Government to redirect waste and climate money into national defense
The government has decided to redirect €195 million in previously unused EU funds to the defense sector. The largest portion of this funding will come from money that had originally been allocated for climate initiatives or waste management. The reallocated funds will go toward the defense industry or projects such as road construction aimed at improving military mobility.
Estonia received a total of €3.4 billion from the European Union for the current seven-year budget period. This refers to cohesion policy funding, which was intended to be used by the end of 2029.
Three-quarters of that amount has already been allocated by Estonia. The remaining quarter — €812 million — has not yet been earmarked and the government has now decided to redirect a quarter of that sum, or €195 million, to defense over the coming years.
In May, ERR reported that ministries had been tasked with designating how many millions from the cohesion funds they would redirect to defense.
The Ministry of Climate was tasked with redirecting €85 million, the Ministry of Education and Research €38 million, the Ministry of Economic Affairs and Communications €24 million, the Ministry of Social Affairs €17 million, the Ministry of Regional Affairs and Agriculture €16 million, the Ministry of Justice and the Ministry of Digital Affairs €14 million and both the Ministry of Culture and the Government Office €3 million each.
Triin Tomingas, head of the foreign financing department at the Ministry of Finance, said that ministries have now made decisions on which sectors will be used to fund the defense allocation.
The Ministry of Climate will contribute the most — its full €85 million allocation. According to Tomingas, the funds had originally been designated for waste management and climate-related measures. Other redirected funds come from areas related to air quality protection, radiation safety and efforts to increase the share of renewable energy in end-use consumption.
Tomingas also noted that the Climate Ministry plans to redirect funding from a program aimed at upgrading household heating systems. Under this program, people could replace old heating units with newer, cleaner and more efficient systems.
Just this May, Climate Minister Andres Sutt (Reform) signed new program guidelines expanding the range of support. In addition to replacing boilers or stoves, funding is now available for any solid-fuel heating systems that pollute outdoor air. Newly eligible expenses include connecting to district heating and drafting construction plans.
Tomingas pointed out that approximately €640 million in EU funding had originally been allocated for waste management and climate measures during this budget period.
"Even if €73 million is redirected, it's actually a very small share," she said.
Other sectors where previously developed plans were revised and funds are being redirected to defense include IT investments related to e-government, education, integration, the creative industries, regional development, the labor market and social policy.
The Ministry of Social Affairs will contribute €17 million to defense. According to Tomingas, this funding comes from programs aimed at achieving and maintaining high employment levels. In the past, the State Shared Services Center has used this funding to help improve youth employability and support their integration into the workforce or education system.
Tomingas added that in reallocating funds from various sectors, the government sought to cut only those programs where demand for certain measures had turned out to be lower than expected or where the original goals could still be met with a smaller budget.
€79 million for road construction
Neither Estonia nor other EU member states are allowed to use unused EU funds to purchase ammunition or military equipment.
Estonia has decided that the largest share — €85 million — of the redirected EU funding will go toward military mobility. This means the plan is to invest in infrastructure to enable the Estonian Defense Forces (EDF) or allied troops to move around the country more quickly and without obstacles.
According to Tomingas, the plan includes allocating €59 million to the construction of the Tallinn–Pärnu–Ikla highway, €20 million to the Tallinn–Tartu highway and €6 million to the Rail Baltica project. She noted that these are part of trans-European priority corridors for military mobility.
Defense industry and national defense AI
A total of €52 million will be used to develop the basic infrastructure for a defense industry park in Ermistu. This includes building access roads, installing electricity and water connections, constructing perimeter fencing and storage facilities — everything necessary to launch industrial operations.
Another €20 million will go toward constructing infrastructure to support allied troop reception and Estonian Defense Forces facilities. Tomingas noted that it has not yet been finalized whether the funding will be directed to the Reede or Narva bases, or possibly to the command center in Pärnu.
€24 million is earmarked for a product development program for defense companies. The goal is to boost the competitiveness of Estonia's defense industry and support the creation of innovative, high-value-added products.
An additional €15 million will go toward a defense-sector research initiative. This includes developing capabilities for testing defense technologies and advancing artificial intelligence applications that support national defense.
Tomingas said that in selecting projects, time constraints had to be taken into account — specifically, that the funds must be used by the end of 2030. "We could only choose projects that are clearly feasible in the coming years and that ensure the full disbursement of the allocated funding," she said.
Hopes for a final agreement this fall
While Estonia had previously planned to use all EU funds allocated for the current budget period by the end of 2029, it is now likely to receive a one-year extension from the European Commission. This means the funds redirected to the defense industry or military mobility must be used by the end of 2030 at the latest.
However, all new investments and changes to how EU funds are used must be negotiated with the European Commission, and according to Tomingas, those discussions are still ongoing.
"The ministries submitted their detailed input on the reallocations in mid-July and we are now reviewing it, clarifying details and putting together a complete package to informally submit to the European Commission at the beginning of September. That will be followed by negotiations and we plan to formally submit the package before the end of the year, or earlier, if consensus is reached with the Commission. The new investments could then begin in early 2026," she said.
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Editor: Marcus Turovski, Barbara Oja
