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Eco-innovation in Estonia EIO Country Profile 2014-2015

ESTONIA eco-innovation 2015 - European Commission specialisation strategy, together with the Estonian research, development and innovation (RD&I) Strategy 2014-2020 and Entrepreneurship

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Eco-innovationinEstonia

EIOCountryProfile

2014-2015

Eco-InnovationObservatory

TheEco-InnovationObservatoryfunctionsasaplatformforthestructuredcollectionandanalysis

ofanextensiverangeofeco-innovationinformation,gatheredfromacrosstheEuropeanUnionandkeyeconomic regionsaround theglobe,providingamuch-needed integrated informationsourceoneco-innovationforcompaniesandinnovationserviceproviders,aswellasprovidingasoliddecision-makingbasisforpolicydevelopment.

TheObservatoryapproacheseco-innovationasapersuasivephenomenonpresentinalleconomicsectorsandthereforerelevantforalltypesofinnovation,definingeco-innovationas:

“Eco-innovation isany innovationthatreducestheuseofnaturalresourcesanddecreasesthereleaseofharmfulsubstancesacrossthewholelife-cycle”.

Tofindoutmore,visitwww.eco-innovation.euandec.europa.eu/environment/ecoap

Any views or opinions expressed in this report are solely those of the authors and do notnecessarilyreflectthepositionoftheEuropeanCommission.

Eco-InnovationObservatoryCountryProfile2014-2015:Estonia

Author:KatreEljas-Taal,JohannaVallistu

Coordinatoroftheworkpackage:TechnopolisGroupBelgium

Acknowledgments

This document has been prepared with the support of the representatives of the Estoniangovernmentauthorities,namely:

• Mare Uiboupin – Ministry of Economic Affairs and Communications, Department ofForeignFinancing

• Ivo Krustok and Mihkel Krusberg – Ministry of the Environment, EnvironmentalManagementDepartment

AnotetoReaders

Any views or opinions expressed in this report are solely those of the authors and do notnecessarilyreflectthepositionoftheEuropeanUnion.Anumberofcompaniesarepresentedasillustrativeexamplesofeco-innovationinthisreport.TheEIOdoesnotendorsethesecompaniesandisnotanexhaustivesourceofinformationoninnovationatthecompanylevel.

This brief is available for downloaded fromhttps://ec.europa.eu/environment/ecoap/estonia

Tableofcontents

Summary....................................................................................................................1

Introduction................................................................................................................2

1 |Eco-innovationperformance.....................................................................3

2 |Selectedcirculareconomyandeco-innovationareasandnewtrends.......5

3 |Barriersanddriverstocirculareconomyandeco-innovationinEstonia....9

4 |Policylandscape:towardscirculareconomyinEstonia.............................11

ANNEX: Policy measures addressing circular economy and eco-innovations inEstonia ...................................................................................................................15

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Summary

Estonianeco-innovationperformancehasincreasedsteadilythroughout2013-2015.ThehighestdevelopmentcanbeseenintheEco-InnovationScoreboardindexesforsocio-economicoutcomesandeco-innovationactivities,whichcontinuouslyperformabovetheEUaverage.Despitethesepositivetrends,EstoniastillscoresbelowEUaverageoverall,mostlyduetoresource-intensiveindustrialstructure,lackofseedfundingopportunitiesforearly-stagestart-upsandlowlevelofmediacoverageoneco-innovationsubjects.

While in general Estonia does not target eco-innovation in policy documents specifically, thesmartspecialisationstrategy,togetherwiththeEstonianresearch,developmentandinnovation(RD&I)Strategy2014-2020andEntrepreneurshipGrowthStrategy2014-2020,aimtotacklethemajor barriers of the Estonian innovation system, which also hold back eco-innovation. Thebiggestpotentialforeco-innovationinitiativeswithinthesmartspecialisationframeworkarisesintheareasofICT,asanenablerofeco-innovativeICTsolutions,andtheuseofsmarttechnologiesformoreefficientresourcemanagementinthebuildingandenergysectors.Thefieldhasseennumerouseco-innovationsolutionsinthepastfewyears,largelyduetoinitiativesthathaveraisedawarenessandthefinancialsupportavailableforcompanies.

Despitethenewnessofthetermcirculareconomy,themostrecentpolicyinitiativesinthefield,notably theEstonianNationalWasteManagementPlan2014-2020,havealreadyadopted theunderlyingprinciplesofcirculareconomy–forexample,aimingtoreducetheamountofwasteproducedandrecyclingittothemaximumlevel.TheEuropeanCommission’sCircularEconomyPackagepublishedattheendof2015hasalreadyinitiatedanimportantdiscussioninEstoniansociety,somoresignificantcirculareconomyinitiativescanbeexpectedintheyearsahead.

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Introduction

Despite the fact that Estonians consider themselves an innovative nation, the most recentInnovationUnionScoreboard(EuropeanCommission,2015)andEco-InnovationScoreboard(Eco-IS)showsatendencytofallbehindotherEUcountriesinrecentyears.Ontheonehand,thereisastrongcultureofstart-upsandinformationandcommunicationtechnologies(ICTs)inEstonia,however,thebiggestvalueaddedisstillproducedbythetraditionalmanufacturingsector.ThelinksbetweenthetraditionalindustrialsectorandnewventuresisweakandICTisnotstronglyconnectedtoincreasedcompetitivenessofEstonianmanufacturingcompanies,whichtendtobebasedonmoreresource-intensiveproductionmodes.

Shifting towards eco-innovative solutions and more resource-efficient production modes areoftenperceivedas costlybyEstonian companies.At the same time, thereare limited fundingopportunities for small and early-stage eco-innovation initiatives. The support mechanismsprovidedbyEUstructural fundsrequirestrongproject-managementcapabilitiesandthereforeaffecttheeligibilityofsmallercompaniesforsupport.Thereisalsolackofawarenessandknow-howamongcompaniesonthepotentialtechnologiesforimprovingresourceefficiencyandtheavailableopportunitiesinEUandEstonia.Thisreflectsastrongerneedforawareness-raisingandknowledge-transferactivities.

The main challenge in Estonia in terms of circular economy is the oil shale industry, whichproduces approximately 80% of total waste (Ministry of Environment, 2014). There is a lowpotentialofusingthiswasteelsewhere,thereforethemainstrategyforthesectoristoincreaseitsproductionefficiency.

Therelevantpolicydocumentsemphasisetheimportanceofmoreresource-efficientproductionmodes,shifttowardsrecyclingandreuseofwaste,anddepictgrowthstrategiesbasedonthreemainsmartspecialisationareas–ICT,healthtechnologiesandenhancementofresources–whicharestronglyconnectedtopotentiallyhigheruptakeofeco-innovationsolutions inthecountry.However,thefieldsofeco-innovationandcirculareconomyhavenotbeenprioritisedclearly.AstrongerpolicyorientationintheseareasisneededinEstonia.

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1 |Eco-innovationperformance

TheanalysisinthissectionisbasedontheEU-28Eco-innovationscoreboard(Eco-IS)fortheyear2015.ViaitscompositeEco-innovationindex,producedbytheEco-InnovationObservatory(EIO),Eco-ISdemonstratestheeco-innovationperformanceofacountrycomparedwiththeEUaverageandwiththeEUtopperformers.Eco-ISisbasedon16indicators,aggregatedintofivecomponents:eco-innovationinputs,activitiesandoutputs,environmentalandsocio-economicoutcomes.

Figure1EU-28Eco-InnovationScoreboard2015,compositeindex

Source:EIO,2016

ThecompositeEco-ISfor2015placesEstoniabelowtheEUaverage,behindHungaryandaheadofLatvia.Outof28countriesanalysed,Estoniaisplaced19th.WhencomparedtotheoutcomesofEco-IS2013and2014,thecountryhasdroppedintherankingbythreeplacessince2013(whenitwas16th)butmadeaslightimprovementin2015comparingto2014(whenitwasranked20th).At the same time, the average score has improved noticeably from 72 to 79 in 2015 anddemonstratesthusasteadygrowthtrendinthefield.

Intermsofindividualcomponentsoftheeco-innovationcompositeindex,Estoniascoresaboveaverageforeco-innovationactivities.ThisislargelyduetoahighproportionofcompaniesthathaveimplementedmeasurestoreducematerialinputperunitoutputandahighproportionofISO14001registeredorganisations.Thismightreflectnotsomuchthelevelofeco-innovationinEstoniabutahighawarenessof internationalqualitystandardsamonglocalcompanies.Atthesame time, there are proportionately fewer companies than in the EU on average that haveimplementedinnovativeactivitiestoreduceenergyinput.

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Figure.2Componentsoftheeco-innovationcompositeindexforEstonia,2015

Source:EIO,2016

Aconsiderableimprovementhastakenplaceintheareaofsocio-economicoutcomes,whichnowisattheEUaveragelevel.Theemploymentrateineco-industriesandturnoveroftheindustriesarewellabovetheEUaverage(withscoresof131and120respectively).Atthesametime,exportsofproductsfromeco-industriesarestillatalowlevel.Thisisprobablyduetoahighnumberofneweco-industryventures,whichhavenotyetmanagedtostartexportingtoforeignmarkets.

Intermsofeco-innovationinputs,thecompositeofthegovernment’senvironmentalandenergyresearchanddevelopment (R&D)appropriationsandoutlays,asashareofGDP, iswellaboveaverage (with a scoreof 145). The shareof total R&Dpersonnel and researchers out of totalemployees is fairly good, at a level of 74. However, the total value of green early-stageinvestmentscontributestotheindex’slowcompositevalue,scoringonly14andreflectingalackofavailabilityoffinancingandinvestmentforyoungenterprises.

The eco-innovation outputs component scores low when compared to the EU average. Thecountryhasabove-average(score122)numberofeco-innovationrelatedpublications,butthegeneral lack of patent culture is reflected in the small number of eco-innovation patents inEstonia.Atthesametime,media-coverageonthesubjectalsoscoreslow,althoughthismaybeduetodifferentdefinitionsusedfortheterm.Theterm“eco-innovation”isrelativelylittleusedin Estonia, with “green economy”, “green ICT”, “cleantech” and other terms used moreprevalentlytodate.

Estoniastillhassomeroomfor improvement in thecategoryof resource-efficiencyoutcomes,withonlyBulgariagettingalowerscoreamongthecountriesobserved.Thereasoncanbeseeninthelegacyofenergy-intensiveindustrialstructureandthefactthattheresultsofinvestinginenergy-efficientsolutionsinproductioncanonlybeseenoveralongperiodoftime.

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2 |Selectedcirculareconomyandeco-innovationareasandnewtrends

Multiplenewinitiativeshavebeenstartedsince2013intheareaofeco-innovationandcirculareconomyinEstonia.Itmustbenotedthatwhilepreviouslytheterm“greeneconomy”wasoftenusedasakeywordinthefield,itisstartingtobereplacedwiththenotionof“circulareconomy”,whichalsocomprises thepreviousgreeneconomyactivities.Thereareanumberof initiativesfocusingoneco-innovationinitiativesaswell.

Firstly, a more comprehensive support system for companies pursuing eco-innovation hasemerged. An Energy and Environmental Technology Development Centre (RoheTAK) wasestablishedat theendof2014,withanaimtosupport thegrowthofviablecompanies in theenergy and environmental technology areas. The companies participating have launched aninitiative to become a cleantech cluster. The Green Industry Innovation support programme,startedin2013incooperationwithdonorpartnerInnovationNorway,hassuccessfullysupporteditsfirst15companiesandisexpectedtocontinueinthefuture.

Thestrongstart-upcultureinthecountryhascontributedtothefastdevelopmentoftheeco-innovation activities in Estonia, with support structures – such as the Tehnopol businessincubator,Mektory(InnovationandBusinessCentreofTallinnUniversityofTechnology,foundedin2013)andotherbusinessincubatorsanduniversity-businesscooperationcentres,suchasTartuSciencePark–havingledthewayinprovidinginitialsupportforstart-ups.

Thestrengtheningcooperationbetweenuniversities,publicsectorandbusinessesintheareaofeco-innovationinitiativeshasledtonotableexamplesemergingintheareasofsmartcitiesande-service,suchasthebikeparkingsystemBIKEEP,ane-plannerforpublictransportandothere-governmentinitiatives,andfurthergrowthofÜlemisteSmartCity.

An important part of ensuring the continuous development of eco-innovation and circulareconomy initiatives is raising awareness among different stakeholders. The Ministry of theEnvironmentawardsenvironment-friendlycompaniesyearly,withBalticFibresOÜwinningthemain prize in 2015. For years, the city of Tallinn has given out the Responsible EntrepreneurAward. Tallinnhas also given a special award for remarkable eco-innovations since2013. TheMinistry of the Environment has opened an awareness-raising measure to further informcompanies about ways to becomemore resource efficient (Krusberg & Krustok, 2016). TartuRegional Energy Agency organised a series of awareness-raising seminars for public officialsthroughout 2013-2014 on topics of eco-design and eco-labels, eco-innovation and greenprocurement, energy management, and implementation of environmental management inAustria.

ThenotionofcirculareconomyisfairlynewinEstoniaandisyettoachievesignificantrecognitioninsociety.TheCertificationCentreforRecyclableGoodswasfoundedin2015andaimstoopenits activities in 2016. A website mapping the locations of waste-disposal centres in Estonia(www.things.ee) has contributed to raising awareness on waste management and circulareconomyamongthewiderpublic.

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Finally, Estonian public sector has seen initiatives on innovative procurement and greenprocurement,withthestatebeingasmartprocurer(TechnopolisGroup,2014).

EstonianCell

Estonian Cell, which started its operations in 2006 in Kunda, produces high-quality Bleached-Chemi-Thermo-Mechanical aspen pulp. Between 2012-2014 the owner company of themanufacturing company Heinzel invested €17million in improving efficiency and securing thesustainabilityofthesite.Asaresult,areactorwasdevelopedwhichusesthesite’swastewaterandturnsitintobiogas.Thisallowsthecompanygraduallytoreplacenaturalgaswithbiogasintheirproduction.In2015,thecompanyproducedmorethan5millioncubicmetersofbiogas,becomingthelargestbiogasproducerinEstonia.

In2014,EstonianCellwasnamedEnvironmentallyFriendlyEnterpriseoftheYearbytheEstonianMinistryofEnvironment.

• Keywords:resourceefficientmanufacturing,waste-reduction,biogas

• Websites: http://www.envir.ee/en/news/most-environmentally-friendly-company-year-estonian-cell;http://www.estoniancell.ee

• Contact:Tel:+3726870000;[email protected]

(Source: www.baltic-course.com)

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SkeletonTechnologies

Thecompanymanufacturesultracapacitorsanddelivershigh-powerandhigh-energystoragesolutions,primarilyfortheautomotive,aerospace,industrialandrenewablessectors.Thefirstseriesofultracapacitorswerelaunchedin2012andhavebeenwelcomedbythemarketduetodoubledenergydensityandfivetimesthepowerdensityofprevioustechnologicalsolutions.Thecompanyisincludedinthe2015GlobalCleantech100list.

• Keywords:ultracapacitor,energystorage,cleantech

• Websites:www.skeletontech.com

• Contact:[email protected]

(Source:www.aripaev.ee)

OceanVisuals(ICDIndustriesEstoniaOÜ)

T he companydeveloped complementary solutions for theoil-spill detection systemOceanVisuals, based on information and laser remote-sensing technology, as part of the GreenIndustryInnovationsupportschemesupportedbyEuropeanEconomicArea(EEA)Grants.ThetechnologyisbasedonHyperspectralLidartechnologyandcanclassifythetypeofoil inthewater,measure the thickness of the oil in thewater, provide real-time data feed for earlywarningofoil spills,etc.Theresultingdata isshownonamap-basedgraphicuser interfaceavailable on web and IOS platforms as well as desktop applications. The complementarysolutions financed by the project included the development of a monitoring system thatprovides continuousdetectionofoil pollution indifficult conditions, suchas icywatersandsubmergedoil.

• Keyword:cloud-baseddatamanagement,spilldetectionsystem,cleantech,real-timereporting

• Websites:http://www.icdindustries.no/group-companies/ocean-visuals

• Contacts:+3726613199;[email protected]

(Source:http://www.icdindustries.no)

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Competition-basedeventsforstart-ups

Thebestchanceforeco-innovativeentrepreneurstofindfundingfortheirideaistoparticipateinoneofEstonia’smanyentrepreneurshipcompetitionsaimedatselectingthebestideasandteams for start-ups. In addition tomonetary support, the winners often getmuch-neededknow-howandadviceon runningabusinessandarewidelypromoted inEstoniaaswellasabroad.

Prototronprovidesfundingforyoungcompaniesthatneedtocreateafirstworkingprototypeof theirproductbeforeproceedingwith realproduction.Being created in cooperationwithSwedbank, Tehnopol Science Park and Tallinn University of Technology, Prototron hassupportedtensofnewideas,whichoftenaimtocreatesmarteco-invention.

Ajujaht was started in 2007 and over time has become the biggest entrepreneurshipcompetitioninEstonia.ParticipantsarechallengedtopresenttheirideasinaliveTV-showandthebesteco-innovationsreceiveaspecialaward.

Negavatt is a university student competition specifically aimed at gathering solutions forenergyandresourceefficiencythatcouldbeused intheuniversity.Thebest ideasovertheyearshaveincludedaverticalwind-generator,smartlightsolutions,creatingamicro-modelofthecirculareconomy,etc.

Astart-uphackathonseriesGarage48organisesweekend-longintensivecooperationsessionsingroupstocomeupwithinnovativesolutions.InMay2015,oneoftheGarage48eventswasdevotedtothesubjectofgreentechnology.

Finally,Rakett69isascienceTVshowforstudentsthatencouragesinnovativethinkingamonghigh-schoolstudents.

• Keyword:prototyping,entrepreneurship,start-upfunding

• Websites: http://prototron.ee/, http://www.ajujaht.ee/en/,http://www.negavatt.ee/,http://garage48.org/,http://rakett69.ee/

(Source:www.rakett69.ee)

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3 |Barriersanddriverstocirculareconomyandeco-innovationinEstonia

Although in recent years there have been examples of financial measures targeted at eco-innovations,aswellasinitiativesonawarenessraising,thegeneraleconomicenvironmentandlackofinitialseedfundingforinitiativescanbeseenasoneofthemajorgrowthimpedimentsinthe area. To generalise, thebarriers anddrivers of eco-innovation are similar to issues in theinnovation system in general. As can be seen from the previous examples, although eco-innovation is oftennot targeted in itself, it has becomepart of a generalmovement towardsenergy-efficientsolutions.Inaway,eco-innovationhasalreadybecomeanintegralpartofregularinnovationactivities(Krusberg&Krustok,2016).

ThenotionofcirculareconomyisstillverynewinEstoniaandisonlyjustseeingthefirstpolicydevelopmentsandinitiativesprioritisingtheareaspecifically.However, itcanbeseenthatthenotionhasbecomeasubjectofdiscussionandhasprevailedoverthepreviouslyoften-usedtermof“greeneconomy”.

Selectedbarriersanddriversofeco-innovationandcirculareconomyarepresentedbelow.

Barriers:

• Lowdemandtowardseco-innovationsolutions fromconsumersaswellas low levelofknowledge.Theshiftinconsumer-levelknowledgeanddemandhasstillnottakenplace.Lack of awareness is also an issue among public sector officials and businesses(RecommendReports,2014).Thelackofknowledgetransferpracticesamongcompaniesis a barrier to sharing best practices and the spread of more efficient technologies(Krusberg&Krustok,2016).

• Dependencyon foreign financingmechanisms, suchasEU fundsorNorwayGrants forfinancingtheRD&Iinitiativesofbusinesses.Thiscreatesabarriertoentryfornewandsmallcompanieswithlowprojectmanagementcapabilities,aswasalsoseenintheGreenICTprogramme(Uiboupin,2016).ThesituationisevenworseforEstoniancompaniesthatwouldliketoapplyforEU-levelsupporttoenhanceresourceefficiency,suchasLIFE+orHorizon2020. Estonian companiesmostly receive this support by being subsidiaries oflargeinternationalcompanies(Krusberg&Krustok,2016).

• Lackoffinancingopportunitiesforstart-upcompaniesaimingtoproduceeco-innovativesolutions,whichcharacterisesthesceneofstart-upsinEstoniaingeneral.

• Management routines in Estonian companies donot encourage recognising long-termstrategies and trends,which is often a prerequisite of eco-innovation.Amanagementstudymadein2015revealedthatapproximately20%ofEstoniancompaniesdonothavearoutinesystemformakinglong-termplans(EAS,2015).

• Lackofcomprehensivepolicyframeworkforcirculareconomyisabarriertoclosed-loopsolutions, and therefore moves towards a circular economy. The roles in differentindustries are fragmented, with waste-management often a separate business fromproduction.

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• Capabilities of the state as a smart consumer in environmental and innovativeprocurements are limited. Notable in energy-efficient construction (EstonianDevelopmentFund,2014), thecurrentprocurementpracticesare seenas law-centredandrigid.

Drivers

• Whileoften themore resource-efficient technologiesareconsidered tooexpensivebycompanies,eco-innovationpioneers(suchasreceiversofGreenICTprogrammesupportorindustrialcompaniesthathaveinvestedinenergy-efficiencytechnologies)haveshownthat a shift towards more resource-efficient and environmentally friendly productionmodes,orenteringthemarketwitheco-innovationproductsandservices,mayleadtoconsiderablecostreductionornewclientsegments. Asetof industrybestpracticesisforming.

• Emergence of support systems and organisations are strengthening the knowledgespillover in thecirculareconomy field.Notableexamplesofexistingstructures includeEstonianWindPowerCluster,WasteManagementCluster,EstonianICTcluster,across-clustercommunicationplatform“EstonianClusters”,PAKRIScienceandIndustrialpark,TallinnScienceParkTehnopol,TartuRegionalEnergyAgency,TartuSciencePark,etc.ThemostimportantrecentadditionistheEstonianCertificationCentreforRecyclableGoods.

• Demandandstandardssetbyforeignownersofcompaniesareseenasoneofthemaindriversofenforcingresource-efficiencystandardsamongEstoniancompanies.Estoniancompaniesarestronglydependentontheirforeignstakeholders.KundaNordicCementandABBareexamplesofinternationalcompaniesthathavebroughtaroundinitiativesofresourceefficiencyintheirEstoniandivisions(Krusberg&Krustok,2016).

• Thedevelopmentoftheeco-innovationandcirculareconomyfieldsgohandinhandwithsocial innovation trends; the developmental shift of civil society in Estonia that hasappeared in recent years provides a necessary impetus for the demand towards eco-innovation solutions to appear. Fast-growing civil-society movements, such as localcommunities and opinion festival Arvamusfestival, encourage environmentalconsciousnessinsocietyandcontributetogreenurbandevelopmentinitiatives.

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4 |Policylandscape:towardscirculareconomyinEstonia

CircularEconomy

The Estonian NationalWasteManagement Plan 2014-2020 (Ministry of Environment, 2013)showsthewaytowardscirculareconomyinitiativesinEstoniaandemphasisescompliancewiththe waste hierarchy principle. The plan states that whenever possible, waste generation isavoidedandthereuseandrecyclinginitiativesforuseofwaste,insteadofitbecominglandfill,aresupported.Reusingwaste,orusingthemtotheirmaximumlevel, isoneofthreestrategicaimsoutlined in theplan. Themain activities includeoptimisationofwaste collectionpoints,supportingcompaniesthatreusewaste,raisingawarenessonthesubjectofreusingwaste,andwastemanagementinformationsystems.

It is importanttonotethatasapproximately80%ofEstonia’swaste is theresidualsoftheoilshaleenergyproductionindustry,theinitiativesforefficiencyenhancementinthisareacanhaveaconsiderableeffect.EstonianOilShaleDevelopmentPlan2016-2030(MinistryofEnvironment,2016)isastrategiclong-termplanwhichforeseesmethodsformoreefficientoilshaleminingandreductionofnegativeeffectsontheenvironment.Itstatesthattherearewaysofreusingtheoilshaleminingwaste,however,moreR&Dinitiativesareneededtoexplorevariousoptions.

TheCircularEconomyPackage (EuropeanCommission,2015)adoptedbytheEuropeanUniontowards the end of 2015 has given way to widespread discussion on the subject in Estonia.Followingtheadoptionofthepackage,Estoniahaspublisheditspositionintermsoftheproposeddirective.Thepositionoutlines thata largepartof it is in linewithEstonia’sEuropeanUnionpolicyfor2015-2019(RepublicofEstoniaGovernmentOffice,2014),whichalsoemphasisestheimportanceofnewinitiativesintheareasofresourceefficiencyandcirculareconomy.CirculareconomywasalsothemaintopicoftheyearlyconferenceoftheEstonianWasteManagementAssociationinspring2016.Atthesametime,specificpolicyinitiativesfollowingthepackagehaveyettoappear.

Eco-innovation

Thesectoralreportsofthesmartspecialisationstrategywerepublishedattheendof2014andoutline Estonia’s development strategy in three growth areas: ICT, health technologies andenhancementofresources.Thepre-analysisofgrowthareaswas,however,alreadyintegratedinto the R&D and Innovation Strategy 2014-2020 and the Entrepreneurship Growth Strategy2014-2020,whichwerementionedintheEIOcountryreportof2013andstilleffectivetoday.

Whileeco-innovationisnottargetedinthesmartspecialisationreportsperse,theplannedfutureactionsformanecessarysupportingenvironmentfortheirdevelopmentandhelptotacklesomebarriers not typical only for eco-innovation but also for the Estonian R&D system in general.Noteworthy among the future actions are the plans to encourage technology transfer, smartbuildings in smart cities, renewed industry and use of integrated technologies, increasedinvestmentsintoknowledge-basedindustriesandenhancementofnaturalresources.

ThebiggestdevelopmentpotentialwithinEstonia’ssmartspecialisationframeworkcanbeseenin the area of enhancement of resources, which is divided in three: knowledge-basedconstruction,materialstechnologyandbiotechnology.

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Knowledge-basedconstructiontargetstheenergy-efficiencyofbuildingsanditsmaindriveristhenear-zeroenergystandard,whichwillcomeintoforcein2019forpublicbuildingsandin2021forallothernewbuildings.Thedigitisationofconstructionprocessesisseenasawayofreducingwasteintheconstructionsector.Thestricterenergyrequirementsfornewbuildingswillmeanahigheruptakeofbiomassforenergyproductioninthefuture.Aneedforsmartelectricitygridswillalsoemerge.

Thebiotechnologysectorgrowthreportoutlinesthatwhiletheactivitiesthatprocessthemediumproducts–includingprocessingfoodwasteforusebytheheatingindustry–arenotthepriorityinS3growthareas,theyareimportantforthenationalbioeconomydevelopmentplan.

Thepotential for ICTsectorgrowth inEstonia ismostlyseentobeasahorizontaltechnology,enablingawideruptakeofITsolutionsinothersectorstoincreaseefficiencyanddevelopnovelsolutions – such as e-health in healthcare and automation processes in industry. While notspecificallymentioned, thehighestpotential for theuseof ICTaspartofagrowthstrategy interms of eco-innovation is in the area of embedded computing, robotics and productionautomation.

Inadditiontonationalpolicies,agoodexampleofaregionalpolicy for thearea is theTallinnEnterprise and Innovation Strategy 2014-2018, which aims to support the development ofenvironmentaltechnologiesandtobenominatedfortheEUGreenCapitaltitlein2018.

GovernmentagenciesstillremainthemainintermediariesofEUfundsintheeco-innovationarea.TheGreenICTprogramme,fundedbyNorwegianandEEAGrants,hasendedandresultedin15successfullarge-scaleprojects.Itisexpectedthattheprojectwillcontinueinthefuture.

EstonianMinistryofEnvironmenthasstartedameasureonenergyandresourceefficiencyforcompaniesfinancedbyEUstructuralfundsfortheperiodof2014-2020.Themainactivitiesofthemeasure include increasing awareness, training specialists, resource-efficiency audits, andprovidinginvestmentsforimprovingenergyefficiencyinproductionactivitiesofcompanies.

PakriScienceandIndustrialPark

PAKRI is a privately owned science park that works in close partnership with public andgovernmental organisations. It combines competence, R&D, manufacturing and a testingcentre,whichfocusesonrenewableenergy,energyinhousing,smartgrid,smart-city,energystoring,electricalvehiclesandgreenfuel.Amongotheraspects,PAKRISmart-Cityfeaturesanautonomoussmartgrid,whichisoneofthelargestautonomousrenewableenergysmartgridsintheregion.ThescienceparkhasclosecooperationtieswithScienceParkTehnopol.

• Greentech,incubators,smart-grid,renewableenergy

• Website:http://pakri.ee

• Contact: Kaija Valdmaa,Greentech clustermanager, +372 53 448048; Enn Laansoo, Jr,CEO, Chairman of theBoard, +372 5216 858,[email protected](source:www.pakri.ee)

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CertificationCentreforRecyclableGoods

Thecreationof thecentre isoneof the first initiatives inEstonia clearly targeted at improvements in circulareconomy.Thecentrereceiveditsoperatingpermitinspring2016, starting its activities soon after. The centrewill beprovidingcertificationforgoodsthathavebeenmadeusingrecycledmaterials, for example, compost produced fromproductionwaste.

The initiativeaims to reassure consumers that thegoodsbought are of good quality and meet specificstandards.Thelong-termperspectiveofthecentreisto become an autonomous conformity assessment

unitfordifferenttypesofproductsmadeofrecycledwaste,includingfermentationwastefrombiogas production, sewage sludge compost and goods produced from construction anddemolitionwaste

• circulareconomy,wastemanagement,certificationcentre

• Website:http://www.recycling.ee/

• Contact:MargitRüütelmann,projectmanager,e-mail:[email protected],tel:+3726181618

InnovationandBusinessCentreMektory

Mektory was started in 2013 and is a unique melting pot for scientists, students andentrepreneurs. The organisation is a sub-division of Tallinn University of Technology andorganisesstudyvisitstothesiteanditssciencelabs,aswellasdifferenteventsencouragingentrepreneurshipandcooperationbetweendifferentparties.Amongotheractivities,Mektoryhostsapre-start-upincubator,operatesasatelliteprogramme,andrunstheMektorySchoolofTechnology.Themainspheresof focusofMektoryaredesignandproductdevelopment,developmentofbusinessmodels,mobileservicesandmedia.Mektory’sactiveapproachforexploring novel technologies has alsodeveloped and progressed cooperationprojects in eco-innovation and greentechnologies.

• RD&I cooperation, businessincubation,

• Website:www.mektory.ee

• Contact: Tea Varrak, Innovationand Business CentreMektory Director, tel: +372 620 3527,[email protected](source:news.err.ee)

(Source:http://www.recycling.ee/)

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Estonian Development Fund, 2015, Estonian Energy Sector 2015. Available athttp://www.arengufond.ee/wp-content/uploads/2015/11/EAF._Eesti_energiamajandus_2015.pdf

Estonian Development Fund, 2013, Smart Specialisation Sectoral reports. Available athttp://ns.arengufond.ee/en

EstonianDevelopmentFund,2013,SmartSpecialisation–QualitativeAnalysis.Availableathttp://ns.arengufond.ee/en

EstonianMinistryofEnvironment,2014,EstonianWasteManagementPlan.Availableathttp://www.envir.ee/et/riigi-jaatmekava-2014-2020

EstonianMinistryofEnvironment,2016,EstonianOilShaleDevelopmentPlan2016-2020.Available at http://www.envir.ee/et/eesmargid-tegevused/maapou/polevkivi-arengukava-2016-2030

European Commission, 2015, Innovation Union Scoreboard. Available athttp://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards/files/ius-2015_en.pdf

European Commission, 2015, The Circular Economy Strategy, Available athttp://ec.europa.eu/environment/circular-economy/index_en.htm

GovernmentofEstonia,2014,EstonianEuropeanUnionPolicyfor2015-2019.Availableathttps://riigikantselei.ee/en/european-union

Krusberg,M&Krustok,I(2016),Interview,Tallinn

TartuUniversityCentreofAppliedSocialSciences,2012,Mappingthepublicprocurementfield in order to aid innovative and sustainable public procurements and jointprocurements.

TechnopolisGroup,2014,FeasibilityStudyfortheDesignandImplementationofDemand-side Innovation Policy Instruments in Estonia. Available athttps://www.mkm.ee/sites/default/files/final_report_part_1.pdf

RECOMMEND REPORTS, 2014, Estonian Report on Pilot-Action Status. Available athttp://www.recommendproject.eu/docs/PilotActionReportEE.pdf

Uiboupin,M(2016),Interview,Tallinn

15

ANNEX:Policymeasuresaddressingcirculareconomyandeco-innovationsinEstonia

Groupofpolicymeasures Typeofpolicymeasure

Specificmeasure

Pleaseprovidereferencetoorbriefsummaryofspecificmeasures(national,regional)

addcellsifnecessary

Focusofpolicymeasure(tickifrelevant)

Circulareconomy

Genericfocusoneco-

innovation

Resourceefficiencyimproveme

nt

Energyefficiencyimprovement

Reductionofemissionsincl.CO2

Otherrelevantareas(e.g.renewableenergy,etc)

SUPP

LYSIDEFO

CUS

Equity/businesssupport

Publiclyco-fundedventurecapitafunds

-SmartCap–co-foundedbyEstonianDevelopmentFund

x x x

Publicguaranteefunds

GuaranteeFund(Tagatisfond)

SupportforR&Dinpublicsectorandindustry

R&Dfunding

Enterprise Estonia supports with the following measures: CompetenceCentres, Smart Procurement, Green IT, Development of RegionalCompetenceCentres,

The support measures and programmes for 2014-2020 are only partlylaunchedtodateandotherinitiativeswillfollow.

Environmental Investment Centre supports the creation of innovativesolutionsforreducingwasteaspartofitsenvironmentprogramme

x x x x

Collaborativegrants

16

R&Dinfrastructure

AgovernmentinvestmentplanisputtogetheraspartofEUstructuralfundmeasurefortheperiod2014-2020:“SupportforresearchinfrastructureofnationalimportanceonthebasisoftheRoadMap”.

Fiscalmeasures

TaxincentivesforR&Dandstart-ups

Incometaxlaw,releasesreinvestmentsfromtaxation.NoextraincentivesforR&Dandstart-ups.

TaxincentivesforR&Dpersonnel

Education,trainingandmobility

Tailoredtrainingcoursesforcompanies,entrepreneurs

x x

MinistryofEconomicsmeasureonenergyandresourceefficiencyplanstoorganisetrainingcoursesforresourceefficiencyspecialists.

Advise/consultingforstartups,companies,entrepreneurs

Advisory and support activities are financed by Enterprise Estonia’smeasure,“DevelopmentofRegionalCompetenceCentres”.

Placementschemesforstudents

SupportforR&Dworkersrecruitments

Networksandpartnerships

Competencecentres,clusters,science-technology

parks

Enterprise Estonia supports with the Competence Centres measure andsupportforclusters

x x x x x

17

Technologyplatformsandinnovationnetworks

ScienceparksandCompetenceCentres,clusters

Foresightandcommonvisionbuilding

EstonianDevelopmentFundprovidesforesightreportsfordifferentfieldsandcreatespublicdiscussion.

x x x x x x

Marketintelligenceandotherformsofinformation

sharing

ForesightandresearchbytheEstonianDevelopmentFundandEnterpriseEstonia.

x x x x x x

DEMAN

DSIDE

FOCU

S

Regulationsandstandards

Regulations,targets,cap&tradeschemes

AmbientAirProtectionAct

InvestmentSchemeunderCO2bargainingsystemofKyotoprotocol x x x x

IndustrialEmissionsAct

Performancestandards,labelling,certification

EnvironmentalManagementprogramme

EnvironmentalImpactassessmentandenvironmentalmanagementact

x x x

Publicprocurement

“Green“publicprocurementofgoodsandservices

EnterpriseEstoniaSmartProcurementProgramme x x x x x

R&Dprocurement

EnterpriseEstoniaSmartProcurementProgramme x x x x x

Pre-commercialprocurement

18

TechnologyTransfer

Advisorysupportfortechnologyadopters

Enterprise Estonia R&D supports the Environmental Investment Centre,whichsupportsthetechnology investmentsofcombinedheatandpowerplantsandrenewableenergies

x x x x x x

Financialorfiscalsupportfortechnologyadopters

(e.g.grantsforpurchasingnewtechnology)

Environmental Investment Centre measures on energy and resourceefficiencysupport

TechnologyloansprovidedbyKredex

X X X X X x

Supportofprivatedemand

Taxincentivesforconsumers(e.g.forpurchasing

environmentallyefficientproducts)

Taxreductionsforproductsandservices(e.g.VAT

reductions)

Demandsubsidies(e.g.eco-vouchers,consumer

subsidies)

Kredex “Energy efficiency in apartment buildings” supports initiatives ofrebuildingapartmentbuildingstobecomemoreenergyefficient.

x

Awarenessraisingandinformationprovision

Environmental Investment Centre supports environmental awarenessraisinginitiativesaspartofitsEnvironmentProgramme.

x x x x x x

AbouttheEco-InnovationObservatory(EIO)

TheEco-InnovationObservatory(EIO)istheinitiativefinancedbytheEuropeanCommission’sDirectorate-GeneralfortheEnvironment.TheObservatoryisdevelopinganintegratedinformationsourceandaseriesofanalysesoneco-innovationtrendsandmarkets,targetingbusiness,innovationserviceproviders,policymakersaswellasresearchersandanalysts.

VisitEIOandDGENVEco-innovationActionPlan(EcoAP)websiteandregistertogetaccesstomoreinformationandtoaccessallEIOreports,briefsanddatabases

www.eco-innovation.euec.europa.eu/environment/ecoap