Estonian pathways �to a climate neutral and resilient energy sector

Javad Keypour

Transition from fossil-based to renewable system

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Security implications of the transition

1. Reducing the dependence to external (mainly Russian) fossil fuel sources;
2. Mitigating climate change;

1. From fossil dependence to material dependence;
2. Potential conflicts and contradictions between food and energy security;
3. Cyber security threat;
4. Pollution shift in energy production (especially in short term)

1. De-politicization of energy?
2. Political instability in petrostates?
3. Future of OPEC, IEA, and other energy IOs?
4. New non-state actors, this time around mineral resources?
5. New resource curse?

Transition’s implications for energy security

Concerns about finite essence of fossil fuels

Conquering on intermittency issue

Geopolitical concerns

Access to geographically bound renewables

Carbon offsetting

Carbon neutrality

Inexpensive and stable external markets

Import vs production dilemma

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How can we experience a secure transition?

SEI Tallinn contributes to a secure transition strategy for Estonia

• Security of supply must be preserved in the time of transition, delicately.
• This urges utilizing the existing infrastructure to pave the way for a carbon-neutral system, while avoiding it becoming

stranded assets.

• Achieving the carbon-neutral energy

system entails carbon neutrality in all energy sub-systems:

• Heating and cooling systems
• Natural gas
• Electricity

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Heating and cooling demand by 2050

Biomass status quo change possibly will result in heat pumps being favoured as the most market-ready and energy-efficient heating option:

• Biomass-driven decarbonisation: Unchanged biomass demand (to 12.986 TWh by 2050 from 12TWh in 2021), if digitalization and renovation goals are achieved.
• Electrification scenario will require an additional 6,596 TWh of electricity demand.
• Ambitious renovation targets for the Estonian building stock are the key achieve high energy efficiency targets in the H&C sector, which is an inevitable factor for waste heat utilization, deploying renewable H&C technologies, and employing low temperatures in district heating lines.

Electrification prevails in Estonia, but gradually!

A joint regional gas market saves security of supply

Considering the recent import cut on Russian natural gas:

• The preliminary qualitative analysis proposes to have LNG terminal capacity deployments as a solution short-term solution and also as a solution where NG is still considered an important energy vector for the regional gas mix in 2050.
• The ongoing analysis compares the NG-based reference case with the decarbonization pathways where green gases like biomethane (B.M), hydrogen (H2), and synthetic natural gas (SNG) will be the energy carriers in the 2050 gas mix.

Source: Gasgrid Finland

Several pathways are available for reaching carbon neutral electricity

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It will be a big economic opportunity, not a cost

• Investment required will range between 9-14 billion euros (except CCU)
• All pathways will have a positive impact on GDP (except CCU)
• Required electricity price to cover investments will range between 90-140 euros
• All pathways will ensure the security of supply (with the help of storage, demand-side management, dispatchable units and interconnectors)
• Key to unlocking these investments will be to simplify and speed up planning and permitting, improve access to capital, involve local stakeholders/communities/households

Thank you!

javad.keypour@sei.org