The small CO2 emission quota the government plans to assign to Estonia’s largest cement producer Kunda Nordic Tsement would in the company’s opinion push up cement prices by 35-40 per cent or leave the country without cement altogether.

Kunda Nordic Tsement’s greenhouse gases emission quota was nearly 1.1Mt this year but the company launched a third production line in the second quarter.

"To keep three production lines in operation throughout the year, we requested an annual quota of 1.3Mt for 2008-2012. This would allow us to produce 1.1Mt of clinker," senior counselor with Kunda Nordic Tsement Aadu Kana told local media.

As the state lacks data about this year’s proven emissions, the government plans to base the 2008 quotas on last year’s proven emissions. "Working three production lines, we’ll be short of 450,000-500,000t," Kana said.

A ton of greenhouse gas emissions at present costs about 22 euros, but Kana said the European Commission expects the price to rise to 40 euros. At such a price the cement plant would have to shell out roughly 313 million kroons (EUR 20 mln) a year to buy the missing quota.

"If we’d be forced to buy this amount, the price of cement would rise by 35-40 percent. This would give Estonian construction a blow from which I’m not sure it’d recover," Kana said.

An alternative for Kunda Nordic Tsement is to shut down the third production line and keep just two in operation. In Kana’s words, this would leave the domestic market without cement altogether as the company has long-term binding export contracts that cannot be altered.