Estonia’s recovery and resilience plan

RRF FUNDED PROJECTS IN ESTONIA

WHAT’S IN THE PLAN?

The reforms and investments in Estonia’s plan are helping it become more sustainable, resilient and better prepared for the challenges and opportunities offered by the green and digital transitions. Following Council approval of Estonia’s plan on 29 October 2021, Estonia’s recovery and resilience plan was updated on 16 June 2023 also to introduce a reform and investments that address REPowerEU objectives.

^{*The plan is entirely financed by RRF grants.
**This value includes the transfer from the Brexit adjustment reserve requested by Estonia and Estonia’s REPowerEU grant.}

• 28 investment streams and 17 reforms
• 59% of the plan will support climate objectives 
• 24.1% of the plan will foster the digital transition.    

The transformative impact of Estonia’s plan is the result of a strong combination of reforms and investment which address the country’s specific challenges. A key focus of the plan is on the green and digital transitions, with measures to improve energy efficiency and develop renewable energy; increase the sustainability of transport and mobility; support companies in the twin transition, in particular start-ups and small and medium-sized enterprises; further digitalise public services; and increase the labour market relevance of the education and training system, notably as regards green and digital skills. The plan contains measures to improve the accessibility and resilience of the health system and envisages some improvements to the social safety net and access to social services. Equal opportunities and social and territorial cohesion are important cross-cutting themes in the plan.

All measures have to be implemented within a tight time frame, as the Regulation establishing the Recovery and Resilience Facility requires all milestones and targets within the national plans to be completed by August 2026.

Estonia’s plan now includes one reform and two investments to reduce its reliance on fossil fuels, in line with one of the REPowerEU Plan's objectives..

To finance this increased ambition, Estonia has asked for its share of the Brexit Adjustment Reserve to be transferred to the plan, amounting to €6.6 million. These funds would be added to Estonia's REPowerEU grant of €83.3 million.

Key measures for REPowerEU

Estonia proposed the following three measures under its REPowerEU chapter:

1. Scaling-up an existing reform to accelerate the decarbonisation of the energy system and supporting the transition to renewable energy (EUR 31.8 million)
2. Programme to increase the access of renewable energy production to the electricity distribution system (EUR 38 million);
3. Increasing production and uptake of sustainable biogas and biomethane (EUR 20.2 million).

Estonia has also addressed the challenges to diversify imports of fossil fuels and to ensure sufficient capacity of interconnections without resources from the RRP. It managed to stop buying Russian gas by cooperating with Finland to put in place a floating storage and regasification unit and it continues its efforts to synchronise its electricity network with the EU electricity network.

In the area of climate and environmental policies, Estonia’s challenges include decarbonisation of its economy, in particular to reduce dependency on oil shale in electricity generation, energy efficiency of buildings and sustainability of transport. Green transition in the enterprises also needs to pick up to adhere to the principles of circular economy and implement new technologies to increase resource productivity.

Key measures for the green transition

• The plan supports the green transition through:
  • investments into green hydrogen technologies (€50 million),
  • Increasing the capacity to connect renewable energy installations, to produce renewable electricity in industrial sites, and piloting energy storage solutions (€55 million),
  • the construction of the Rail Baltic viaducts (€31 million),
  • setting up the Green Fund to support innovative green technologies (€90 million).
  • Energy-efficient renovation of 3500 dwellings (€75 million)
  • Boosting offshore wind parks development (€67 million)
  • Connecting Rail Baltic to sea connections with the Nordic Countries via the construction of the Tallinn Old Port tram line (€36.5 million)
• Key reforms include:
  • incentivising the production of renewable energy by removing administrative barriers and setting targets and actions to phase out oil shale in electricity production,
  • strengthening advisory services and digital tools to promote energy efficient renovations,
  • adopting a new strategic approach to mobility and implementing a common transport system for the Tallinn capital region.

The modified plan, including the REPowerEU chapter, has further strengthened the focus on the plan on the green transition, devoting 59% of the available funds to measures that support climate objectives (up from 41.5% in the original plan).

Digital challenges for Estonia include the digital transformation of enterprises, especially of small and medium-sized enterprises and in sectors where the potential of digital technologies has remained insufficiently exploited so far, and the provision of digital skills. While Estonia is a front-runner on eGovernment, another challenge is to further modernise public services, including by enhancing capacities to fight against money laundering.

Key measures for the digital transition

Estonia’s recovery and resilience plan supports the digital transition with investments and reforms in particular as regards:

• digitalising companies (€58 million), including small, medium and micro businesses; 
• digitalising the public administration (€97 million), with measures aiming at upgrading digital government services drawing on the latest technologies, in order to improve their resilience, security, and efficiency, and reduce the administrative burden for both citizens and businesses;
• increasing connectivity (€24 million), with support to the deployment of very-high capacity networks in rural areas, which should contribute to the reduction of the digital divide;
• Strengthening the capacity to fight money laundering (€4 million).

Key challenges for the Estonian economy include enhancing productivity growth; addressing skills shortages; increasing the resilience and accessibility of the health care system, improving the adequacy of the social safety net and of the provision of social services, including of long-term care.

Key measures in reinforcing economic and social resilience

• The plan reinforces economic and social resilience in particular as regards improving access to health care (€72 million) with measures aiming at:
  • the construction of the TERVIKUM health centre in Viljandi,
  • modernising e-health governance,
  • strengthening of primary care,
  • addressing health workforce shortages;
• It strengthens social resilience (€10 million) with measures aiming at incentivising youth employment through a combination of wage and training support, extending the duration of unemployment benefits in periods of high unemployment, introducing measures to reduce the gender pay gap, and improving the provision of long-term care, in particular for children with higher care needs; 
• It reinforces the competitiveness of Estonian companies (€33 million), with measures aiming at developing regional and country-specific export strategies, and promoting Estonian companies at global events; developing innovative business centres in key foreign markets.

Annual events facilitate the exchange of views on the state of implementation of the Recovery and resilience plans, while ensuring close cooperation between all stakeholders and providing a platform to discuss interlinks between the Plans and other Union programmes. 

More information on Annual events held in Estonia can be found here

Estonia’s plan is consistent with the challenges and priorities identified in the European Semester, the annual cycle of coordination and monitoring of each EU country’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)

DOCUMENTS