Dear colleagues from Latvia and Lithuania,
Honourable Commissioner Piebalgs
Excellencies,
Ladies and Gentlemen,

Hardly a day passes by without a conference, seminar, a study or major article on the subject of energy. We have all heard gloomy predictions about the near or more distant future. For some, already the present is gloomy enough.

Those days are well behind, when every state was sovereign in energy issues, producing a lot of its energy requirements from its own resources and enjoying the liberty to pollute as well. Today we have full interdependence – and often just dependence – in the field.

It has become commonplace to suggest that energy is our common concern – we cannot fight climate changes on our own, we cannot produce all the energy we need ourselves.

Recognising all this, we have adopted ambitious goals at the Spring European Council: to increase the share of renewables to 20% by 2020 and to attain the level of ten percent of biofuels in transport sector. These are important decisions which now need to be implemented.

I can assure you that the Estonian Government takes those commitments seriously and we will set ourselves an ambitious target as regards the use of renewable energy. We have already taken measures that will soon have their impact – a few months ago the Estonian Parliament adopted a law which guarantees very generous and competitive price for energy produced from renewable sources.

I know that our southern neighbour is way ahead of us, with even bigger share of energy coming from renewables, but we are working on ways for catching up with you.

On the global level, the main measure for fighting the dangerous global warming has been reducing CO2 emissions in the framework of the Kyoto process. Unfortunately, we are still at the start of the road.

Besides deepening our own commitment to fight climate change, we also need to get on board those important polluting countries that have not picked up their burden, both in the developed and developing world. In order to have really an impact on planetary processes, we have to do it together.

I am looking forward with a great interest to the proposal of the European Commission regarding the future of the emissions trading scheme after 2012. I hope that we can reach an agreement on the scheme by 2009 at latest – otherwise the companies would have no time at all to plan their activities.

Nevertheless, we have already come a long way. Just 20 years ago the Baltic States used to be among the biggest polluters in Europe. In Estonia we had two of the ten biggest sources of industrial pollution on the continent. Luckily, with the political and economic changes, the Baltic States have reduced their CO2 emissions by more than 50% since then.

We have received a lot of assistance in know-how and resources and I consider this an important contribution that the European Union has made to the development of our society. And we have made our contribution to a cleaner Europe.

As a result of our efforts, we have enjoyed generous quotas for our emissions. However, we have always known that this would come to an end, and rather sooner than later. Already starting from 2008, we have to cope with a new reality – the quotas suggested by the European Commission are on the same level with our current emissions.

Our economies are growing in double digits annually and this makes it difficult to keep the energy consumption and also emissions at the constant level. However, energy efficiency has improved, Estonia needs two times less energy for a GDP unit than just recently in 2001. Thus the energy efficiency of our economy keeps improving steadily.

We still have a lot to do. Efficient use of energy is still several times lower than the EU average. We will have to find ways to make our homes and working places more resistant to climatic conditions outside. Within the next five years the Estonian Government will invest 80 million euros to support the renovation of housing sector and other sustainable energy investments.

We will have to make more efficient use of oil shale – our main source of energy that has made us self-sufficient producers of energy for decades. Only this way will we be able to continue with large-scale mining of oil shale in the coming decades.

Ladies and gentlemen,

I would like to turn your attention from co-operation on the global and European level to our own Baltic and Nordic area. Actually, while in many other fields of life – banking, cultural exchange, co-operation in the EU – we can talk about a Nordic-Baltic area, it cannot be said about the energy sector.

On the eastern side of the Baltic Sea energy co-operation has been quite good. Estonia and Lithuania are net exporters of electricity, Latvia stores natural gas for both of us. Nordic energy markets are quite well integrated. Nevertheless, thus far the East and West coast of the Baltic Sea have remained distant, in terms of energy relations.

At last, in the end of the last year the 350 MW Estlink electricity cable was opened under the Gulf of Finland. By this morning, the total turnover of this cable has been 750 GWh of electricity – and the traffic has been both ways. In addition to profits it has brought increased security to our region – in case of changes in prices or disturbances at home the electrons can be made to move the other way.

This is only a beginning. We need to build more connections with other member states of the European Union. Without that, there can be no talk about being a part of the internal market in energy or applying the rules of the internal market here. I hope that in the next few years there will be another cable linking Estonia and Finland, a power bridge between Poland and Lithuania, hopefully some more.

These days one also hears about ideas to build a liquefied natural gas terminal in the Baltic States, why not in Estonia. At the same time the Baltic States should be connected by gas pipeline with Finland, the so-called Baltic Connector project. All this would significantly diversify our so far very one-sided gas supply.

I hope very much that the crowning achievement of Baltic energy co-operation, in fact Baltic co-operation as such on the par with Baltbat or joint air surveillance system, will be a joint nuclear power plant in Ignalina. I have to admit that a lot remains to be done. We have to decide, how powerful reactors we need, how we will divide participation in the company etc.

Building a nuclear power plant will go a long way in diversifying our energy sources. While not wanting to minimise the role of renewables, if we want to have major energy production without the harmful emissions of CO2, it can only be done by nuclear energy. This will again increase our self-sufficiency.

I am truly glad that at our joint meeting yesterday we have decided to extend an official invitation to the Polish Government to participate in the Ignalina project. This should not come as a surprise to anyone as preparatory work on business level has been going on for some time. But in addition to mere business interest there is also a reason to celebrate the political solidarity of the four EU member states that are willing to embark on joint project of ample proportions.

Connecting the Baltic States to the electricity grid to that of Central Europe will be a step further down the road to our complete integration to the European Union. By that time it will also include membership in the Schengen area and Eurozone.

Furthermore, it will enable us to become members in the UCTE. This is another major decision that we took with my Latvian and Lithuanian colleagues yesterday.

Ladies and gentlemen,

In the field of energy, Estonia has advocated all along that the European Union should be able to speak with a single voice with external producers and suppliers of energy. It will not be easy to achieve, as every member state wants to maintain control over its own energy mix. Inspite being a big optimist about European integration, I really do not expect member states to relinquish their sovereignty in this area in the near future.

This does not mean that we should not try. We should be able to reach common agreement on priority infrastructure projects and then behave in such a manner that would not jeopardise those projects. The single voice in foreign and security policy has been a long time coming and one should not expect anything easier with energy. However, I feel that the solidarity inside the European Union is getting stronger and that there is a reason to be optimistic about the future.

The EU imports 82 per cent of its oil and 57 per cent of gas. This means a lot of relations with third countries. Let me be clear. Solidarity and single voice should not mean veto rights over the legitimate energy imports of member states. I do not think that you can prescribe anyone when or how or from where one should import its energy carriers.

However, when we do take decisions that have an impact on the other member states or the environment, those member states should be consulted as well. I am glad that in recent times this will and solidarity has been there, making the Union again stronger.

Ladies and gentlemen,

Being in Riga today I am glad to note that energy co-operation has moved to the heart of Baltic co-operation. This is where we can really support each other and prove that our small size will not hold us back from big or innovative projects. I hope this co-operation will deepen with years to come.

I am glad that the European Union of 27 plays an increasingly active role in fighting climate change and developing an energy policy. I promise that Estonia will be an active and positive partner in all those matters.

Thank you