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Home › Dodgy Deals ›
Dodgy Deal
Est-For Pulp MillEstonia

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Work partners:
Estonia Fund for Nature & Estonian Council of Environmental NGOs (EKO)
Contact:

nature@banktrack.org

 

Last update: 2019-05-31 00:00:00
Emajogi River (Tartu area Estonia) a large part of which is protected as a Natura2000 site. Photo: Keith Ruffles via Wikimedia Commons (CC-BY-SA 3.0)

Project – On record

This profile is no longer actively maintained, with the information now possibly out of date
Work partners:
Estonia Fund for Nature & Estonian Council of Environmental NGOs (EKO)
Contact:

nature@banktrack.org

 

Last update: 2019-05-31 00:00:00
Why this profile?

What must happen

Banks and other financiers should ensure a comprehensive set of safeguards is in place before considering finance for any mil project.  These should cover all of the requirements in Green Paper, Red Lines, and in the case of the Est-For mill should pay particular attention on the following issues.

  • There are many indicators that there is not enough timber from truly sustainable sources to supply the amount required by the Est-For mill.
  • Given the mill’s dimension and scale, the effluents into the Emajõgi river will irrevocably damage the ecological balance of its water basin.
  • Careful scrutiny should be given to the claims about greenhouse gas emissions from the mill. So far, the full short-term and long-term forest carbon impacts have not been accounted for in a credible life cycle analysis.
  • The new European regulation on accounting of emissions from land use, land use change and forestry (LULUCF) will require a reduction of logging from Estonian forests, that is incompatible with existing logging rates and even more with further logging intensification
About
Sectors Pulp, Paper and Paperboard Mills
Location
Status
Cancelled
Design
Agreement
Construction
Operation
Closure
Decommission
Website http://biorefinery.ee/en/

The Est-For pulp mill project in Estonia is a planned biorefinery that will produce energy and pulp, projected to launch production in 2022. It would have a production capacity of up to 700,000 tons of pulp annually, which would require an input of three million cubic meters of pulpwood and wood chip each year; an enormous amount in the Estonian context. The project developers state that the project would source timber from "existing wood flow", however forests in Estonia are already overexploited, and there is no commitment to use timber from credibly certified sources.

Wood supply would primarily come from within Estonia, with additional sourcing from Latvia or Lithuania if necessary. The project requires an investment of EUR 1 billion.

Impacts

Social and human rights impacts

The Emajõgi river provides recreation opportunities for a large area of Estonia, and is the basis for a growing eco-tourism industry that mostly benefits local communities. Many eco-tourism companies have expressed their concerns over impacts on the river health and from increased logging.

In December 2017, the Estonian Fishermen's Community issued a very detailed statement, expressing opposition to the mill, due the high pollution it would cause to the Emajõgi river.


Environmental and climate impacts

Forest management
The project's size is enormous not only by Estonian standards. The Est-For pulp mill will require 3,000,000 cubic meters of pine, spruce or birch wood each year - almost a third of total timber felled in the country each year. Timber will be mainly purchased from Estonia and partly from Latvia. The project developers state that the project would source timber from "existing wood flow", however forests in Estonia and Latvia are already overexploited, there is no commitment to use timber from credibly certified sources (FSC), and as such the project is expected to add to these problem. 

The way Estonia manages its forests is currently at a point where environmental organisations on one side and the state and private forest owners on the other disagree on what the maximum logging volume should be. EKO (Environmental Council of NGOs) claimes that "the state had no idea what the logging volume of the current year would eventually be, and had not made any efforts to effectively limit logging volumes. The state had no sufficient overview of the industry either. Surveys had already shown that the current disorganized approach negatively affected the forests and the habitats it provided to the local fauna."

A new large consumer of forest resources like the planned pulp mill would worsen the current situation. Before the next large investments, measures needed to be taken to guarantee a sustainable use of Estonia's forests, including the appropriate legal measures. A recent OECD report recommended: “Encourage sustainable forestry management, including by limiting the intensity of forest use, and disseminating knowledge on sustainable forestry practices among private forest owners.”

In 2016 a study on Fungal Ecology was published suggesting that intensive management of Estonian forests, especially spruce dominated forests, poses a threat to rare wood inhabiting fungi. Furthermore, in the past years several changes to the Forest Act gave preference to those using timber industrially. The additional need for large volumes of timber will only worsen this process.

Biodiversity 

In 2016 a study was published suggesting that intensive management of Estonian forests, especially spruce dominated forests, poses a threat to rare wood-dwelling fungi.

Even more threatened is the flying squirrel (Pteromys volans L.)  The population of this rare mammal, whose habitat ranges from the Baltic Sea in the west to the Pacific coast in the east, is decreasing with every passing year. The Alutaguse forest district, in the north-east of the county, is the last permanent habitat of Estonia’s most endangered animal, These animals favour old growth forests, and they are seen as in indicator of the quality and health of the habitat. In the early 1990s, the habitat of flying squirrels covered 3180 square kilometres, but this has now shrunk to 550, a decrease of more than 80% over the last twenty years. There are currently less than 40 nesting places of flying squirrels left.

Birds also suffer from the consequences of intensive logging. In January 2017, the Estonian Ornithological Society warned that between 1984 and 2016, the abundance of forest-related species has decreased by an average of 60,000 bird pairs per year (0.5%), due to changes to forestry legislation and intensified forest management, leading to significant negative impacts on Estonian forests.

Water management
The mill will be built near the major Estonian river Emajõgi and will not use totally chlorine free technology (TCF), nor a closed water cycle, putting at risk local water ecosystems, which are already under severe stress. The mill will discharge a huge amount of effluents (1.2 % of the river flow), containing chloride, potassium, carbon, calcium and sulphate ions, threatening the credibility of national plans to reduce the river pollution to meet European Union requirements, and causing further harm to the lake’s ecosystem (source: Report of the National Audit of Estonia).


Other impacts

Governance 

According to the TV station Pealtnägija show, the State Forest Agency RMK agreed with Est-For 15 years supply of timber. RMK was lead until December 2016 by an  Est-For investor, and father of Est-For representative, Mati Polli. He resigned just before the new mill project have been announced. According to the Pealtnägija show, the agreement between RMK and Est-For had been signed beforethe project was made public. It is not clear whether the deal had been initially agreed before or after Mati Polli’s resignation from RMK board, but critics note that in either case he could have had an undue influence.

Local Communities 

In March 2018, the City Council of Tartu released a strong position statement opposing the project, drawn up by consensus by all political groups: "Due to the unlawfulness and questionability of current procedural steps, the implementation of a national special plan is forbidden and the procedure for the drawing up of a national special plan must be called off." Rural municipalities in Tartu County have voiced similar opinions, with seven out of its eight local governments following the city's move. The decision came after meetings with all stakeholders, including the company that is promoting the new mill. Despite strong local concerns, the government decided to move forward with the national designated spatial plan for the establishment of the infrastructure necessary for the operating of the Est-For pulp mill. The City Council of Tartu has announced that it will take action against that decision.

Financiers

Est-For states on its website that its investors represent 100% Estonian capital. These investors are: Aimar Varula, Arvo Türner, Heiki Vahermets, Peedo Pihlak, Toomas Mets and Virko Lepmets (OÜ Combiwood), Peeter Mänd (Ivard OÜ), Kaido Jõeleht (Kaamos Group), Jüri Külvik (Lemeks Grupp), Mati Polli (Tristafan OÜ) and Tiit Nilson (Woodwell).

Given the high amount of finance needed for this project (EUR 1 billion) it is expected that private sector banks will become involved.

 

Institution type
Finance type
Year
Companies

Project sponsor

Est-For Invest OU

Estonia
Website
Est-For Invest OU is the consortium that leads this project. It consists of the six companies listed under 'other companies'.
No companies

Other companies

Caspar Re OU

Estonia

Combiwood OU

Estonia
Website

Ivard OU

Estonia

Kaamos Group

Estonia
Website

Lemeks Group

Estonia
Website

OU Tristafan

Estonia
No companies
Governance
Norms & standards
Other regulations

Applicable norms and standards

FSC Principles and Criteria

Inclusion of Greenhouse Gas Emissions From Land Use, Land Use Change Aand Forestry (LULUCF) into the 2030 Climate and Energy Framework. EU European Commission – Statement, Commission welcomes agreement on key legislation to tackle climate change, Brussels, 14 December 2017,

News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Estonian government opts to initiate termination of pulp mill spatial plan

2018-06-21 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Gallery: Nearly a thousand Tabivere residents in pulp mill protest

2018-06-20 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

EU commissioner voiced against the mill project

Ansip changes his mind about billion-euro pulp mill close to Tartu
2018-05-12 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Tartu City Council to take Estonia to court over pulp mill plan

2018-04-19 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Tartu City Council: Pulp mill designated spatial plan must be called off

2018-03-08 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Mill would increase temperature of Emajõgi River at wastewater release site

2018-02-12 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Billion-euro pulp mill deal with RMK may be in conflict of interest

2018-02-01 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Two researchers critical of emissions analysis for planned pulp mill

2017-12-20 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

Estonia’s trees: Valued resource or squandered second chance?

2017-11-02 | Mongabay
Blog
BankTrack news BankTrack blog Partner news Partner blog

Environmental Paper Network is concerned about a huge biorefinery in Estonia

2017-10-20 | Mandy Haggith – Environmental Paper Network
BankTrack news BankTrack blog Partner news Partner blog

Estonian court rejects environmentalists' appeal of pulp mill plan

2017-09-25 | ERR.ee
BankTrack news BankTrack blog Partner news Partner blog

Environmental activists take legal action against €1 billion pulp mill plan

2017-09-19 | Err.ee
BankTrack news BankTrack blog Partner news Partner blog

NGOs coalition Estonian Council of Environmental NGOs (EKO) 

2017-06-28
BankTrack news BankTrack blog Partner news Partner blog

NGOs: Planned billion-euro pulp mill needs more thorough assessment

2017-06-13 | ERR.ee
BankTrack news BankTrack blog Partner news Partner blog

Government to deliberate planning exception for pulp mill

2017-05-11 | ERR.ee
BankTrack news BankTrack blog Partner news Partner blog

Developer: Pulp mill near Emajõgi eliminates dependency on Estonian lumber

2017-05-05 | ERR.ee
BankTrack news BankTrack blog Partner news Partner blog

€1 billion pulp mill to be built near Tartu

2017-03-22 | ERR.ee
BankTrack news BankTrack blog Partner news Partner blog

Est-For plans to build pulp mill in Estonia

2017-02-10 | CW Group
BankTrack news BankTrack blog Partner news Partner blog

Proposed Biorefinery Would Represent Largest Industrial Investment in Estonia

2017-02-08 | Forest2market
BankTrack news BankTrack blog Partner news Partner blog

Est-For Invest to invest in wood-working mill

2017-01-11 | CW Group
Resources
Documents
Videos
Links
2018-05-18 00:00:00

Bio-refinery: new name, dirty old story

Concerns about pollution, forest degradation and climate change emissions from an Estonian pulp mill and biomass energy plant - EPN Discussion Document 7
NGO document
2018-05-18 00:00:00 | Environmental Paper Network (RPN)
2018-05-12 00:00:00

Kadri Runnel, Conservation status of Estonian polypores

University of Tartu, Faculty of Science and Technology, Institute of Ecology and Earth Sciences
Other document
2018-05-12 00:00:00
2018-05-12 00:00:00

Joint statement to stop Irresponsible Est-For Pulp Mill

Elbiku, Estonia 25 April 2018
NGO document
2018-05-12 00:00:00 | EPN and others
2017-10-03 00:00:00

Letter from EPN and others to Est-For Invest OÜ on Est-For biorefinery development poses risks to environment

Correspondence
2017-10-03 00:00:00 | EPN and others
2017-06-13 00:00:00

Estonian Fund for Nature report: Significant Threats to Construction of a Timber Refinery

(document in Estonian)
NGO document
2017-06-13 00:00:00 | Estonian Fund for Nature
2012-03-26 00:00:00

Effectiveness of measures for improving the status of Lake Peipus

Has the pollution lo ad in Lake Peipus decreased?
Other document
2012-03-26 00:00:00 | National Audit Office of Estonia
2017-02-02 00:00:00

Environmental performance reviews Estonia 2017

Other document
2017-02-02 00:00:00 | OECD
2016-12-07 00:00:00

River Basin Management plans

Other document
2016-12-07 00:00:00 | Ministry of the Environment of Estonia

Est-For Biorefinery: New name, dirty old story - 24 May 2018

2018-05-29 16:54:37

Estonian Council of Environmental NGOs (EKO)

Esti Metsa Abiks (Helping Estonia's Forests) Facebookpage

Estonian Fund for Nature

Global Foret Watch

Estonia

Global Foret Watch maps

Estonia, Tree cover loss

Updates

2018

2018-06-21 00:00:00 | Estonian government opts to initiate termination of pulp mill spatial plan

The Estonian government at its Thursday Cabinet meeting decided to initiate the termination of the national designated spatial plan for a planned €1 billion pulp mill in Southern Estonia. According to the government's decision, the circumstances that hinder the realisation of the plan have arrived aAnd are in complete opposition to the community, also highlighted by several legal disputes (Err.ee).

2018-02-01 00:00:00 | Billion-euro pulp mill deal with RMK may be in conflict of interest

Documents in the possession of ETV's "Pealtnägija" show that the State Forest Management Centre (RMK) and pulp mill developer Est-For Invest concluded an advance agreement guaranteeing the yet-unbuilt mill half of the RMK's pulpwood over a 15-year period. Critics of the deal see this as a conflict of interest or even prohibited state aid (Err.ee).

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