Estonia: from shale to gale

The last few years have been very eventful in the Estonian energy sector. The country had long been a net electricity exporter thanks to the oil shale power plants of national energy company Eesti Energia, which until 2018 accounted for 76 percent of total domestic electricity generation with about 1500 MW of installed and usable capacity, amounting to about 70 percent or 11 million tons of the country’s total CO₂ emissions. This largely changed in the summer of 2019, when rising CO₂ emission quota prices finally pushed this unique and extremely carbon-intensive fossil fuel largely off the energy market. Following these developments, the government decided in early 2020 to subsidise a new Enefit 282 shale oil plant to intensify ongoing oil production. As the oil is mainly exported, so are the majority of the related emissions from fuel combustion. So the ministers were quick to claim that this decision was still moving Estonia itself towards climate neutrality. In early 2021 the former government fell due to a corruption scandal and the new coalition has promised to both stop fossil fuel investments and phase out oil shale in all forms. Is this really the case and what are the just alternatives?

The Estonian government has declared two phase-out dates – exiting oil shale electricity by 2035 and shale oil production by 2040 at the latest. Both of these numbers are good, because the oil shale sector and people involved with it urgently needed some clarity about their future prospects. But the numbers are bad, because they are out of touch with reality. As mentioned, electricity generation had mostly stopped back in 2019. The capacity that is still regularly operational is there only because of governmental orders that defy open-market logic. On some colder winter days, when producers in other countries are having outages, more dirty oil shale electricity gets a short competitive chance. The reason for this situation is simple – due to decades-long governmental inaction there simply are currently no alternatives for quick deployment. As for shale oil, phasing out by 2040 seems widely optimistic, given that this industry is mostly dependent on three factors: world oil price, CO₂ quotas and local environmental taxes. While local taxes have already been lowered to bare minimums by previous governments, the oil price is volatile and the CO₂ price is staying high. However, this in itself would not be a major problem for the oil industry, as it has generously been allocated free emission quotas due to the improbable chance of “carbon leakage”, where Estonian companies would relocate outside the EU (e.g. to neighbouring Russia) to escape the fair climate policies. What is a problem for the industry on the other hand is the fact that these free allocations are decreasing yearly, with the current rate of -2.2 percent proposed to rise to -6 percent or more in the coming years. The industry itself has calculated that this would mean a shutdown of operations no later than 2028. So giving the sector a promise of smooth sailing until 2040 is a risky and possibly very costly bet for the government.

In recent years another important process has been unfolding in Estonia, that of a just transition in the oil shale region. The concept was first introduced by several environmental organisations with the aim of openly discussing the possible alternatives for the people currently employed in the shale sector. The multi-stakeholder roundtables were held in Ida-Virumaa, the north-eastern part of the country most affected by oil shale phaseout. Topics discussed ranged from mapping the various problems and obstacles that have previously prevented such transitions from finding alternatives and ways to fund them. As of 2021 the work has led to local-level platforms and governmental steering groups that are compiling the territorial just transition plan needed to apply for EU funds to help the region in moving towards a more diversified and low-carbon economy. At the end of 2020 a group of experts held some intensive co-creation sessions to input their ideas for a “Green Plan” for the region. Some potential projects included a green-tech innovation centre, a residential sustainability showcase area, solar and wind co-operatives, innovative district heating and an overall new narrative for the country among other initatives. Moving from “shale to gale” is of course not an overnight possibility and many related problems must first be solved, starting with developing the electricity grid and ending with installing new defence radar systems to free up more land for the wind parks. But overall, the problem of the transition is not technical, but purely political.

Yet there is another recent development that can hinder Estonia’s progress on renewable energy. This is the false promise of small modular nuclear reactors, being forecfully advertised by a small local company. While such tiny nuclear power plants have been proposed for decades, it seems that some businesmen have decided that perhaps enough time has now passed since the last major nuclear accident in the world that the same technology can be sold again. The difference this time around is the narrative of a “new generation” of nuclear technology, mixing the messages between “3+” and “4th” generation nuclear reactors. These are of course a totally different breed of technologies, but that seems to be the point – gaining public support by promoting the “waste-burning” and very futuristic designs, while preparing to license the problematic older technologies in somewhat smaller forms. The proponents claim that there is no alternative to nuclear, as renewables simply “do not work”, but that these different technologies do not compete with each other. Yet at their conferences every opportunity is taken to blast wind and solar. Actions speak louder than words in this case. The developers also claim that they need no public money for their business venture, yet they have already asked for land near the small town of Kunda on the shore of the Gulf of Finland. While it is highly unlikely that the small modular reactor technology will ever come to realisation, it is still important to keep public funds away from such toxic projects.

While the previous governments had completely missed the obvious end of shale oil electricity, they at least invested in good connectivity with neighbouring countries. The new leaders have the opportunity to turn the failure into a success story by engineering an ambitious transition to renewable energy sources, advocate for overall energy saving, promote energy storage solutions and simplify the creation of energy communities that leave no one behind. A popular local petition is calling for climate neutrality as early as 2035, and the science shows it can be done. So the lights are still on in Estonia, and in the future they could start shining brighter than ever.

Madis Vasser

(Madis Vasser is a policy and advocacy expert at the Estonian Green Movement)

In this issue

Ocean acidification increases the agony of the Baltic Sea

Because of low alkalinity and high primary production, the daily fluctuation of pH in the surface water is already high, and ocean acidification is projected to increase this variation further.

Editorial

Marine areas around the world face dramatic changes related to the release of greenhouse gases. Some of these changes — such as marine heat waves already proven devastating to coral reefs — are directly related to the temperature regimes experienced by the organisms. In addition, there is a whole list of other changes that occur concurrently.

Improved air quality could save 200,000 lives per year

Reducing urban air pollution in 31 European countries to below the WHO recommended levels could prevent more than 50,000 deaths per year, and if the cities manage to bring down air pollution in line with the lowest measured levels, over 200,000 annual deaths could be prevented.

EU Clean Air Outlook

The annual health benefits of additional measures needed to achieve the 2030 national emissions ceilings are estimated at €12–43 billion, up to 31 times higher than the estimated costs.

EU countries falling short of air pollution targets

All but two EU member states have failed to show how they will cut air pollution to comply with the National Emission Ceilings Directive, a troubling new report finds.

Renewables have reduced environmental pressures in EU

A new study shows that the increase in renewable electricity has reduced the EU’s climate change impact as well as land, air and water pollution. Targeted actions will further reduce environmental impacts of the energy transtition.