Energy emergency revives Estonia’s polluting oil shale industry

KOHTLA-JÄRVE, Estonia — Russia’s war in Ukraine is prompting Estonia to turn back to dirty oil shale as it deals with soaring energy prices and the need to replace energy imports from Moscow.

Estonia is the only country in the world where oil shale historically supplied a majority of energy, accounting for 73 percent of primary energy supply in 2018. But burning oil shale, which has a higher carbon intensity than coal, gave Estonia the second-highest per capita carbon dioxide emissions in the EU in 2020.

The oily rock can be mined and burned for power or heating like coal, transformed into liquid fuels, or used for chemical manufacturing.

When Prime Minister Kaja Kallas came to power last year, hot on the heels of the EU’s Green Deal, she pledged to end oil shale use for electricity production by 2035 and to stop using the solid fossil fuel in the entire energy sector by 2040.

The country had been making rapid progress, with consumption of oil shale extracted by the state-owned Eesti Energia falling from 16.6 million tons in 2016 to 7.9 million tons last year.

But then came war in Ukraine, and the government’s decision to use oil shale to produce electricity and for home heating this winter rather than importing Russian gas and power.

“Extraordinary measures must be used in exceptional circumstances. Fortunately, we have an alternative fuel,” Economy Minister Riina Sikkut said last month.

The government insists it will still hit its climate targets, but any reprieve for oil shale is welcomed by the industry.

“This situation shows that having our own oil shale power stations is needed for Estonia — and I think this [reasoning] will apply for a long time,” said Andrei Zaitsev, chairman of the Narva Energia trade union representing oil shale workers in the northeastern region of Ida-Virumaa. 

Hando Sutter, the CEO of Eesti Energia, said his company is ready to boost production to 10 million tons.

“This energy naivety era is over,” he said. “We very clearly understand in Europe today that we can’t rely so much on … not-so-friendly neighbors.”

The company had to “ramp up” extraction in its current mines, he said, and Eesti Energia will also open a new mine in around five years, depending on how fast current oil shale stocks are depleted.

“Our hope is that this war will be over very very soon,” he said, adding that for now the company is treating current needs as a “short-term crisis.” He insisted it “will not give up” on its aim to stop producing electricity from oil shale by 2030 and that the company is investing €2.5 billion over the next five years to quadruple its renewables capacity. 

But Sutter admitted “there is a chance” that the company’s longer-term strategy could change if the war in Ukraine drags on. 

Climate concerns

The country’s oil shale revival is also worrying local climate campaigners.

“It’s a very backward move,” said Madis Vasser, a climate expert at the Estonian Green Movement NGO, adding that it could set back the country’s progress on emissions by five years. The current energy crisis admittedly is “a bad situation,” he said, but “for the NGO sector it looks like just another reason to … continue the status quo.” 

Estonia’s environment ministry did not immediately respond to a request for comment.

However, the rethink is good news for miners in Ida-Virumaa, Estonia’s historical oil shale heartland that lies along the border with Russia. Eesti Energia has begun hiring 500 new workers in the sector since the war began, Sutter said.

“Of course locals in Ida-Virumaa also want a greener environment and so on but they also want to eat and live somewhere,” said Sander Vaikma, president of the Energy Workers Union that represents over 1,200 workers in the sector.

That’s a big change from recent years, when decarbonization policies forced a downsizing. The national industry, which has five mines in operation, two of them owned by Enefit Power, an Eesti Energia subsidiary, has seen employment fall from about 6,500 people in 2019 — a level that hadn’t changed much in recent years — to about 4,800 at the end of 2020.

Job cuts were done to “meet those climate targets,” set by the government, said Andres Vainola, Enefit’s chairman, adding that the company spent “millions” — along with the state — to pay redundant workers at least one-third of their salary for six months while they looked for new work.

That hurt the mining city of Kohtla-Järve, once a Soviet industrial powerhouse due to its abundant supplies of oil shale.

Extraction there began at scale during World War I, but it was under Soviet occupation that the city’s mining capacities exploded. At its peak in the 1980s, the city had 90,000 residents, many coming from across the Soviet Union to work in the mines. It produced over 30 million tons of the solid fossil fuel a year.

But in recent years, the population in the economically depressed Ida-Virumaa area, where unemployment is more than double the national average, has shrunk by two-thirds.

“It has been a very neglected area … it’s considered somehow alien by the mainstream Estonian elite,” said Eeva Kesküla, an anthropology professor at Tallinn University, “dirty, polluting foreign — and potentially disloyal.”

Jan, 72, a pensioner from Kohtla-Järve, has noticed the impact as oil shale downsized.

“Of course it’s sad … there’s few people here now,” he said. “Young people left across the border to go work,” he added, including his son, now living in Finland.

For Zaitsev, the union leader, the shift in policy “is a favorable situation” for the sector.

The current EU energy security crisis, he said “clearly demonstrates” that the bloc’s “sudden transition” to carbon neutrality by 2050 is “likely not possible.”

“Electricity is needed,” he said, “it’s only going to get worse.”