Riga, 15 January 2020

With the announced European Green Deal Investment Plan and its annex – the Just Transition Mechanism – the European Commission, in exchange for a few dozen million euros, is destroying a traditional sector of the Latvian national economy with a significant contribution to the state's economy – peat extraction and processing. Unlike in Ireland and Finland, where peat is burned for energy needs, peat extracted in Latvia is used in agriculture and cannot be equated with the fossil resources from which Europe wishes to divest. The peat sector in Latvia employs approximately 3,000 workers on average per year, mainly in the regions, and at least 20 million euros are paid in taxes annually. The Latvian peat industry has a rhetorical question – is the failure to take into account these fundamental differences in peat usage due to the ignorance of decision-makers or malice?

Yesterday, the European Commission announced the European Green Deal Investment Plan, which provides funding for Europe's transition to climate neutrality by 2050. As part of this investment plan, a Just Transition Mechanism has been developed, providing additional funding to specific European regions that are more dependent than others on the extraction and use of fossil energy resources (coal, lignite, oil shale) in energy production. In these regions, jobs depend on the extraction and use of fossil fuels or carbon-intensive industrial processes, i.e., heavy industry. Europe proposes to compensate for job losses with new jobs, retraining of workers, investments in clean energy, etc. Shortly before the mechanism was announced, peat used for energy, i.e., so-called energy peat, which releases greenhouse gas emissions when burned, was included alongside fossil resources. One of the goals of the Green Deal is to decarbonise the energy sector, where energy production and use account for more than 75% of EU greenhouse gas emissions.

Peat is not extracted for energy in Latvia

Since 2004, peat in Latvia has almost not been extracted for energy needs at all – only 2% of the total volume of peat is used in energy production. In Latvia, 95% of extracted peat is used in agriculture, processed into peat products, and exported to more than 100 countries around the world, where it is used in horticulture, forestry, and for soil improvement. Ornamental plants, vegetables, and tree seedlings grown in peat absorb greenhouse gases. For example, 6,000 tree seedlings can be grown in one cubic metre of peat, which can be used to plant 3 hectares of forest, potentially sequestering 1,110 tonnes of CO2 over a 50-year perspective. One cubic metre of peat can also be used to grow 7,000 vegetable seedlings, which can later produce a harvest of 16 tonnes of cucumbers or 32 tonnes of tomatoes – a significant amount of food.

Peat is of great importance in food production worldwide; it is the basis for vegetable growing. Peat extracted in Latvia accounts for a third, or 31%, of the peat used in professional horticulture in the EU. Globally, 70% of substrates used in professional horticulture are peat-based. It is calculated that in 2050, the world's population will reach 10 billion, and 415% more substrate will be needed to ensure food, ornamental plants, and tree seedlings. The demand for horticultural peat will grow by at least 250% (also taking into account the increase in other substrates by up to 1,000%).

There is also talk of replacing peat substrates in horticulture with other substrates, but the GHG emissions caused by the production and application of various peat substitutes, such as stone wool, as well as their post-use options, are not being considered. After being used for growing seedlings, peat is used for soil improvement.

Without peat substrates, it is impossible to grow natural, healthy food and high-quality seedlings

Ingrīda Krīgere, Head of the Latvian Peat Association, points out: “By acting in this way, officials prove that the state lacks long-term thinking and does not see the big picture. The people who represent us in Europe do not know the sector they are making decisions about. There is a short-term desire to obtain funds, but this would destroy a sector that makes a major contribution to the food production chain. The desire to obtain funding for the restructuring of a non-existent energy peat extraction sector could be defined as the wastage of EU money.”

The peat industry must continue to be modernised

Latvia is a country rich in peat resources; peat is one of the few mineral resources of Latvia whose export products are recognised all over the world, and the demand for peat products is steadily growing. By managing this resource thoughtfully and sustainably, it is an opportunity to develop the country's economy and reach the standard of living of the European Union, while at the same time reducing greenhouse gas emissions.

One direction for development is to promote the modernisation of the sector – to reduce greenhouse gas emissions and promote the production of new peat products with even higher added value in Latvia. The second is to develop and create prerequisites for seedling cultivation and horticulture as a significant sector of the national economy, by growing tree, vegetable, and other plant seedlings in local peat for local consumption and export. Following the Chinese example, it is also possible to build greenhouse complexes in Latvia for growing seedlings and vegetables.

Jobs in the regions

The Latvian peat extraction and processing industry employs an average of more than 3,000 workers in Latvia per year. It is significant that the peat industry has a distinct regional character – it provides jobs in Latvia's regions. Often, a peat extraction company is the largest employer in the municipality. Closing the sector could have unpredictable socio-economic consequences that will in no way improve the overall balance of greenhouse gas emissions.

Opinions in the peat sector

Dainis Aļeksējevs, Chairman of the Board of SIA “Saukas kūdra” and Chairman of the Council of the Latvian Peat Association, points out: “The operation of the peat sector is linked to a number of other sectors, such as wood processing, transport, service providers, fuel sales, machinery sales, etc. Likewise, the peat industry makes a significant contribution to the state treasury from the paid excise tax on fuel. The loss will not only be the lost revenue of peat extraction companies and the payment of state income tax, but much broader.”

As Uldis Ameriks, Manager of SIA “Laflora” and a member of the Council of the Latvian Peat Association, points out: “A viable, export-capable, and traditional Latvian sector is being threatened with false information, and it is possible that the European Commission is being misled about the true situation in the Latvian peat sector. People are worried and have lost their sense of security about the future; banks are no longer financing companies. Such negligence by officials has catastrophic consequences with real losses.”

Edijs Ločmels, Financial and Administrative Director of SIA “Pindstrup Latvia”, points out: “Instead of fighting for jobs and an important sector in the Latvian national economy, it seems that Latvian officials are already planning how to absorb European Union money. We ‘successfully’ liquidated the sugar production sector, now it is the turn of the peat extraction and processing sector.”

FOR INFORMATION

·         Peat extracted in Latvia is used all over the world – 95% of Latvian peat is exported. Last year, export volumes reached 176 million euros.

·         In total, mires cover 10% of the country's territory. Out of all of Latvia's mires, peat extraction takes place in only 4%, and thanks to favourable climatic conditions in Latvia, the annual natural increment of peat significantly exceeds the extraction volumes.

·         There are 63 peat extraction and processing companies operating in Latvia.

More information:

·         Financing the green transition: European Green Deal Investment Plan and Just Transition Mechanism: https://ec.europa.eu/commission/presscorner/detail/lv/ip_20_17

·         Explanation of the European Green Deal Investment Plan and Just Transition Mechanism: https://ec.europa.eu/commission/presscorner/detail/lv/qanda_20_24

·         About the European Green Deal: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_lv

Additional information: Ingrīda Krīgere, Member of the Board of the Latvian Peat Association, ingrida@peat.lv, 29106008