Earlier this week, it was announced that the government had agreed to redirect unused EU funding to defense. On Friday, more details were given about where the funding would come from.  

The government will allocate nearly €195 million in unused EU funds to the defense sector. These are cohesion policy funds that had been planned for use by the end of 2029.

The money will now go toward developing military mobility, such as road and railway construction, as well as the defense industry.

The largest share redirected to defense — €85 million — comes from the Ministry of Climate's budget. Support for the circular economy and waste management planned for the coming years will be cut by €31 million.

The savings are being made from areas the ministry says have attracted very low interest.

The amount of money for apartment building renovations will also be cut by €26 million. Support for renovations will be cut by €6 million. Funding for the national renovation loan program, channeled to apartment buildings through the Housing Investment Fund, will decrease by €20 million.

"Since commercial banks have, as a result of recent support rounds, begun lending on much more favorable terms and almost nationwide, demand for these financial measures has been much lower than expected, making it possible to cut funding from the unused allocations," a ministry spokesperson said.

€17 million less for climate change adaptation

The Ministry of Climate will also redirect €9 million, originally intended for public transport, to defense. This means no additional application rounds will be announced for building multimodal public transport hubs in larger cities and nearby municipalities.

Funding for the development of Tallinn's tram network will also be reduced in areas where the city has not applied for investment support.

The ministry said this is money that cities have not used in open calls, so redirecting it to defense will not leave any ongoing projects unfinished.

The ministry will also reallocate €17 million from climate change adaptation to defense. For example, €12 million will be cut from the local heating support program.

Funding for cities to develop greening plans and address flood damage will also be slashed.

Countries will likely get more leeway in meeting climate targets

All of these areas are in some way connected to climate goals agreed upon in the European Union.

The EU has agreed that member states must reduce emissions in both the forestry and land use sector (LULUCF) and in transport, buildings, agriculture, and waste management. This is officially known as the Effort Sharing Regulation.

Countries that fail to sufficiently reduce carbon emissions will, in a few years, have to buy greenhouse gas emission units from other countries.

Marten Kokk, secretary general of the Ministry of Climate, said that diverting money to defense will make meeting Estonia's climate goals more difficult.

"Absolutely. It is certainly true that achieving the target will be harder, but looking at what's happening in the real world, we are willing to take that risk. If we see that a problem arises somewhere, we can actually put the money back there," Kokk told ERR.

However, he added that there is a very strong likelihood that in the coming years, member states will be given more breathing room in meeting climate goals that have significant impacts on national budgets. This may include making them more flexible.

"In implementing climate goals, it must certainly be taken into account that since there will be fewer resources [money] for meeting them, and more will be needed elsewhere, member states should have opportunities through flexibility to manage this so that no one ultimately has to buy anything [greenhouse gas emission units from other countries]. That is not an end in itself. The goal is for these climate targets to be reasonable and for no one to start smashing glass ceilings with their head, that's clear," Kokk said.

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