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Created on: 2017-09-25 12:11:04
Last update: 2017-09-29 10:33:35 Environmental Paper Network
Estonia Fund for Nature & Estonian Council of Environmental NGOs (EKO)
Sergio Baffoni, EPN, +49 162 381 25 28
Siim Kuresoo, Eestimaa Looduse Fond
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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.
The investment group, Est-For Invest OU (Est-For), was established in 2016. Its owners include forest and wood-processing companies AS Lemeks, Caspar Re OU, Ivard OU, Kaamos Group OU, OU Combiwood and OU Tristafan. In January 2017 Est-For Invest submitted an application to the Ministry of Finance to initiate the planning process for the mill, with the potential location in Emajõgi river basin.
What must happen
Banks and other financiers should ensure the following set of safeguards is in place before considering proceeding with finance for this project:
- The Est-For pulp mill should only source wood with FSC certification;
- Water for the mill must be limited to a closed system, and any effluent should be at least as clean as the river’s water itself;
- An environmental impact assessment should be conducted according to high standards and
- Before allowing any large investments that will substantially increase the consumption of timber, the Estonian government must make sure that sustainable use of Estonia's forests is granted, including approving the appropriate legal measures.
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.
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.
The mill will be built beside the river Emajõgi that flows into the trans-boundary Lake Peipus, on the Russian border, which is already in a poor condition. Its border location already creates challenges for its protection and restoration. The new mill will add further harm to the lake’s ecosystem due to use of its water and release of waste water in the river (source: Report of the National Audit of Estonia).
Applicable norms and standards
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).
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.