The Estonian government has initiated a state special planning process to chart an onshore hydrogen pipeline route through its territory, aiming to secure lucrative transit fees and bolster domestic green energy projects.

However, the land-based initiative faces stiff competition from a parallel maritime project that mimics the route of the defunct Nord Stream natural gas pipelines.

A consortium of European energy companies plans to lay a competing pipeline directly along the Baltic Sea floor to connect Finland and Germany.

The German pipeline operator GASCADE, importer SEFE (Securing Energy for Europe), and the Baltic Sea Hydrogen Collector consortium—which includes Finnish and Swedish developers—formally agreed to cooperate on the undersea route in April.

Both projects share the goal of supplying green hydrogen to German industrial factories seeking to achieve zero emissions by transitioning away from natural gas. Green hydrogen is produced using renewable energy sources.

Kalle Kilk, head of the Estonian electricity and gas system operator Elering, noted that building both pipelines simultaneously is impractical. He stated that Finland and Germany hold the decision-making power as they weigh the options.

While an undersea route avoids land-ownership disputes and local government negotiations, Elering and Estonian officials strongly favor the onshore path.

The land route is critical for the survival of planned hydrogen production plants in Estonia's Pärnu region, which would struggle to connect to a maritime line. 

Additionally, officials in Tallinn hope a physical land pipeline will incentivize Germany to take a more active role in Estonia’s regional security.

"Pärnu is obviously quite far from the sea route," Kilk said. "It would certainly be easier for Pärnu projects to connect to a pipe passing overland."

The Estonian government expects to define specific alternative corridors leading south from northern Estonia toward Latvia by early next year. 

Because the infrastructure represents a long-term regional investment, companies are not expected to make final investment decisions until 2030 or 2031.