Despite protests from the Latvian National Peat Association, which defends the interests of not only local landowners and peat producers but the entire Latvian public regarding sustainable long-term peat extraction, the Cabinet of Ministers approved the draft order for the Territorial Just Transition Plan at its meeting on 14 July. This plan provides for the closure of the energy peat sector in Latvia from 2030 in exchange for €184 million from the EU, without promoting the country's energy security and independence. Furthermore, it is dramatic that the received funding is planned to be used in ways unrelated to a just transition for the energy peat sector; local entrepreneurs – peat bog owners – will not even receive compensation for the prohibition on extracting energy peat from their private property after 2030. The Latvian National Peat Association believes that the plan must be radically revised.
Energy peat is a local, large-scale, and historically widely used energy resource in Latvia, the use of which was halted under Minister A. Kalvītis when, during the 2001 reconstruction of TEC-1, peat usage began to be replaced by cheap imported Russian gas, thereby increasing dependence on a neighbouring country. Although the share of peat currently used in the energy sector is not high, it could be significantly increased to substantially boost Latvia's energy independence and security – by up to 700,000 tonnes of energy peat per year.
As Uldis Ameriks, Deputy Chairman of the Board of the Latvian National Peat Association, emphasises: “Since 24 February, we have been living in a completely new reality. Today, Latvia's energy security is of particular importance – regardless of the course of the war, Russia will always be our neighbour. In this geopolitical situation, we must consider how to replace Russian natural gas in the energy sector with local resources, not just until 2030, but beyond. In the short term, the Finnish path should be followed, which involves timely creation of energy peat reserves for several years. In the long term, a strategic plan is needed for the long-term use of Latvia’s local wealth – the peat resource – in the national economy even after 2030, by developing not only the horticultural but also the energy peat sector.”
The Latvian National Peat Association believes that the Territorial Just Transition Plan must be radically revised to align with national and public interests. The funding should be used to modernise boiler houses so that by burning fuel, including energy peat, CO2 emissions are reduced. A second important direction is the long-term modernisation and development of the peat industry – both the horticultural and energy peat sectors. It is especially important to develop the industry in Latgale, the border region with the aggressor state of Russia, where the largest peat resources are located. These aspects are not included in the current Territorial Just Transition Plan approved by the Cabinet of Ministers – no funding is allocated for the development of the peat industry.
Significantly, the €184 million plan does not provide funding for compensation or compensatory measures for private properties where energy peat can no longer be extracted, thereby unlawfully restricting property rights.
“This is a precedent! And not in the good sense of the word. In the deepest energy crisis since the restoration of national independence, the Cabinet of Ministers is adopting a ban on the use of a local, widely available energy resource – energy peat. Entrepreneurs who, under market economy conditions, could have provided the country with additional energy resources of up to 2 million MWh per year have, like a large part of the country's population, been left in a helpless situation – without clarity about the future and with their property taken away, as there are no compensatory mechanisms for the ban on energy peat extraction on private property, nor any measures for where to put this energy peat. No one will invest millions of euros to extract peat for energy for just a couple of years out of goodwill. Producers will continue to extract, but these volumes will be small,” emphasised Ilze Ozola, representative of the Latvian National Peat Association and the Seedling and Peat Innovation Fund.
Currently, peat is primarily extracted at active sites in Latvia for horticulture. Since peat used in the energy sector is located in the lower layers of extraction bogs and, due to its acidity, cannot be used in the production of high-quality horticultural substrate, many entrepreneurs planned to extract it specifically as an energy resource – especially considering EU regulations adopted so far, which set the end of the exception period for biomass in 2030. Thus, peat as a fuel could be used from 2030 and would be able to compete on price, even assuming that CO2 quotas would need to be purchased.
“The Cabinet of Ministers’ decision, without compensatory mechanisms, causes significant financial damage to private peat bog owners. But even more so to the public, who will have to pay disproportionately high heating costs in the coming heating seasons. By all appearances, Europe is planning the same path for the peat industry as for sugar factories and the fishing industry, yet in this case, not even paying compensation,” says Ilze Ozola.
Neither the European Commission regulation establishing the Just Transition Fund (JTF), nor the Latvian National Energy and Climate Plan imposes an obligation on the state to close the energy peat sector, but the Ministry of Environmental Protection and Regional Development (VARAM) is planning to do so for the sake of obtaining one-off funding.
The Latvian National Peat Association defends the interests of national landowners and peat producers, as well as the entire Latvian public, regarding sustainable long-term peat extraction. The Association’s goals are to promote the inclusion of peat as a slowly renewable natural resource in the Green Deal, which includes the modernisation and emission reduction of both the energy peat and horticultural peat sectors, the promotion of local peat consumption, and the development of innovative, value-added peat products.