June 19th, the Just Transition Platform roundtable had already begun. I was late because of coming from the capital, some 150 kilometers away, and taking the bus. The bus schedule was thin as it was, and the corona crisis must have cut the departures even more.
On the upside, I had the pleasure of walking through the local town, admire the soon to be completed new sports and wellness centre and enjoy the green park surrounding the culture center. So it was a beautiful start to an important day that would play a role in steering the future of the region.
The roundtable hosted different stakeholders, all somehow affected by a transition to an economy with a lower environmental footprint. There were people from the local municipalities in the Ida-Virumaa shale region, ministries, industry representatives, unions and environmental organisations. The aim was to agree on the basics: what is it that we call “just” and where should the region “transition” to?
As the representative of environmental organizations, I was glad to admit that such a diverse group of stakeholders actually agree on the end goals of the process: that local municipalities should not lose its citizens, that there would finally be clarity and confidence about the fate of the local fossil fuel industry, and that the workers most affected are guaranteed a decent living into the future.
Hardi Murula, the representative of the Association of Ida-Virumaa Municipalities, expressed an understandable worry about the declining population of the region. Over the last 30 years, local municipalities have seen over 85,000 people leaving – this is equal to an entire county in Estonia. There is an old saying that applies: an empty bag does not stay upright.
It is challenging to maintain public services as the population rapidly declines. Also it becomes hard to develop alternative economic sectors that should ideally co-exist with the current industries to enable a very smooth transition – this can only happen when there are enough people for both sectors. Otherwise any plan put on paper will quickly crumble in reality. In the roundtable ideas were expressed to focus heavily on the development of the local living environment, that is public transport and services, urban space and culture.
Regarding public health, questions about air quality, water pollution and noise issues all relate closely to the fate of the local oil shale sector.
Currently, all stakeholders agree, the lack of long-term clarity is very problematic. While the oil shale sector is heavily influenced by world oil prices and environmental taxes, it is ultimately the government that decides to either continue supporting this extremely dirty form of fossil fuels. The current undecidedness means that the industry’s investment decisions, local governments’ budget plans, workers’ future prospects, young people’s educational paths and even home building choices, all become a blind gamble.
There is a certain impasse regarding the questions about the future of the oil shale sector, mainly because stakeholders are talking past each other to some extent. Some are asking if it is reasonable to entirely phase out the oil shale energy sector, including exportable oil shale production. Others believe that this scenario is unavoidable and the only question is when. The conflict may stem from different assumptions about the near-term trajectory of the CO2 emission quotas and world crude oil prices, the trend of overall environmental policies and the government’s willingness or ability to continue subsidising the oil shale sector.
In these debates a frequent old saying is used: do not fill up the old water well, before the new one is dug. While this may sound reasonable, there may also be another, more sinister saying that fits: only then will you build a lid for the well, when the child has already drowned.
The coming discussions, debates and arguments must ensure that whatever is decided this year about the economic development of the region is not a superficial transition that actually turns out to be a failed mission.
The transition can fail if the plans are short-sighted or lacking altogether. The biggest impact will be felt by those directly employed in the oil shale sector, but the wider community and the region will be affected as well. If the conclusion is reached that the highly polluting industry has to start closing down, the just transition process should first and foremost help the workers who currently enjoy a bigger pay than the regional average. It is important to ensure that the long term plans and obligations, e.g. home loans, do not get a sudden and prolonged hit.
There are many ways for the government to solve this wage challenge, as was also recently calculated by researchers from Tartu University – options range from complete compensation to paying the difference between the old and new salary. There are of course other approaches as well, and the exact measures should arise from broad discussions.
What is certain, however, is the fact that due to decades of inaction there is no cheap and easy solution on the table any more. If the oil shale sector is to continue, hundreds of millions in direct and indirect subsidies must be taken in account. If a fossil fuel production phaseout is planned, the companies and workers obviously expect compensations, as previously the government position had always flirted with the idea of never phasing out oil shale in Estonia.
Since the European Commission’s proposal for a Just Transition Fund expanded five-fold, the region of Ida-Virumaa really has an opportunity to make a real shift and not only engage in problem-shifting. The discussions about just transition continued June 26 on the national level, but the process will evolve all through the summer and new stakeholders are invited to join the discussions.
Environmental organisations want to see Ida-Virumaa transition into a resilient and life-worthy environment, from where people are not forced to leave, but want to stay and even move in. This demands a long-term plan with diverse solutions, that do not bet all the money on one sector with unstable market situation and high pollution.