Estonia has made significant progress in improving its environmental performance by decoupling economic growth from the primary environmental pressures. However, it still faces some challenges linked to the extensive use of natural resources, which results in high emissions intensities and low material productivity of the economy. This chapter presents the key socio-economic developments and considers Estonia’s progress in moving towards a low-carbon and energy-efficient economy, resource efficiency and sustainable management of natural assets, including biodiversity and water resources.

Estonia has made significant progress in upgrading its regulatory framework for environmental management and advancing environmental democracy. However, more needs to be done to improve the coherence of environmental requirements and ensure better compliance with them, as well as to build human and technical capacity at the local level. This chapter analyses Estonia’s environmental governance system. It reviews the regulatory framework for environmental impact assessment and permitting, as well as compliance assurance instruments. The chapter also assesses progress in promoting public participation in decision making and access to environmental information, education and justice.

Estonia is pursuing an ambitious green tax reform, operates several support schemes to stimulate green investment and has a growing environmental goods and services sector. However, vehicle taxation is limited, and pollution taxes are too low to have an impact on environmental performance of firms. This chapter presents Estonia’s progress in using economic and tax policies to reach environmental objectives. It analyses public and private investment in environment-related infrastructure and reviews the promotion of environmental technologies, goods and services as a source of economic growth and jobs.