The Estonian Peat Association has proposed the creation of a strategic peat reserve and compensation for the price difference caused by CO2 quotas. The Ministry of Economic Affairs and Communications said that while producers were free to approach district heating providers, there were no measures for CO2 component compensation.
The association wrote in its letter to the ministry that the role of peat in Estonia’s energy economy should be reevaluated in the altered economic and security situation. District heating providers use mostly gas or woodchips in Estonia, while prices are going up today. Peat is cheaper than woodchips but subject to the price of CO2 quotas.
Because demand for peat is low, there are no major heating peat stockpiles, while they could be created this summer to lessen dependence on gas and woodchips, the association finds.
Peat producers propose the creation of a strategic peat reserve of 330,000 tons. The price of heating peat is around EUR 44-47 per megawatt-hour with the price of CO2 quota included.
Jaanus Uiga, head of the economy ministry’s energy department, said that while the time was right to prepare for the coming heating season, producers should take their proposals to district heating providers.
“Just as liquid fuels serve as a possible alternative for natural gas, peat serves as one for woodchips. We have a considerable number of boiler plants that could be switched to pear use either partly or in full,” Uiga said.
He added that producers were free to offer district heating providers their product and sign contracts, while the latter were mostly interested in woodchips.
“Considering that woodchips constitute a local renewable fuel, district heating companies tend to prefer it, while interest in peat could be created should there be foreseeable problems with woodchips supply,” Uiga offered.
Woodchips price advance could mean the use of peat could be on par in terms of price, while Estonia has no support schemes for CO2 created by using fossil fuels. (ERR/Business World Magazine)
