The current mechanism for trading carbon dioxide emissions needs to be improved so that price changes are not so chaotic, Prime Minister Kaja Kallas said in a speech to the Estonian parliament on Tuesday about the sharp rise in energy prices.
She pointed out that there were a number of ways to stabilize electricity prices and the energy market as a whole, one of which was a change in the mechanism of the European carbon market.
“Life has shown that the current solutions are not the best and need to be reworked. It would be better for the economy if the carbon trading system were more predictable, more linear than it is now, reminiscent of a roller coaster ride,” the Estonian prime minister said.
According to her, the situation would be stabilized by more fixed-price contracts, which in turn would improve the conditions for electricity sellers.
Kallas said that “unlike exchange price contracts, where a very low price can be followed by a price increase, fixed price contracts guarantee a stable electricity price in the long run. they could offer lower fixed prices to households “.
The Prime Minister reminded that the Electricity Market Act has been submitted to the Estonian Parliament, which specifies the conditions for withdrawing from the contract.
According to Kallas, when the government discussed the situation in the electricity market at the meeting last week, a number of problems were crystallized and tasks were set to solve them.
First, the government has mandated three ministers to submit proposals in the first quarter for locations where wind farms could be built. Secondly, the so-called local benefit element has been developed, which, as Callas said, aims to increase people’s interest in building renewable energy capacity in their area.
Also, as the Estonian Prime Minister emphasized, a maritime spatial plan should be approved, which would include sites for the possible establishment of wind farms, and the fourth point of the plan is solutions for energy storage, as well as accelerated analysis of possible construction of a nuclear power plant in Estonia.
Callas said the problem of connecting renewable energy capacity to the grid must also be resolved quickly.
In order for Estonia to receive cheaper electricity from the Nordic countries, it is planned to establish a third interconnection between Estonia and Finland by 2030 – the interconnection “Estlink 3” built at sea.
The Prime Minister emphasized that hydrogen is the future of energy, so more attention should be paid to its potential.
Callas, the leader of the Reform Party, said that the Center Party was to discuss with another member of the ruling coalition the possibility of setting a price cap on the electricity exchange and abolishing distribution network service fees for companies. She added that government parties are trying to find common ground on these issues.
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