The aim of this paper is to identify the main circumstances related to the Estonian energy sector and economy and the facts which are important for development of the research conducted by the author and for clarification of the main viewpoints. The paper provides the principal facts on the first (2005-2007) and second (2008-2012) period of CO2 (carbon dioxide) trade in Estonia; describes electricity production in Estonia on the basis of the electricity development plan effective in the reference year 2007 and proceeding from that – calculations of CO2 emissions by kind of fuel used. The paper will touch upon the main legislative provisions concerning renewable energy support, which essentially influence the development of renewable energy generation and indirectly the CO2 trade. Analogously with the reference year 2007 methods of calculation, CO2 emissions have been calculated for 2020. The electricity production prognosis for the year 2020 is based on the interpretation of the electricity sector development plan. Computation according to the CO2 calculation methodology shows that the CO2 emission amount will be ca 5.7 Mt (million tonnes) in 2020. In 2020 compared to 2007, the domestic consumption of electricity is estimated to grow: in 2007 the domestic consumption of electricity was ca 8200 GWh, in 2020 it is estimated to be ca 10480 GWh, i.e. the growth is ca 22%. Decrease in the emission amount of CO2 will be gained due to the expected use of different energy sources, compared to those used in 2007, in the designed power plants based on renewable energy sources or gas. The share of oil shale-based energy production will decrease from 83% to 44% resulting in a further reduction of CO2 emissions from 12 Mt to 4 Mt. In view of the fact that, during consumption, the CO2 emissions comprise nearly 60% of the gross consumption of electricity production, the research reveals that raising consumer awareness of the use of various energy saving equipment and the promotion of economical lifestyle involve a remarkable potential for reducing the amount of CO2 emission. To ensure competitiveness of electricity producers in the free market conditions, influenced by CO2 emission allowance trading, construction of the power plants in compliance with national regulations must be ensured with the help of support schemes, state aid, tax policies and legislative measures. Since the quota trade rules which will apply after the year 2012 are not distinctly clear yet, thus this topic will be developed further in the articles to come.