Erik Gamzejev: What will happen to Ida‑Viru County after the 340 million euros are spent?
Researchers at the University of Tartu note in their study that although the Just Transition Fund has initiated new activities in Ida‑Virumaa, the question remains of what will happen once the fund's money has been used up, writes Erik Gamzejev.
A group of University of Tartu researchers presented part of their findings to the public this week. In simple terms, the study examines how satisfied Ida‑Virumaa residents are with their lives.
The official name of the research and development project is "The socio‑economic well‑being of Ida‑Viru residents and labor‑force monitoring." Observing and studying Ida‑Virumaa residents will continue for years and costs nearly 1.5 million euros.
The funding comes from the Just Transition Fund, intended as an elixir to preserve life in Ida‑Virumaa after the region's main industry, oil shale, becomes effectively taxed out of existence by European climate policy. The fund also provides work and income for researchers, consultants, trainers, communications specialists and others outside Ida‑Virumaa. Hopefully for the benefit of Ida‑Virumaa.
The survey results published so far about residents' expectations did not reveal much new. The main conclusion is that if there are jobs with decent pay, schools, healthcare options and affordable prospects for establishing a home, people will stay. If not, they leave. High unemployment and lower income create insecurity and increase anxiety.
These facts apply to all regions far from Tallinn and Tartu. If residents of South or West Estonia were surveyed, the results would be similar.
Ida‑Virumaa's specific situation is that the exhaustion of the oil‑shale industry through EU carbon‑trading rules has accelerated negative trends. If, for example, the European Commission decided that spas must buy water‑use quotas on a fluctuating market, making their survival uncertain, then a Just Transition Fund would also be appropriate for Pärnumaa and Saaremaa.
In Ida‑Virumaa, many positive developments have emerged thanks to the fund, and more are expected. The first stage of the Narva magnet factory has been completed. Last week, a grand and unique nature spa opened on the shore of Lake Peipus, becoming a new landmark for the region. The Jõhvi film studios will soon be finished. Companies are being established in the Kohtla‑Järve business park. Construction of an oxygen plant is underway in Auvere.
With the fund's support, dozens of small businesses have built new facilities and purchased equipment. Local university colleges have strengthened their footing. Municipalities also have their "department" in the fund: Alutaguse renovated the old post office in Iisaku into a new municipal building, Jõhvi is building a new social‑services center, and Kohtla‑Järve is giving new life to the Punamütsike kindergarten. The same fund has also covered costs for cultural festivals and sports events.
Compared to how much employment and tax revenue oil‑shale companies previously provided to local residents, municipalities and the state, the one‑time 340‑million‑euro fund is still only a garnish on the plate.
The Just Transition Fund has turned out to be a slower‑acting painkiller than hoped. Creating new businesses does not happen as quickly as politicians would like. Several companies that received support a year or two ago have not yet begun construction. Some have withdrawn due to high risks. The fund helps significantly with building facilities and acquiring equipment, but entrepreneurs must also convince lenders and investors to put their own money into the idea.
The shutdown of an industry can happen quickly through political decisions. Restructuring an economy and creating new businesses is more like an ultramarathon, where not all participants reach the finish line.
Given past experience, Estonian politicians should strongly defend the interests of local industry during the ongoing reform of the EU emissions‑trading system. We should avoid repeating the situation from about ten years ago, when a still‑functioning heavy industry was strangled first, and only afterward was a long‑term plan created. New‑generation companies should be successfully launched before considering the downsizing of fossil‑based industry.
University of Tartu researchers note in their study that although the Just Transition Fund has initiated new activities in Ida‑Virumaa, the question remains: what happens when the fund's money is gone?
How can we ensure that the good initiatives already started do not collapse before gaining momentum and producing results? Preparations should already begin for a second and possibly third stage of the Just Transition Fund. A strong Ida‑Virumaa with a diverse economy benefits all of Estonia.
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Editor: Kaupo Meiel, Argo Ideon
