Eco-Innovation in Estonia

Eco-innovation in Estonia

EIO Country Profile 2018-2019

Eco-Innovation Observatory

The Eco-Innovation Observatory functions as a platform for the structured collection and analysis of an extensive range of eco-innovation and circular economy information, gathered from across the European Union and key economic regions around the globe, providing a much-needed integrated information source on eco-innovation for companies and innovation service providers, as well as providing a solid decision-making basis for policy development. The Observatory approaches eco-innovation as a persuasive phenomenon present in all economic sectors and therefore relevant for all types of innovation, defining eco-innovation as: “Eco-innovation is any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole life-cycle”. To find out more, visit www.eco-innovation.eu and ec.europa.eu/environment/ecoap

Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect the position of the European Commission.

Eco-Innovation Observatory

Country Profile 2018-2019: Estonia

Author: Dominik Beckers

Coordinator of the work package: Technopolis Group Belgium

1 Acknowledgments This document has been prepared with the kind support and advice of the following experts: • Erki Ani, Chief Executive Officer, Cleantech ForEst • Mihkel Krusberg, Estonian Ministry of the Environment, Environmental Management Department.

A note to Readers Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect the position of the European Union. A number of companies are presented as illustrative examples of eco-innovation in this report. The EIO does not endorse these companies and is not an exhaustive source of information on innovation at the company level.

This brief is available for download from https://ec.europa.eu/environment/ecoap/country_profiles_en

1 Table of contents

Summary …………………………………………………………………………………………………………….. 3 Introduction ...... 4 1 | Eco-innovation performance ...... 5 2 | Selected circular economy and eco-innovation areas and new trends .. 9 3 | Barriers and drivers to circular economy and eco-innovation in Estonia 14 4 | Policy landscape in Estonia ...... 16 REFERENCES ...... 22 ANNEX: Policy strategies and instruments ...... 25

2 Summary

Estonia continues to not capitalise on its full potential, which particularly lies in digital readiness and associated skills, and falls behind the EU average performance, hence finding itself at the lower-midfield end of the spectrum of the Eco-innovation Index 2019. Only Malta, Croatia, Slovakia, Poland, Romania, Cyprus, Hungary and Bulgaria trail Estonia’s overall composite Eco-innovation Index score of 73. However, this score, which is 27% below EU- average, represents a substantial improvement vis-à-vis previous years (2017: 60 / 2016: 62 / 2015: 59 / 2014: 58 / 2013: 56 / 2012: 63 / 2011: 62). This improvement can therefore be considered a positive sign in the country’s eco-innovation ambitions. In terms of sub- indicators, socio-economic outcomes and eco-innovation inputs are the nation’s two driving forces. Resource efficiency, on the other hand, is a major deficiency in which Estonia is ranked last among all EU Member States (MS). In general, a strong and consistent political and economic will to foster eco-innovation and circular economy in all its different shapes and forms is present in Estonia. In particular, the circular economy as a topic as well as an economic mode has increasingly gained attention. The three-stage development of the national circular economy action plan, of which the first stage has already been completed and the second one is currently in the making, is a testimonial for this endeavour. A novel measure that is intensively addressed in Estonia can be found in ecodesign. In light of the EU’s ecodesign directive, the EcoDesign Audit was developed by the Sustainable Design Lab of the Estonian Academy of Arts. The national bioeconomy strategy is currently being drawn up, too. The Ministry of Environment, being the institution in charge, intends to finalise and roll out this strategy once the Estonian bioeconomy development study “Bioeconomy value chains in Estonia” (2018-2021) is finished. Resource efficiency, albeit being one of the major weak points of eco-innovation in Estonia and its economy, and having considerable room for improvement, is addressed through programmes and support schemes as well. Several drivers and barriers can be identified, too. On one hand, digitalisation continues to be a major driving force benefitting eco-innovation. Being used across many different levels, digitalisation and Estonia’s approach to it has given the country a competitive edge. This has also translated into a considerable surge of cleantech and its establishment as a crucial pillar of the national economy. Within this context of technological and digital advancements, human resources and knowledge capital continue to develop in a direction favourable for eco- innovation and circular economy advancement. In particular, ICT professions are gaining in popularity among younger people. However, the generally high awareness of environmental concerns among the Estonian population has only poorly translated into lifestyle changes, as green values and attitudes are only partially adopted and followed through. Moreover, in terms of access to investments and funding, Estonia continues to be somewhat dependent on the EU’s means, particularly with regard to RDI. This is similarly reflected in the country’s overall RDI landscape, which is subject to several structural issues. In general, eco-innovation appears to be driven by the demand of foreign actors, which creates a distinct dependency of the entire Estonian scene on foreign support.

3 Introduction

Estonia continues to be a prime address for businesses, foreign investment and knowledge capital, which is supported by an advanced digital infrastructure across different levels. However, one also needs to take into consideration that said foreign investment and knowledge capital is more of a prerequisite than a supporting driver to foster eco-innovation. In fact, the Baltic nation is somewhat dependent on foreign demand, investment and funding, the latter being a major burden for SMEs to access funds (Dutt, et al., 2019). The Northernmost Baltic country finds itself exposed to urgent environmental issues which, however, are not exceedingly more dramatic than in other countries. Nature conservation, water and air quality are at high levels, and access to drinking water is ensured. Nonetheless, considerable room for improvement remains. Estonia continues to be one of the most resource-intensive countries throughout the EU and has been ranked the most resource- intensive country within the scope of the current eco-innovation observatory. In this light, it is strongly encouraged to progress towards more efficient solutions for its economy and industry. A similar verdict can be made for the nation’s waste handling. While recycling has more than doubled since 2018, the rate of overall waste treatment reaches only half the EU average, thereby causing Estonia to not meet the EU 2020 recycling target of 50% (Ministry of Finance, 2018). In particular, the oil shale industry, which produces approximately 80% of total waste, is an inevitable point of concern (Directorate-General for Environment, European Commission, 2017). In light of the UN’s Sustainable Development Goals (SDGs), Estonia faces several challenges. For instance, the loss of terrestrial and marine ecosystems and a decrease in biodiversity are as much of a problem as they are a product of many different sources such as the use of fertilisers, changes in land use or increased overall pollution. Furthermore, “the absolute value of greenhouse gas emissions had not decreased in Estonia by 2016 as compared to the year 2000, instead, this value had slightly increased (13.4%)” (Oras, 2018) On a more immediate level, the COVID-19 outbreak, which was in full effect at the time of writing, has hit the Estonian economy considerably. Forecasts estimate that the economy as a whole will shrink by 6-14% in 2020 alone. Experts identified four major pathways through which impacts will be channelled: i) the direct impact of restrictions, ii) tourism and travel services, iii) exports and imports of production and iv) private consumption and investment (Eesti Pank, 2020)

4 1 | Eco-innovation performance

The analysis in this section is based on the EU 28 Eco-innovation Index (EcoI Index) for the year 2019. The Eco-innovation index demonstrates the eco-innovation performance of a country compared with the EU average and with the EU top performers. EcoI Index is a composite index that is based on 16 indicators which are aggregated into five components: eco-innovation inputs, eco-innovation activities and eco-innovation outputs as well as environmental outcomes and socio-economic outcomes Figure 1 EU28 Eco-innovation Index 2019, composite index

Source: EIO, 2019 Estonia continues to not capitalise on its full potential, which particularly lies in digital readiness and associated skills, and falls behind the EU average performance, hence finding itself at the lower end of the spectrum of the Eco-innovation Index 2019. Only Malta, Croatia, Slovakia, Poland, Romania, Cyprus, Hungary and Bulgaria trail Estonia’s overall composite Eco- innovation Index score of 73. However, this score, which is 27% below EU-average, represents a substantial improvement vis-à-vis previous years (2017: 60 / 2016: 62 / 2015: 59 / 2014: 58 / 2013: 56 / 2012: 63 / 2011: 62). This improvement can therefore be considered a positive sign in the country’s eco-innovation ambitions. The Baltic state’s performance can furthermore be analysed and contextualised according to several indices as presented in Figure 1.

• Socio-Economic Outcomes This category takes into account the eco-industries’ exports and employment, as well as the value added in environmental protection and resource management activities in the country. Estonia’s strongest element of its eco-innovation aspirations can be found in its socio- economic outcomes score, which is considerably above EU average performance (175; 75% above EU average), and trails only Luxembourg’s, Finland’s and Austria’s respective values.

5 Accordingly, employment in eco-industries as a relative measure of total employment across all companies is about 2.8 times bigger than EU average, and finds itself at similar levels to countries such as Austria and Luxembourg. In a similar vein, the generated turnover in eco- industries as a relative appropriation of total revenue across all companies in 2017 is about 2.3 times the EU average. This value makes Estonia one of the top performing countries in this respect. Similar to previous years, within the umbrella category of socio-economic outcomes the measure of exports of products from eco-industries as a percentage of total exports in 2018, however, falls behind and matches only half the EU average. • Eco-Innovation Inputs This category considers the share of the government’s environmental and energy R&D appropriations and outlays, R&D personnel and researchers, as well as the value of green early-stage investments in the country. Whereas eco-innovation inputs had repeatedly proven to be one of the weaknesses of Estonia’s eco-innovation aspirations in the past, they now indicate modest above-average performance. Thanks to the respective composite index score of 106, the Baltic nation finds itself in similar spheres as countries such as Slovenia and the UK. Particularly the total value of green early-stage investments in USD per capita has surged from as little as 32% of EU average in earlier reports to more than 400% between 2016-2019. Similar to abovementioned eco-innovation outputs, this sub-domain distorts the mean index score for eco-innovation. By contrast, the total R&D personnel’s and researchers’ share of total employment in Estonia lies about 44% below EU average. Even more drastically, Estonia achieves only a quarter of the average score of governments’ environmental and energy R&D appropriations and outlays as a relative measure of GDP in 2018. • Eco-Innovation Outputs This category concerns the eco-innovation-related patents, academic publications and media coverage in the country. An opposite trend can be identified for eco-innovation outputs. While having been a driving force in the past, the value of 46 for this sub-indicator lies 54% below EU average, and is only trailed by Bulgaria, Croatia, Hungary, Romania and Slovakia. All three sub-indices display below-average performance. For instance, Estonia’s index score for eco-innovation-related patents per million population in 2016 of 0.21 is less than half the EU’s average of 0.48 and finds itself in similar spheres as the Czech Republic, Latvia and Spain. The deficiencies within the category of eco-innovation outputs are particularly evident in the realm of Estonia’s composite index for eco-innovation-related publications per million population in 2018, which is the second weakest throughout the entire EU after Bulgaria’s. Surprisingly, this sub-category used to be one of the Baltic nation’s driving forces in the past. Less extreme, yet slightly lagging indicators could be retrieved for the field of eco-innovation-related media coverage per number of electronic media in 2019, where the score of of 0.29 lies no more than 17% below EU average and ranks at comparable levels to those of Austria, France, Germany and Sweden. • Eco-Innovation Activity This category includes the implementation of resource-efficiency actions and sustainable products among SMEs, as well as the number of ISO 14001 certificates in the country. Less pronounced and advanced scores are also representative of the eco-innovation activity index, which has a value of 60, and is thereby 40% lower than the EU average as well as 21% below Estonia’s corresponding index in 2017. In terms of specific measures considered for the determination of said index score, the overall volume of ISO 14001 registered organisations

6 per million population by 2016 (394) is the second highest among all 28 EU MS, exceeding the average of all countries by more than three times, and being second only to the Czech Republic. On the other hand, Estonia ranks last in both implementation of resource-efficiency actions among SMEs in 2017 and in implementation of sustainable products among SMEs in 2017. • Resource Efficiency This category reflects the material, water and energy productivity in the country, as well as the GHG emissions intensity. As regards resource efficiency, not only does Estonia rank last amongst all 28 MS, its respective index score equals 0. To understand this outstandingly low score, one needs to know that all countries are assigned a score between 0 and 1 for each sub-domain, with 0 being the score of the worst performer. Since Estonia ranked last in all four sub-domains within the category resource efficiency (hence, four times 0), the nation has consequentially been assessed with the lowest possible score.

Figure 2 Components of the Eco-innovation index for Estonia, 2019

Source: EIO, 2019

7 Figure 3 All indicators of the Eco-innovation index for Estonia, 2019

Source: EIO, 2019

8 2 | Selected circular economy and eco- innovation areas and new trends

Eco-innovation is present in many different sectors and areas, albeit to various degrees. This varying overall assessment is similarly depicted in the second major area of investigation within the scope of this report, namely circular economy. This economic model has enjoyed increasing attention from many different actors in the past year (see development of a Circular Economy Action Plan below). The rate of circular (secondary) use of material was 11.8% in 2016, thereby narrowly matching the EU standard (11.7%), while the number of people employed in the circular economy in Estonia is above the EU average (2.01% vs. 1.73%). A somewhat more inconclusive depiction can be captured for the field of waste management. In fact, waste generation has almost doubled since 2000, where particularly oil shale stands out as a major source of waste. At the same time though, the waste recovery rate has increased from 14% in 2000 to 38% in 2016 which represents a considerable improvement. However, a closer look at the municipal waste recycling rate (26% in 2016) shows that it merely reaches half of the EU average, thereby causing Estonia to not meet the EU 2020 recycling target of 50% (Ministry of Finance, 2018). In light of these challenges, several trends and measures have been introduced and can already be identified. For instance, the Estonian waste disposal tax has made landfilling less attractive than alternative, more environmentally friendly waste treatment options, thereby provoking a significant decrease in landfilling (OECD, 2019). The notion of circular economy and waste management can furthermore be broadened and considered under the umbrella of resource efficiency. In particular, SMEs and their approach to resource efficiency open up a relevant line of analysis. While Estonian SMEs generally continue to perform in line with most environmental aspects raised in the EU, the effective uptake of resource-efficiency measures is lowest in the entire EU despite nearly 50% of all Estonian SMEs having benefitted from public support measures in the past. At the same time, the proportion of SMEs whose main income is generated through green services or products is well above EU average (European Commission, 2019). An important counteracting measure that is intensively addressed in Estonia can be found in ecodesign. In light of the EU’s ecodesign directive, the EcoDesign Audit was developed by the Sustainable Design Lab of the Estonian Academy of Arts. This Audit aims “to increase the awareness of ecodesign among the region’s SMEs, design organisations and designers”, and thereby to contribute to the mainstreaming of circular business development (Estonian Academy of Arts, 2019). Particular attention has also been paid to circular design and circular economy design practices within the scope of the First Ecodesign Talk hosted in January 2020 in Tallinn (Ecodesign Circle, 2020). Another main area in which eco-innovation is – naturally – present is the field of bioeconomy. About 30% of all economic output is linked to the bioeconomy in Estonia, and this figure keeps (moderately) growing (Invest in Estonia, n.d.). The number of people employed in agriculture, forestry and fisheries reached about 30,000 in 2017 (please note that these figures do not represent the bioeconomy in its entirety) (Mõtte, et al., 2019). A domain that is of particular relevance within the context of the bioeconomy is the forestry-based sector. In fact, the turnover generated through forest-based activities makes up about 40% of the volume of the entire national bioeconomy. In addition, digital solutions have become increasingly popular in this domain and revolutionised the supply chain spanning from the forest to the final product. Software and applications that take on forest management have entered the mainstream and can be widely found in the Baltic nation (Estonian Timber, 2018) (please refer to the best practice example below).

9 Another relevant domain to shed light on is represented by energy and resources and more sustainable and efficient approaches to them. In general, Estonia finds itself in a non-optimal position in terms of resource use as its domestic material productivity rate lies well below EU average. On the other hand, the share of renewable energy in final energy consumption in Estonia is one of the biggest throughout the EU (Ministry of Finance, 2018). Moreover, Estonia is rich in biomass resources, and therefore has a currently developing bioenergy sector. Subsequently, bioenergy has been identified as a major trajectory to be pursued for sustainable development, motivating the nation to participate in the EU’s bioeconomy programmes. To meet the associated criteria, Estonia has launched a research project clearly defining the value chains and exploitation possibilities of bioresources to increase the competitiveness of the Estonian bioeconomy (Ruuder & Pelkmans, 2018). Further focal areas with respect to resource and energy efficiency can be found in buildings, health and food. As for the former, buildings are subject to an officially-binding near-to-zero energy consumption quota from 2020 onwards. Research in this field is particularly fostered by the ZEBE Centre of Excellence in Research. Organic farming and alternative approaches to food production and consumption, on the other hand, is studied at the Research Centre of Organic Farming of the Estonian University of Life Sciences. In addition, thanks to this institute’s efforts, the share of organic farming reached one-third of the total agricultural land in 2017 (Research Estonia, 2018). Transportation, however, remains a critical domain as Estonia continues to struggle to increase the share of renewables in transport. The government addresses this issue by introducing “biofuel blending obligations and the promotion of indigenous production of biomethane as cost-effective means to increase the share of renewables in the transport sector” (IEA, 2019). In addition, energy technology research and development is fostered and effectively taken up through several means. For instance, as of January 2019, 61 Estonian organisations had been active in Horizon 2020 projects. Moreover, a Memorandum of Understanding for an Energy Research Programme between the Baltic States and the Nordic Energy research on Energy Programme was signed in 2018 (IEA, 2019). Linking into this technology trajectory, cleantech is gaining increasing market presence in Estonia, especially as a cross-cutting element influencing many different domains. According to Startup Estonia, about 50 of the more than 550 startups currently to be found in the Baltic nation come from the cleantech sector. It would be wrong, however, to solely focus on startups or the private sector in general, as research institutions and umbrella organisations (see Cleantech ForEst below) should be highlighted as two of the major foundational factors of Estonia’s cleantech network. In addition, the government’s positive attitude towards cleantech and related innovations, as well as a friendly investment environment or the role of Estonia as an incubator and piloting ecosystem, are all factors that benefit the sector and are warmly welcomed at the same time (Lukas, 2019). In a similar vein, ICT serves as a direct enabler of eco-innovative solutions (Directorate-General for Environment, European Commission, 2017). Estonia thereby anticipates climbing the global value chain. In order to enable an efficient operation of such services, as well as the entire public ICT sector in general, interoperability has been stressed as an inevitable element. Moreover, the creation of an efficient and effective ICT infrastructure, the improvement and enhancement of digital skills and knowledge, smarter governance and an internationally elevated awareness of the digital capacity of Estonia (“eEstonia”) are primary objectives and sources for development (Minsitry of Economic Affairs and Communications, 2018). Nonetheless, several issues persist in the context of ICT. For instance, productivity growth remains at comparatively moderate levels, ICT-related patents make up a rather small share of all national patents filed, and automation in SMEs in more traditional sectors has been only poorly taken up (OECD, 2019).

Cleantech ForEst Cleantech ForEst is a non-profit organisation effectively functioning as an umbrella entity of various actors involved in cleantech. At the same time, the organisation serves as the central instance promoting, coordinating and advancing cleantech solutions in Estonia. Cleantech ForEst organises several events and fulfils a diverse range of support functions. In general, the organisation supports and funds early stage green technology startups, advances environmental education and supports energy experts. More specifically, Cleantech ForEst provides access to the EIT Climate Accelerator, which has supported more than 30 startups financially to this day. Furthermore, Cleantech ForEst offers the so-called Climate Launchpad, a three-month-long intense mentorship programme for pre-seed green startups or teams with an idea. In addition, a Hackathon is being organised. This one- or two-day event brings together many different actors to collectively work on digital green solutions. The latest edition was held in Tallinn in October 2019 and simultaneously brought together people from more than 130 cities across the globe. • Keywords: cleantech, digital solutions, climathon, green startup support • Website: https://www.cleantechforest.ee/ • Contact: Erki Ani, [email protected]

source: Cleantech ForEst

Timbeter Timbeter is a digital timber measurement solution that uses machine learning technology and artificial intelligence to accurate log detection. Being a forest-tech company with locations across the world, Timbeter’s aim is to eradicate illegal logging and improve timber supply for both, log buyers and sellers, using a unique algorithm. The software allows different actors in the timber-producing industry to share measurements with contractors and clients, store and manage logs, reduce the costs of log inventory, transfer data across devices and instances, integrate data into existing workflow processes and measure log count, diameter and density in less than 3 minutes. • Keywords: timber, log measurement, data exchange • Website: http://www.timbeter.com/

11 • Contact: [email protected]

source: Timbeter

eAgronom Founded by the son of a farmer and an experienced software developer, eAgronom offers digital solutions that cater the needs of farmers and simplify daily and seasonal farm exercises, thereby taking their businesses to the digital age. The Estonian startup’s services, which can be accessed via web and mobile platforms, enable farmers to manage their entire farm, exchange information with and instruct employees, and oversee fields in real time. Specifically, eAgronom supports farmers to make more efficient, cost-saving and environmentally friendly decisions which mitigate their respective risks and give them better planning capacities. The company’s customer base lists cases in which farmers have saved tens of thousands of euros by using this software. eAgronom, which was founded in 2016, has already entered several international markets and continues to expand in terms of both, company size and geographic coverage. • Keywords: farming, planning, agriculture, software • Website: https://eagronom.com/en/ • Contact: Robin Saluoks, [email protected]

source: eAgronom

12 Gelatex Gelatex has develop an eco-friendly, non-toxic textile that provides a sound and durable alternative to leather. Gelatex looks and feels like real leather and is the only product currently on the market that is easily scalable. The leather-like material is produced from upcycled gelatine and discarded animal waste, which are combined and brought together in a specific solution and processed until an insoluble nano-fibrous mesh has been created. This mesh is then combined with further materials which makes the potential forms and fields of usage diverse, thereby offering many different industries and businesses new opportunities. The company is expected to grow considerably in the upcoming years and aims at a revenue of EUR 10 million in three years. Moreover, the market potential for this novel textile is estimated at EUR 2 billion within a decade. Most recently, Gelatex won the Green Alleys Award 2019, the first European startup prize for the circular economy. • Keywords: textiles, gelatine, leather production, livestock industry • Website: https://www.gelatex.com/ • Contact: [email protected]

source: Gelatex

13 3 | Barriers and drivers to circular economy and eco-innovation in Estonia

Some framework conditions, which can be interpreted as either drivers or barriers to the circular economy and eco-innovation, have already been introduced in previous sections. Yet, several other factors certainly need to be stressed in this context and therefore enjoy specific attention in the following. As an overarching observation, Estonia generally offers favourable macroeconomic conditions for businesses, foreign investment and foreign knowledge capital. This is complemented by an advanced digital infrastructure, where particularly public services are amongst the most digitally advanced worldwide (Makarow, et al., 2019). Even if this potential is not necessarily fully capitalised on, it is worth recognising this base upon which all following observations need to be considered on. In terms of access to investments and funding, Estonia continues to be somewhat dependent on the EU’s means, particularly with regard to RDI. As of 2017, the locally publicly and privately funded RDI activities did not exceed 1.3% of Estonia’s GDP in 2017. This figure is even more under threat nowadays as in May 2019 the government announced that only 0.71% of the nation’s GDP would be made available for RDI activities in the upcoming years. The Estonian government has therefore intensified its efforts to mobilise private investors. As a result, the venture capital strategy was changed from 2017 onwards. Ever since, relevant capital has been increasingly provided by private VC funds, thereby allowing the state to assume a passive, yet influential role (Dutt, et al., 2019). Nonetheless, Estonian SMEs consider the lack of financing a major obstacle to their operations, not at least to long-term investments. This is reflected in the rejection rate of loan applications by SMEs, which is more than double the EU average (11% vs. 5%) and has led to a surge in alternative financing methods, where factoring has become one of the most important sources of financing for SMEs (Estonian Research Council, 2019). This non-optimally balanced approach is similarly reflected in the country’s RDI landscape, which is subject to several structural issues. For instance, an asymmetry between public and private RDI efforts can be noted, preventing a streamlined and smartly specialised approach to (eco-)innovation. This results in small-scale solutions which are not necessarily met by market demand, ultimately leading to further fragmentation of support functions. In addition, industrial actors are oftentimes locked in a contracting situation, which gives them little space to manoeuvre, but also little incentive to foster RDI activities that would give the economy a competitive edge. Climbing the value ladder therefore becomes increasingly difficult (Kattel & Stamenov, 2018). In terms of technology and technological base conditions, Estonia is ranked first in Barclay’s Digital Development Index1. This position could not have been achieved without the country’s aforementioned pro-business environment, where particularly the “collaborative ecosystem well suited to rapid innovation, development and launch of hardware and software solutions” has been highlighted. The Baltic nation’s strong technological position continues to be reinforced by smart and agile networks that pave the way for the Industrial IoT era (Invest in Estonia, n.d.). However, a continuous problem can be found in the relatively poor dissemination of digital solutions beyond “agile” industries (i.e. towards more traditional industries). This results in a rather moderate variety of actor types in the economy paired with an ever-increasing, yet not sufficient scale of these operations, which ultimately demonstrates

1 https://epale.ec.europa.eu/sites/default/files/barclays_digital_development_index.pdf

14 room for improvement. In other words, Estonia’s actors demonstrate great potential which, however, has not been fully tapped into yet. This can partially be explained by the rather limited size of the Estonian market, which is both a curse and a blessing, as it enables a fast and seamless introduction of new technologies and innovations in initial stages on one hand but exposes a relative lack of critical mass on the other (OECD, 2019). In the context of technological and digital advancements, human resources and knowledge capital continue to develop in a direction favourable for eco-innovation and circular economy advancement. In particular, ICT professions gain in popularity among younger people. In numerical terms, twice as many students pursue ICT careers in Estonia than the average in other OECD countries (Kassen, 2019). At the same time, the strong startup scene has created a general entrepreneurial spirit which has also trickled down to education systems and schemes, and equips young, potential entrepreneurs with the right skill set to become the leaders of an eco-innovative future. This is similarly mirrored in the social and cultural fabric present in the Northernmost Baltic state. In fact, Estonia has managed to build a multifaceted and stable foundation on which eco-innovation and circular economy can build. Firstly, strong public support for environmentally friendly and more resource-efficient measures is present in Estonia (European Commission, 2019). Secondly, environmental awareness and recognition of environmental issues is high among the population. However, this awareness has only partially translated into lifestyle changes, as green values and attitudes are only poorly adopted and followed through (Ministry of Finance, 2018). The source of this discrepancy between intention and action can also partially be traced back to a certain image problem of the principles of the circular economy in Estonian society. More often than not, reusing, repairing and rethinking are associated with the Communist past of Estonia, which does not resonate with large parts of the society. Secondly, the Estonian government has successfully managed to build digital capacities and trust in digital solutions among the population. Transparency, reliability and user-friendliness all are factors that have contributed to continuously high levels of trust in digital advancements (Panke & Gurol, 2018). However, digital education has not reached the entire population, leaving older generations often poorly equipped for the labour market (OECD, 2019). Estonia is also blessed with an abundance in potential for bioeconomy, as it has two times more arable land per capita than the EU average, with more than half of Estonia’s mainland being woodland (Lemetti, 2015). Natural capital therefore is one of the strongest assets of the Baltic state. This potential is realised across all levels of the society and economy, and measures to capitalise on it are underway, as is evidenced by the intensified development of materials science (Research Estonia, 2018). However, habitat loss as well increased degradation and fragmentation pressure on ecosystems and biodiversity are also part of the game as the survival of half of the habitat types and little over one-third of the species to be found in Estonia cannot be guaranteed (Ministry of Finance, 2018). As already mentioned in the previous Eco-Innovation Observatory Country Report for Estonia (2016-17), the main driver behind all the above-mentioned favourable aspects for eco- innovation continues to be the demand expressed by foreign actors, which ultimately creates a distinct dependency of the entire Estonian scene on foreign support. In particular, financing opportunities from the EU or further institutes not only are in high demand, but almost without any alternative. This creates a barrier to entry for new and small companies with low project management capabilities, and results in a general lack of funding opportunities for startups and established companies to engage in eco-innovative solutions (European Commission, 2019).

15 4 | Policy landscape in Estonia

4.1 Strategic policy framework Estonia has approached the subject of eco-innovation and circular economy through a multitude of different strategic documents which promise to provide sufficient and coherent context for relevant innovations to strive and develop. At the same time, some pivotal strategies are still under development. For instance, the national bioeconomy strategy is still in the making. The Ministry of Environment, being the institution in charge, intends to finalise and roll out this strategy once the Estonian bioeconomy development study “Bioeconomy value chains in Estonia” (2018-2021) is finished (Mõtte, et al., 2019). In addition to the bioeconomy strategy, the circular economy strategy and action plan is currently being formulated and drawn up, and is expected to come into force in 2021. The required work is mainly divided into three major stages: • Developing circular economy indicators (2019; already carried out by Technopolis Group and HeiVäl Consulting) and capturing the current situation of the Estonian circular economy (2020-2021) • Formulating a strategic document and action plan for the implementation and mainstreaming of the circular economy in Estonia • Continuous and cross-cutting stakeholder involvement throughout the development process (2020-2021). The Ministry of environment stands behind this circular advancement and has pledged to be open to external impressions and lessons learnt from other countries so as to formulate an all-encompassing and robust strategy that exerts its full potential for the economy, environment and society. Estonia’s development of its own national strategy needs to be considered within the context of the EEA Norway Support Programme, which complements the abovementioned circular economy aspirations and aims to support in i) compiling the input needed for the circular economy strategic document and action plan, ii) implementing Green Public Procurement principles, iii) providing circular economy training for the public sector, as well as iv) organising awareness-raising campaigns on circular economy (Ministry of the Environment, 2019). Estonia also adopted a National Strategy on Climate Change Adaptation (“General Principles on Climate Policy until 2050”) in 2017. This strategic conceptualisation specifies eight areas of elevated importance that particular attention should be paid to: i) human health, ii) land use and spatial planning, iii) natural environment, iv) bioeconomy, v) economy, vi) society, vii) infrastructure and buildings, and viii) energy and energy supply systems (European Commission, 2019). As a cross-cutting and underlying issue, lowering carbon emissions has been identified as a prime focal area. The overarching goal in this regard is to reduce greenhouse gas emissions by 80% compared to 1990 levels by 2050. A pivotal and clearly communicated element in achieving this goal is expected to lie in the development of innovative technologies, products and services. Some of the key aims include moving “towards enhancing energetic value and the production of products with higher additional value […], directing major participants in the energy and industry sectors towards a successful and cost-efficient reduction of GHG emissions while continuing the use of market-based mechanisms [or] facilitating the implementation of technologies with a low emission factor of CO2 and efficient use of resources in manufacturing processes”, for instance (International Energy Agency, 2018).

16 Picking up on the eighth of the aforementioned focal areas of the National Strategy on Climate Change Adaptation, Estonia also launched the National Development Plan of the Energy Sector until 2030 in 2017. In addition to the aforementioned GHG emissions reduction goals, the Estonian government aims to increase the share of renewable energy in energy production up to 50%, as well as to 80% in heat production and 14% in transportation. Moreover, a plan intended to guarantee energy security until 2050 was formulated and drawn up (International Energy Agency, 2019). As a cross-cutting issue, Estonia updated its National Agenda 2020 for Estonia in 2018. The rationale underlying this agenda is to provide a secure, well-performing and reliable infrastructure based on which further digitalisation can proceed. Some of the main areas expected to benefit concern the competitiveness of the economy, social wellbeing and effectiveness of public governance. More particularly, the Digital Agenda outlines several goals in the two major focal areas of development of information society and increasing cyber security. Some of these goals entail raising the capability of the public sector for using data analytics and research, adopting artificial intelligence applications, or accelerating innovation in the fields of e-governance and cyber security (Government of the Republic of Estonia, 2018). Another relevant strategy that is of major importance in the context of eco-innovation in Estonia can be found in the National Transport Development Plan 2014-2020, which directly targets all issues surrounding the transportation system in the Baltic nation. The government currently reviews and amends the strategy, which is expected to be updated and rolled-out in 2021. Particularly in Estonia, transport is considered within the context of spatial planning, greenhouse gas emissions, technological development and new, digitally based forms of mobility (International Energy Agency, 2019). 4.2 Policy instruments, measures, programmes In general, a strong and consistent political and economic will to foster eco-innovation and circular economy in all its different shapes and forms is present in Estonia. Relevant support measures and functions are diverse and promise to reach a multitude of different actors across different levels and domains (Kassen, 2019). Digitalisation is one of the key vehicles in this respect as Estonia is commonly considered one of the global powerhouses when it comes to digitalisation and digital solutions, particularly in the context of public services. As a result, major international organisations aspire to benefit from the Baltic nation’s infrastructure (e.g. NATO moved its cyber-security headquarters to Tallinn) and “research and innovation in the IT and digitalisation realm [have] played a vital role in its political programme” (Panke & Gurol, 2018). This is mirrored in a cohort of measures and instruments installed to achieve the associated aspirations, which nonetheless show room for improvement. One of the most immediate and commonly employed tools is taxation. On one hand, Estonia’s revenue from environment-related taxes remains among the highest in the EU (EE: 2.88% of GDP vs. EU average: 2.4%). A similar verdict can be made for energy taxes (2.54% vs. 1.84%). Some of the specific measures leading to these figures can be found in the nation’s mineral resource extraction charge or the fishing fee system. Moreover, fossil fuel subsidies decreased over the past decade (European Commission, 2019). On the other hand, however, environmentally harmful subsidies are still in place and “Estonia’s CO2 emissions are largely priced below the low-end estimate of the climate cost of carbon of €30 [per tonne]”. In fact, Estonia has no domestic carbon-pricing system as most of its emissions are subject to the EU- ETS. It does not appear that the government is intending to introduce an updated, better- suited and uniformly binding CO2 emission pricing system in the near future (OECD, 2019). Another prime means of fostering eco-innovation is embodied by funding and investments. In 2016, Estonia spent more than EUR 123 million on environmental protection, where the most prominently benefitting areas were waste management and the protection of

17 biodiversity. This overall figure, however, represents a decrease of about 12% in funds made available for environmental protection compared to 2015 (European Commission, 2019). An outstanding and pioneering position was adopted with the opening of the Environmental Investment Centre (EIC) back in 2000. This centre has the specific function of financing environmental activities and investment projects in the following areas: i) energy and reduction of air emissions, ii) waste, iii) fisheries, iv) environmental education, v) environmental management systems, vi) environmental monitoring and surveillance, vii) nature conservation, viii) mineral resources, ix) marine environment, x) forestry and xi) water. The EIC has supported more than 20,000 projects since its establishment, which have collectively received financial contributions of a volume of more than EUR 2 billion. The EIC also planned to allocate EUR 100 million in grants from EU funds to resource and energy efficiency projects in the industrial sphere between 2014-2020. The main objectives of the Environmental Investment Centre are as follows: • reducing environmental nuisances to the benefit of the environment, human health, well-being, property and cultural heritage • promoting sustainable development to secure crucial resources • preserving and protecting natural diversity and the environmental state in general. To ensure conformance with these objectives, the EIC has launched several programmes, which include dedicated programmes for the circular economy or environmental awareness (Environmental Investment Centre, 2019). Besides the EIC, Enterprise Estonia has been an active instance through which funding and investments have been channelled (Enterprise Estonia, 2019). As regards public procurement, no national actional plan or strategy on green principles within the cadre of public procurement is currently in force in Estonia despite the fully recognised potential lying in the purchasing power of public institutions. Within the context of resource efficiency and environmental management, the state-owned institute Accelerate Estonia should be stressed and highlighted. One of the institution’s key aspirations in supporting businesses can be traced back to the former of the two context factors – resource efficiency – which is why the Excess Materials Flow support action was launched. This programme has created, and aims to expand, an online database with live streams of manufacturing by-products and leftover materials, which enables actors across the value chain to benefit from each other and optimise their respective material flows (Tiido, n.d.). The Estonian Association for Environmental Management has also played a crucial role since its inauguration in 2003. This non-profit organisation brings together many different actors interested in improving overall environmental performance, thereby functioning as a moderator between state institutions and the society as a whole (Estonian Association for Environmental Management, n.d.). As previously indicated, the field of renewable energy has been particularly catered for by Estonian authorities. Estonia therefore grants subsidies for several intents and purposes, such as solar panels or other forms of sustainable energy generation (Poljanskihh, et al., 2019). According to the Electricity Market Act §59, subsidies are furthermore issued for i) introducing renewable energy sources, ii) increasing efficiency in the energy sector and iii) securing inland supply and capacity sufficiency. The most recent update of this Act, which was agreed in February 2020, aims at increasing the proportion of biomass in the Estonian energy portfolio (Ministry of Economic Affairs and Communication, 2020). Renewable energy also makes up a considerable part of the nation’s RDI efforts, where energy is particularly stressed in the context of i) electricity supply, ii) development of local fuels, iii) energy sufficiency of buildings as well as iv) heat supply. For these and further topics the

18 government spent EUR 22 million on energy-related RDI (International Energy Agency, 2019). In general, RDI in the context of eco-innovation is considered a pivotal element and important vehicle of technological development. Even though no separate national or regional RDI strategy on smart specialisation is present in Estonia, the more general Entrepreneurship Growth Strategy and RDI Strategy clearly formulate three focus sectors to be paid attention to: i) ICT and supporting sectors (e.g. automation and robotics, software development), ii) health technologies and services (e.g. biotechnology, e-health) and iii) resource efficiency (e.g. material science, knowledge-based construction). The field of RDI moreover opens up an interesting path of investigation by focussing on research commercialisation and the general process from innovation to mainstreaming. In this respect, Estonia shows room for improvement. Even though most academic spin-off companies are usually founded in the fields of biotechnology (33%), ICT (16%) and health (11%), and therefore in sectors relevant to eco-innovation, commercialisation skills are often poor and efforts, more often than not, nipped in the bud as neither the national RDI strategy nor Intellectual Property regulations pave the way for commercialisation activities (Eljas-Taal, et al., 2019). Digitalisation is approached as a cross-cutting topic. The digitalisation of public services is one of Estonia’s strongest assets. In particular, environmental authorities have embraced digital solutions (see KOTKAS’s good practice example below). For instance, an environmental monitoring database has already been introduced, while a water quality modelling system focussed on data integration is currently being developed (European Commission, 2019). In fact, “Estonia has all economic preconditions to prosper in this direction, especially in advancing open data-driven platforms to render new electronic services as a presumably cost- effective addition to its excellent traditional top-down digital government platforms” (Kassen, 2019). Estonia also embraces international cooperation to foster eco-innovation across borders. Finland as a partnering country can be highlighted in this context as ICT-related areas have enjoyed strong and continuous cooperative efforts between the two nations. For instance, Tallinn and Helsinki intend to create a single business information ecosystem between the two cities (Kassen, 2019). Another relevant action has been fostered in the Meeting of Baltic Assembly Committees that focussed on the circular economy and digital cooperation. During this meeting, particular attention was paid to the treatment of bio-waste, innovation systems and exchange as well as technological development (Pesur, 2020). From an inward-focussed perspective, Estonia also attempts to create strong links to its regions to create a local and regional network and ecosystem that enables favourable conditions for eco-innovation. Accordingly, the Northernmost Baltic nation has allocated EUR 101 million, which equals 5.4% of its allocation under the ERDF, to sustainable urban development. In addition, Tallinn and Tartu are involved in the URBACT initiative. However, as local governments in Estonia are relatively free-standing entities with rather loose vertical ties to higher levels of governance, nationwide uniform coordination certainly still has room for improvement (European Commission, 2019).

KOTKAS KOTKAS is an information system engaged and overseen by the National Environmental Board that aims to centralise environmental permit applications, processing, declaring environmental fees and filling annual reports. In other words, KOTKAS is designed to a be a “one-stop-shop” for all administrative matters concerning the environment and its economic use. KOTKAS thereby also improves the maintenance, usage and availability of gathered information, potentially opening the door for further data analysis and data-based processes which ultimately benefitting the environment, economy and society. The information system allows users to not only apply for permits and environmental charge

19 declarations, but also have access to statistics on environmental use as well as self- monitoring information related to permits. • Keywords: textiles, gelatine, leather production, livestock industry • Website: https://kotkas.envir.ee/ • Contact: Alar Valdmann, [email protected]

Energy Data Access Conference The Estonian Ministry of Economic Affairs, the national transmission system operator Elering and its French counterpart RTE cooperatively organised the Energy Data Access Conference in Tallinn in November 2019. The aim of this conference was to intensify the creation, capturing, dissemination and exchange of data that is related to energy production, transmission and service provision. In doing so, greater integration of national energy markets should be achieved. From a demand perspective, consumers should benefit through being empowered to access energy services which are usually rather closed to them. To address all these issues and deliver on its promises, the conference adopted a multifaceted perspective from the point of view of regulation, standardisation and interoperability standards. • Keywords: energy data, data access, data exchange, cross-border data handling • Website: https://energydata2019.eu/ • Contact: Kristjan Kaiklem, [email protected]

Circular Economy Conference The second edition of the Circular Economy Conference was organised by the Ministry of Environment and the Environmental Agency and held in November 2019 in Tallinn. The aim of the conference was to familiarise entrepreneurs with the principles, objectives and supporting activities of the circular economy. To mediate the message in an appealing and direct manner, practical examples, best practices and experiences were presented and shared. In doing so, particular attention was paid to bringing different actors from different fields together, such as entrepreneurs, circular economy experts or public sector representatives. More specifically, the conference offered its attendants several key takeaways which can generally be captured by the notions of i) deepening knowledge, ii) encouragement to apply circular economy principles, iii) discussing the role of the circular economy in innovation and in achieving a competitive advantage and iv) encouraging the development of a circular economy network. • Keywords: circular economy, life cycle thinking, smart design • Website: https://www.conference-expert.eu/et/ring2019 • Contact: Liisa Mihkla, [email protected]

source: Circular Economy Conference

REFERENCES

Ministry of Finance, 2018. FAKTILEHT - Riigikantselei ja Rahandusministeeriumi taustamaterjal EESTI 2035 valdkondlikele töörühmadele november-detsember 2018, Tallinn: Ministry of Finance. OECD, 2019. Waste Management and the Circular Economy in Selected OECD Countries, Paris: OECD Publishing. European Commission, 2019. The EU Environmental Implementation Review 2019: Country Report - ESTONIA, Brussels: European Commission. Estonian Academy of Arts, 2019. EcoDesign Audit: The Strategic Tool for Circular Business Development, Tallinn: Estonian Academy of Arts. Ecodesign Circle, 2020. First Estonian Design Talk focusses on Circular Design. [Online] Available at: https://www.ecodesigncircle.eu/17-spotlight/48-first-estonian-design-talk- focusses-on-circular-design [Accessed 08 March 2020]. Invest in Estonia, n.d.. Bioeconomy. [Online] Available at: https://investinestonia.com/business-opportunities/bioeconomy/#our- advantages [Accessed 08 March 2020]. Mõtte, M., Lillemets, J. & Värnik, R., 2019. A systematic approach to exploring the role of primary sector in the development of Estonian bioeconomy. Agronomy Research, 17(1), pp. 220-233. Canales, N. et al., 2019. Policy Dialogue on a Bioeconomy for Sustainable Development in the Baltic Sea Region, Tallinn: Stockholm Environmental Institute. Estonian Timber, 2018. Digital Revolution in the Estonian Forestry and Wood Industry. [Online] Available at: https://estoniantimber.ee/best-practices/digital-revolution-in-the-estonian- forestry-and-wood-industry/ [Accessed 08 March 2020]. Ruuder, L. & Pelkmans, L., 2018. Estonia – 2018: Bioenergy Policies and Status of Implementation, Tallinn: IEA Bioenergy. Research Estonia, 2018. Estonia – The SmartEST Research Country, Tallinn: Research Estonia. IEA, 2019. Energy Policies of IEA Countries: Estonia 2019 Review, Brussels: IEA. Lukas, T., 2019. Why Invest in Estonian CleanTech?. [Online] Available at: https://investinestonia.com/why-invest-in-estonian-cleantech/ [Accessed 08 March 2020]. Directorate-General for Environment, European Commission, 2017. The EU Environmental Implementation Review: Country Report - Estonia, Brussels: European Union. Krusberg, M., 2018. Eco-Innovation Observatory Estonia 2016-17 [Interview] (03 April 2018). Minsitry of Economic Affairs and Communications, 2018. Digital Agenda 2020 for Estonia, Tallinn: Minsitry of Economic Affairs and Communications.

22 OECD, 2019. OECD Economic Surveys: Estonia, Paris: OECD Publishing. Makarow, M. et al., 2019. Peer Review of the Estonian R&I System, Brussels: European Commission. Dutt, P. K., Wahl, M. & Kerikmae, T., 2019. Using Patent Development, Education Policy and Research and Development Expenditure Policy to Understand Differences between Countries – The Case of Estonia and Germany. ICLR, 19(1), pp. 190-233. Estonian Research Council, 2019. Estonian Research 2019, Tallinn: Estonian Research Council. Invest in Estonia, n.d.. Industry 4.0. [Online] Available at: https://investinestonia.com/business-opportunities/industrial- automation/#overview [Accessed 08 March 2020]. Interreg Baltic Sea Region Funding Cooperation, 2017. Programme Manual for Coordination of Macro-Regional Cooperation, Rostock: the Programme ’s Managing Authority/Joint Secretariat. Regionaalministri Valitsemisala, 2014. Eesti Regionaalarengu Straateegia 2014-2020, Tallinn: Sisukord. Kassen, M., 2019. Open Data Politics in Estonia: Advancing Open Government in the Context of Ubiquitous Digital State. Open Digital Politics, pp. 37-67. Panke, D. & Gurol, J., 2018. Small States as Agenda-setters? The Council Presidencies of Malta and Estonia. Journal of Common Market Strategies, pp. 1-10. Lemetti, I., 2015. Bioeconomy in Estonia - Challenging the Status Quo in Strategic Planning, Tallinn: Republic of Estonia - Ministry of Rural Affairs. Kattel, R. & Stamenov, B., 2018. RIO Country Report 2017: Estonia, Brussels: European Commission. Ministry of the Environment, 2019. Creating a Strategy and Action Plan for Circular Economy in Estonia. [Online] Available at: https://ringmajandus.envir.ee/en/creating-strategy-and-action-plan-circular- economy-estonia [Accessed 08 March 2020]. International Energy Agency, 2018. Estonian Low-Carbon Strategy until 2050, officially named „General Principles of Climate Policy until 2050“. [Online] Available at: https://www.iea.org/policies/6409-estonian-low-carbon-strategy-until-2050- officially-named-general-principles-of-climate-policy-until-2050 [Accessed 08 March 2020]. International Energy Agency, 2019. Energy Policies of IEA Countries: Estonia 2019 Review, Brussels: IEA. Government of the Republic of Estonia, 2018. Digital Agenda 2020 for Estonia (2018 Update), Tallinn: Government of the Republic of Estonia. Environmental Investment Centre, 2019. Environmental Investment Centre: About Us. [Online] Available at: https://kik.ee/en/kik [Accessed 08 March 2020].

23 Enterprise Estonia, 2019. Enterprise Estonia to support ten projects of professional associations. [Online] Available at: https://www.eas.ee/enterprise-estonia-to-support-ten-projects-of- professional-associations/?lang=en [Accessed 08 February 2020]. Tiido, M., n.d.. Excess Material Flows. [Online] Available at: https://accelerateestonia.ee/en/ [Accessed 08 March 2020]. Estonian Association for Environmental Management, n.d.. Estonian Association for Environmental Management. [Online] Available at: https://www.ekja.ee/en/ [Accessed 08 March 2020]. Poljanskihh, A., Levina, A. & Dubgorn, A., 2019. Investment in Renewable Enery: Practical Case in Estonia. MATEC Web of Conferences, Volume 193. Eljas-Taal, K. et al., 2019. Teaduse kommertsialiseerimine Eestis, Tallinn: Startup Estonia. Pesur, V., 2020. Meeting of Baltic Assembly Committees Focusses on Circular Economy and Digital Cooperation. [Online] Available at: https://www.riigikogu.ee/en/press-releases/others/meeting-baltic-assembly- committees-focuses-circular-economy-digital-cooperation/ [Accessed 08 March 2020]. Ministry of Economic Affairs and Communication, 2020. The Electricity Market Act will increase the proportion of biomass in Estonian electricity production. [Online] Available at: https://www.mkm.ee/en/news/electricity-market-act-will-increase-proportion- biomass-estonian-electricity-production [Accessed 10 March 2020].

24 ANNEX: Policy strategies and instruments

Table A1: National Policy strategies Name of the policy document Relevance for Relevance for Relevance for the Input and process targets Outcome and impact targets Relevant (strategy, action plan, roadmap) eco-innovation Circular innovation chain implementation or Economy governance system 1 National Bioeconomy Strategy (expected from Dedicated focus Cross-cutting Cross-cutting N.A. N.A. N.A. 2021 onwards) on eco- innovation

2 National Circular Economy Strategy and Action Dedicated focus Cross-cutting Cross-cutting N.A. N.A. N.A. Plan (expected from 2021 onwards) on eco- innovation 3 General Principles of Climate Policy until 2050 Eco-innovation is Cross-cutting Cross-cutting Activities • Climate change policy targets No (2017) among other • Energy efficiency targets (https://www.riigiteataja.ee/akt/307042017001 objectives • Resource efficiency and circular ) economy policy targets • Renewable energy policy targets 4 National Development Plan of the Energy Sector Eco-innovation is Cross-cutting Cross-cutting Inputs, Activities & Outputs • Climate change policy targets No until 2030 (2017) among other • Energy efficiency targets (https://www.mkm.ee/sites/default/files/ndpes objectives • Resource efficiency and circular _2030_eng.pdf) economy policy targets • Renewable-energy policy targets 5 Digital Agenda for Estonia 2020 (update 2018) Eco-innovation is Cross-cutting Cross-cutting Inputs, Activities & Outputs • Resource efficiency and circular No (https://www.mkm.ee/sites/default/files/digital among other economy policy targets agenda2020_final.pdf) objectives

Table A2: Policy instruments and measures

Category Name of instrument Overall relevance for eco-innovation Relevance for CE Relevance for the innovation chain

Direct financial support for eco-innovation

Grant funding Enterprise Estonia Dedicated focus on eco-innovation Cross-cutting Cross-cutting

25 Category Name of instrument Overall relevance for eco-innovation Relevance for CE Relevance for the innovation chain Environmental Investment Centre

Innovation vouchers Enterprise Estonia Eco-innovation is among other topics Cross-cutting Cross-cutting

Loans and credits Green Loans (Swedbank) Eco-innovation is among other topics Cross-cutting Cross-cutting

Publicly co-funded SmartCap – co-funded by the Estonian Eco-innovation is among other topics Cross-cutting Cross-cutting venture capital funds (e.g. Development Fund start-ups)

Fellowships and postgraduate loans and scholarships

Equity financing from Estonian Private Equity & Venture Eco-innovation is among other topics Cross-cutting Cross-cutting public banks Capital Association

Other (indicate)

Indirect support for eco- innovation

Tax incentives/relieves for Free public transport for Tallinn’s eco-innovation citizens (businesses, R&D activity)

Tax relief for consumers adopting/ purchasing green technology/products

Taxation of Environmental Taxation scheme (see Eco-innovation is among other topics Cross-cutting Cross-cutting environmentally harmful above) technologies

Regulations, targets

Green public procurement N/A N/A N/A N/A

26 Category Name of instrument Overall relevance for eco-innovation Relevance for CE Relevance for the innovation chain

Demand subsidies (e.g. Renewable Energy Subsidy Dedicated focus on eco-innovation N/A Commercialisation eco-vouchers/subsidies for green products)

Labeling, certification, e.g. Estonian Organic Farming Dedicated focus on eco-innovation Cross-cutting Cross-cutting standards

Debt guarantees and risk Tagatisfond Eco-innovation is among other topics Cross-cutting Cross-cutting sharing schemes

Training, advisory, information support, awareness raising

Technology transfer and Environmental Investment Centre Eco-innovation is among other topics Cross-cutting Cross-cutting business advisory services measures centred on energy and resource efficiency support Technology loans provided by Kredex

Business incubation/ Accelerate Estonia: “Excess Material Dedicated focus on eco-innovation Cross-cutting Cross-cutting accelerations Flow”

Eco-innovation Climathon Dedicated focus on eco-innovation Cross-cutting Cross-cutting challenges, prizes, awards

Training for companies, Ministry of Economics Eco-innovation is among other topics Cross-cutting Cross-cutting consumers, Advisory and Support Activities are financed by Enterprise Estonia’s measures to establish Regional Competence Centres, which are also an integral part of Estonia’s regional economic development strategy

Public awareness • Environmental Investment Centre Dedicated focus on eco-innovation Cross-cutting Cross-cutting campaigns, platforms, and supports environmental outreach activities awareness raising initiatives • Estonia’s presidency of the European Council 2017 • Tallinn Climathon

27 Category Name of instrument Overall relevance for eco-innovation Relevance for CE Relevance for the innovation chain • Circular Economy Conference

other

Collaborative platforms and infrastructure

Clusters, networks, Bioeconomy Cluster Dedicated focus on eco-innovation Cross-cutting Cross-cutting platforms (e.g. industrial symbiosis platforms) Organic Estonia STACC IMEC ELIKO

Dedicated support to new Tallinn Science Park Tehnopol Dedicated focus on eco-innovation Cross-cutting Cross-cutting research infrastructure (piloting facilities)

other

About the Eco-Innovation Observatory (EIO)

The Eco-Innovation Observatory (EIO) is the initiative financed by the European Commission’s Directorate- General for the Environment. The Observatory is developing an integrated information source and a series of analyses on eco-innovation trends and markets, targeting business, innovation service providers, policy makers as well as researchers and analysts.

Visit EIO and DG ENV EcoAP website and register to get access to more information and to access all EIO reports, briefs and databases. www.eco-innovation.eu ec.europa.eu/environment/ecoap