On March 23 of this year, the government initiated a special national planning process to identify the most suitable corridor for a hydrogen pipeline crossing mainland Estonia. According to Ministry of Economic Affairs and Communications (MKM) project manager Monika Korolkov, the process is still in its very early stages, with meetings currently underway with local municipalities to introduce the project and hydrogen technology.

The first phase of the special planning process is expected to cost around €1.5 million and a public procurement tender to find a consultant will be announced shortly. Korolkov explained that the initial planning area is based on a proposal by TSO Elering, taking into account the existing gas infrastructure and electricity grid.

More specific alternative route corridors running northward toward Latvia are expected to be identified by early next year. At present, the special planning process includes 24 municipalities, from Jõelähtme to rural municipalities in southern Estonia.

Just a few weeks later, on April 9, an agreement was signed in Riga that could fundamentally reshape the existing plans: Germany's leading gas infrastructure company GASCADE, German state-owned energy group SEFE (Securing Energy for Europe) and the Baltic Sea Hydrogen Collector (BHC) consortium, which brings together Finnish and Swedish developers, officially announced cooperation on building a major hydrogen trunk pipeline directly along the floor of the Baltic Sea from Finland to Germany.

The main driver behind both the overland and offshore projects is the German industrial sector's desire to replace hydrogen currently produced from natural gas with green hydrogen produced within the European Union, generated by wind farms in the region when electricity prices are low.

"Clearly, it would not make sense to put both of them into operation at the same time. As a first approach, it would make sense to build only one of them," said Elering CEO Kalle Kilk.

He emphasized that the key decision-makers are the endpoints — Finland and Germany — which are weighing the advantages and disadvantages of both options.

Elering prefers a land pipeline running through Estonia

Although building on the seabed would spare developers disputes with landowners and local governments, Elering strongly favors the overland route. According to Kilk, Estonia's national interests are at stake.

First and foremost, there is the economic interest — transit fees could generate revenue. "If we do not want this, we can immediately say they should bypass us, but that would not be sensible," Kilk said.

The overland project, which would pass through several member states, has a greater chance of receiving a high co-financing rate from the European Commission as a project of common interest, even though the route itself is clearly more expensive on land.

In addition, Kilk said that shared European energy corridors create mutual dependence. If German industry depends on a pipeline running through Estonia, that would increase allies' interest in protecting security in the region, Kilk emphasized.

Choice of route has direct impact on local developments in Estonia

Because hydrogen can only be transported economically over long distances in gaseous form via pipeline — unlike natural gas, it cannot simply be compressed into liquid form for shipping — production facilities need to be located close to the route.

If the offshore route is selected, it would be geographically relatively easy to connect it to the Gulf of Riga offshore wind farm, but this would likely require building a hydrogen production plant in western Saaremaa.

At the same time, the offshore route would cast serious doubt over the massive hydrogen plants planned for Pärnu County. "Pärnu is obviously quite far from the offshore route. For the Pärnu projects, it would certainly be easier to connect to a pipeline running overland," Kilk acknowledged.

Monika Korolkov agreed that if the overland pipeline does not materialize, the future of the Pärnu County plants remains uncertain. "That is indeed the case. But time will tell — today we are not able to assess that," she said.

Final decision expected at the turn of the decade

According to the Ministry of Economic Affairs and Communications (MKM), the German, Finnish and Norwegian consortia considering the seabed route have not officially approached the ministry. Korolkov and Kilk agree that the current parallel planning efforts are not wasted work, but rather necessary risk mitigation and a way to determine the best business case.

"We can abandon it at any point if we see that, in the end, it is not sufficiently profitable. But the fact that we are going through the planning process now — the potential benefits far outweigh the problems involved," Kilk noted.

Because this is infrastructure with an extremely long-term horizon, final investment decisions are not expected until 2030–2031 when the planning processes are complete and the true willingness of German industry to pay for Finnish hydrogen becomes clear.

If everything goes according to plan and the overland route is selected, hydrogen could begin flowing through Estonia in 2035 at the earliest.

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