This country note features selected environmental indicators from the OECD Core Set, building on harmonised datasets available on OECD Data Explorer. The indicators reflect major environmental issues, including climate, air quality, freshwater resources, waste and the circular economy, and biodiversity. Differences with national data sources can occur due to delays in data treatment and publication, or due to different national definitions and measurement methods. The OECD is working with countries and other international organisations to further improve the indicators and the underlying data.
Environment at a Glance: Estonia
Estonia is a small, sparsely populated country, with an open, market-based economy that has a well-skilled workforce and a business-friendly environment. The country has experienced strong economic growth although gross domestic product (GDP) per person remains lower than the OECD average. Estonia is notable for its pioneering digitalisation of public services. It is endowed with large oil shale1 reserves and abundant forestry and water resources.
Estonia is located in northeast Europe, bordering the Baltic Sea and the Gulf of Finland, between Latvia and the Russian Federation. Estonia restored its independence in 1991. Since then, the country has adopted market reforms and has joined both the European Union (EU) and the North Atlantic Treaty Organization in 2004.
International trade plays a significant role in the economy. The country is a net exporter of several energy sources, notably primary solid biofuels, electricity and shale oil produced from oil shale. However, the country fully relies on imports for the provision of liquid transport fuels, such as diesel and gasoline, and natural gas. Forests cover about half of Estonia’s territory and forestry products also represent a significantly higher share of national exports than in most OECD member countries.
Estonia has notably decreased its greenhouse gas emissions (GHG), mainly due to an overall reduction in electricity and heat generation from oil shale and growth in generation from wind, solar photovoltaics and domestic forestry biomass. However, starting in 2021 net GHG emissions have been increasing due to a rebound in electricity and heat generation from oil shale and to land use, land-use change and forestry (LULUCF) becoming a net emissions source since 2017. LULUCF has been a notable emissions source since 2018, driven mainly by changes to Estonia’s forests, including increased logging. Forestry biomass plays a major role in Estonia’s energy system, accounting for 23% of total energy supply in 2022, and is a key fuel for heating (IEA, 2023[1]).
The role of oil shale and forestry production is reflected in the per person production-based and demand-based (or footprint) greenhouse gas (GHG) emissions, which have fluctuated considerably during 1995-2020. It has also resulted in Estonia being one of the few OECD countries where the production-based intensity has long been higher than the demand-based intensity.
Estonia is well endowed with fossil fuels mainly in the form of oil shale2. Oil shale was historically the source of electricity, supplying around 80% of the electricity consumed in Estonia in 2018. The use of oil shale has been decreasing, dropping to 56% of total energy supply in 2023. Meanwhile, the use of renewable energy sources have been increasing mainly in the form of biomass, wind energy and solar PV. The oil shale based electricity production has undergone major changes with opening of the new Auvere Power Plant in 2018 and the closing of old ones. Estonia imports most of the natural gas and petroleum products it consumes (OECD, 2023[2]).
The share of renewables in electricity production made a spectacular increase in recent years, from 16% in 2018 to 53% in 2023.
Except for ammonia, which emissions increased since 2000, the trend in major air pollutant emissions is decreasing, sometimes by a large amount, such as for sulfur oxide (SOx). The main reason for the significant decrease in SOx emissions since 2000 has been technology improvements in the oil shale fired Narva power plant, the largest power generator (OECD, 2017[3]).
However, emission intensities, both per person and per GDP, remain above OECD averages.
The main factor influencing overall trends in air quality has been implementation of the EU Air Quality Directives 2008/50/EC and 2004/107/EC, which set legally binding limits for concentrations of outdoor air pollutants. Estonia’s Ambient Air Protection Act regulates polluting activities, as well as data reporting and collection. It entered into force in 1999, was amended numerous times and is supported by a large number of implementing regulations (OECD, 2017[3]).
Despite improvements, population exposure to PM2.5 remains above the World Health Organisation threshold of 5 µg/m3.
Estonia has relatively abundant per person freshwater resources, and yet it suffers from moderate water stress. Cooling in electricity production represents the largest share of freshwater abstraction, which in Estonia is favoured by low rates of abstraction taxes (OECD, 2017[3]).
Although about 20% of the population is still not connected to wastewater treatment plants, Estonia has made good progress is wastewater treatment, with nearly all wastewater treatment plants providing advanced, tertiary, treatment.
With 372 kg/person/year in 2023, generation of municipal waste is well below the OECD average. Estonia has also made good progress in municipal waste management. In 2000 nearly all municipal waste treated was landfilled. The country now recycles an increasing share of municipal waste, while the majority is incinerated with energy recovery.
Estonia is one of the few OECD countries where per person domestic material consumption (and material footprint) has been increasing since 2000. Although the share of fossil carriers (mainly oil shale) has somewhat decreased in recent years, consumption of biomass has stagnated, while consumption of non-metallic minerals has increased considerably. As a result, material productivity has stagnated and is well below the OECD average.
Compared to the rest of Europe, Estonia is considered to have preserved a relatively high proportion of its natural environment. The traditional methods of agricultural practices are responsible for the higher conservation rate observed, with more important habitat destruction in Estonia having begun during the Soviet period (later relative to most areas in Europe). An estimated 40 000 species inhabit Estonia but, as of 2008, only 60% or 23 500 species have been identified.
Natural grasslands are declining as a result of conversion of agricultural land to forestry. Semi-natural grassland communities, dependent on continual human impact, such as mowing or grazing to prevent communities from growing into forests, are also on the decline. Old forests are also declining (CBD, 2022[4]).
With 20% of terrestrial protected areas and a bit less of marine protected areas, Estonia is above the OECD average and below the OECD-Europe average. More efforts are needed to reach the 2030 GBF target of protecting 30% of terrestrial and inland water areas, and of marine and coastal areas.
This section shows selected policy instruments based on data available for most OECD countries and does not provide a complete overview of countries’ policy mix to achieve their environment-related objectives. Interpretation should consider the country specific context.
Estonia’s excise duty rates are not based on GHG emissions or other environmental factors. In addition, Estonia is the only OECD country without taxation on private vehicles and has one of the oldest and least efficient vehicle fleets (IEA, 2023[1]).
Nevertheless, with 2.5% in 2022, Estonia’s share of environmentally-related tax revenue is above the OECD average. Their share in total revenues has increased since 2000 and is largely dominated by the energy base. Unlike other OECD countries, transport makes up a small tax base, smaller than the pollution base.
Support for fossil fuels in Estonia takes the form of exemptions to excise duties and reduced rates for specific fuels and usage. Marked diesel fuel used in agriculture is subjected to a reduced tax rate while exemptions are also applicable for fuels used for fishing. There are exemptions applicable for fuels used for mineralogical processes and in electricity production. Exemptions under these sectors are provided for by an EU directive and equivalent measures are present in Estonia’s neighbouring EU countries.
Since 2019, energy-intensive sectors can apply for reduced excise duty rates when they meet the necessary conditions set in the legislation. In a recent development, the government for construction of a shale oil plant has extended an aid worth EUR 125 million. As part of its pandemic relief measures targeting domestic consumers, the administration decided for lower excise duty rates on several fuels and electricity between 1 May 2020 and 30 May 2022 resulting in an estimated revenue foregone of EUR 76 million (OECD, 2023[2]).
In total, 73.9% of GHG emissions in Estonia were subject to a positive Net Effective Carbon Rate (ECR) in 2023. Explicit carbon prices in Estonia consist of emissions trading system (ETS) permit prices and carbon taxes, which cover 49.4% of GHG emissions in CO2 eq. With roughly 49.4% of total GHG emissions, coverage is largest for ETS. Fuel excise taxes, an implicit form of carbon pricing, cover 28% of emissions in 2023. About 68% of GHG emissions have a Net ECR above EUR 60 per tonne of CO2 eq., a mid-range estimate of current carbon costs. Net ECRs are highest in the road transport sector, which accounts for 17.2% of the country's total GHG emissions. The Net ECR is on average positive in all sectors (OECD, 2024[5]).
The share of environmentally-related government R&D budget has fluctuated wildly since 2002, but has recently settled on a downward trend, at only 1.5% in 2023. The share of renewables in public energy RD&D has also set on a downward trend in recent years, at about 13% in 2023.
Estonia is a minor player in environmentally-related inventions, and their share in total inventions is around the OECD average.
Estonia’s vision for development co-operation is to contribute to eradicating poverty and attain the Sustainable Development Goals (SDGs) by sharing its knowledge and experience. Estonia focuses its co‑operation on partner countries in its neighbourhood, including by scaling up assistance to Ukraine, and has priority partners in sub-Saharan Africa. Estonia’s total official development assistance (ODA) decreased in 2024 to USD 83.4 million (preliminary data), representing 0.20% of gross national income (GNI).
In 2022-23, Estonia committed 10.6% of its total bilateral allocable ODA in support of the environment and the Rio Conventions, up from 7.9% in 2020-21. The DAC average was 39% in 2022-23. Twelve per cent of screened bilateral allocable ODA focused on environmental issues as a principal objective, compared with the DAC average of 9.6%. Eleven per cent of total bilateral allocable ODA focused on climate change overall, up from 4.8% in 2020-21 (the DAC average was 34.8%). Estonia had a greater focus on mitigation (13.7%) than on adaptation (11.9%) in 2022-23. Eight per cent of screened bilateral allocable ODA (USD 0.8 million) focused on biodiversity overall, up from 0.4% in 2020-21 (the DAC average was 7.6%). (OECD, 2025[6]).
References
[4] CBD (2022), Country profiles: Estonia, https://www.cbd.int/countries/profile?country=ee.
[1] IEA (2023), Estonia 2023: Energy Policy Review, OECD Publishing, Paris, https://doi.org/10.1787/9e91fe6a-en.
[6] OECD (2025), Development Co-operation Profiles, OECD Publishing, Paris, https://www.oecd.org/en/publications/development-co-operation-profiles_04b376d7-en/estonia_42f7aec0-en.html.
[5] OECD (2024), Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down, OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris, https://doi.org/10.1787/b44c74e6-en.
[2] OECD (2023), OECD Inventory of Support Measures for Fossil Fuels: Country Notes, OECD Publishing, Paris, https://doi.org/10.1787/5a3efe65-en.
[3] OECD (2017), OECD Environmental Performance Reviews: Estonia 2017, OECD Publishing, Paris, https://doi.org/10.1787/9789264268241-en.
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← 1. Oil shale is an energy-rich sedimentary rock which contains organic matter in the form of kerogen, a waxy hydrocarbon-rich material regarded as a precursor of petroleum. It can be either burned for heat and power generation or used for producing liquid fuels.
← 2. In IEA statistics, oil shale is aggregated with coal when measuring primary energy supply. Most of the oil shale production is transformed into other petroleum products (i.e. for heating, chemicals manufacturing, marine fuels) that are exported, and is counted as negative to oil in total energy supply, resulting in a negative share in the energy supply mix.