The Ministry of Climate is preparing a plan that would significantly accelerate the rate at which peat extraction fees increase over the coming years.

Until now, the peat mining fee has risen by 6.5 percent annually. Under the new proposal, the fee would increase by 10 percent in 2027 and then by 13.5 percent each year through 2036.

Antti Tooming, deputy secretary general at the Ministry of Climate, told ERR that peat is not a typical mineral resource like gravel or sand, as its extraction releases a considerable amount of greenhouse gases — something the current pricing system fails to account for.

"The basic principle is that when we use natural resources, the producer should pay a fair price that reflects the need to offset the environmental harm. This follows the 'polluter pays' principle. It's also important that the state receives a fair price for resources it owns and that the price allows for further development of the industrial sector," Tooming said.

According to Tooming, the current fee for the right to extract peat is €2.20 per ton. By 2036, it is projected to rise to €7.60 per ton — an increase of more than threefold.

Peat producers, however, see the ministry's approach as unfair and out of touch with reality.

Jüri Tiidermann, chairman of the Estonian Peat Producers Association, told ERR that if the state raises extraction fees as much as currently proposed, the sector would essentially cease to exist within a few years. He warned that companies would no longer be able to compete in international markets.

Tiidermann said the association has submitted a compromise proposal to the ministry, suggesting that fees rise by 7 to 10 percent annually. This would bring Estonia's environmental charges in line with those in neighboring countries.

"In Latvia, a compromise was just approved where the resource fee will rise to €3.50 starting in 2027. We proposed exactly the same: we're willing to increase the fee from €2.20 to €3.50 — a one-time rise of about 50 percent — which would then be frozen for a set period. In Latvia, it's frozen for five years," said Tiidermann.

Tooming, however, maintained that the ministry's analysis shows peat producers can handle the proposed increase in extraction fees.

"Looking at the long term, once the final rate is reached in 2036, the extraction fee would make up about 5 percent of total production costs. The economic analysis showed that Estonian producers are capable of absorbing this cost. Of course, producers vary — some are larger, some smaller. Larger ones are certainly more capable and smaller ones may struggle more. But overall, the conclusion was that the increase is manageable," Tooming said.

The Ministry of Climate plans to submit the draft law for public consultation either at the end of this year or early next year.

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