Green Energy Feasibility in Estonia

By: Alexandra Davis, Dasha Beniash, Gabriel Goodspeed, and Theresa Haunold

Though not the most well-known of the European Union countries, Estonia, which gained membership in 2004, is a leader in reaching the EU sanctioned National Renewable Energy Action Plan (RES). Estonia has in the past been heavily dependant on an ecologically harmful and unsustainable form of energy–oil shale. However, in recent years, thanks in part to its harnessing of wind power, Estonia has surpassed the EU assigned 2020 green energy goal. This opens up the possibility of Estonia working together with other EU countries for mutually beneficial energy and funding-based relationships in the future, under the EU Energy Cooperation Mechanisms.

Introduction and History of Oil Shale in Estonia

Since Estonia has many oil shale reserves, it has taken advantage of its resources and is now the leading producer of oil shale in the European Union. One can produce 850kWh of electricity from one ton of Estonian oil shale (1). Estonia has clearly reaped the benefits with 80% of its oil shale used for the production of energy (1).

Figure 1: Estonian oil shale reserves extend into Russia. (2)

The reason for Estonia’s unique dependence on oil shale stems from its recent history. When part of Russia in 1916, Estonia starting exploiting its oil shale during the Russian crisis in fuel consumption during World War I. Industrial techniques to extract oil shale had already been developed in France in 1838 by Alexander Selligue. But Estonia began improving upon these technologies once it had become a sovereign nation in 1918 and continued doing so through the 1930s, which allowed it to sustain its energy consumption with reliable and cost-efficient oil shale (2).
Estonia also did not have to rely on its neighbor, Russia, for electricity, thereby making it easier to leave the Soviet Union and achieve complete independence from Russia. Other post-Soviet States had to negotiate with Middle Eastern countries that had crude oil supplies to increase their energy supplies after leaving the Soviet Union, while Estonia had no need for relations with Arab nations. Enthusiasm for oil shale in other countries, for example in the US, which has the largest oil shale reserves in the world, depends on the current price of crude oil. When crude oil from Middle Eastern countries is more expensive, such as in the 1970s in the US, there is an increased interest in exploiting oil shale of one’s own country. Without such relations before the creation of the EU, Estonia had been dependent on its own reserves for the purpose of energy production. (Oil shale mining peaked in 1980 at 31.35 million tons (3).) put somewhere else?
However, Estonia’s production of oil shale has slowed in the last thirty years due to environmental concerns. The process of converting oil shale to electricity produces fly ash, or environmentally concerning gases such as nitrogen oxide, sodium dioxide, and hydrogen chloride (4). When Estonia entered the European Union, it received temporary EU membership provided that it would meet guidelines on developing oil shale and curtailing greenhouse gas production.
Interestingly, the government partly owns the oil shale industries and therefore has a powerful say in production. The Estonian government has been aware of environmental concerns and has ramped down production but has kept up economic progress. It is predicted, though, that within another thirty years, Estonia will no longer produce oil shale for electricity unless new technologies are found (1).

Science behind oil shale and comparison to other countries

By now, most readers will have a basic understanding of oil shale. However, to clear up any confusion, it is important to emphasize how vague the term “oil shale” really is and that “oil shale” and “shale oil” are not the same. Firstly, oil shale is a sedimentary rock, but it does not have a set geological or chemical definition. Oil shales are broadly defined as sedimentary rocks containing much unoxidized organic matter. They can vary a lot in composition, age, history etc. The large number of organic compounds is due to deposition in oxygen-depleted conditions, for example in marine basins, lakes, or swamps. Estonian oil shales (called põlevkivi) contain especially high amounts of organic matter, sometimes up to 50% (for a kind of oil shale called “kukersite”). (5) The solid framework of organic compounds in oil shales is known as kerogen and can also have variable compositions. Misleadingly, not all oil shales are shales (fine grained sedimentary rocks made of mud with set properties). On the other hand, shale oil is any synthetic oil that is extracted from oil shale.

Figure 2: Processing Oil Shale

This graph (6) is an overview of the extraction and use of oil shale. Here, “ex-situ” means above ground as opposed to underground processing, which is often used in newer, experimental technologies. Today, most oil shale is mined (ex-situ), and therefore the extraction is limited to surface mines. No matter where this takes place, oil shale is converted to shale oil by a process called pyrolysis, which is derived from the Greek terms for “fire” and “separation”.

In general, pyrolysis is a decomposition reaction that occurs, unsurprisingly, at high temperatures and in the absence of oxygen and water (as opposed to combustion). Pyrolysis of oil shale occurs between 450 and 500 degrees Celsius and produces ash, shale oil and oil shale gas. Using shale gas is not economically viable, but shale oil can be burned directly to produce heat or drive steam turbines (7). As shown in the graph above, shale oil can also be treated (hydrocracking, for example) and used as a fuel.

The processing of oil shale leads to considerable environmental and ecological problems. Firstly, extractions for ex-situ processing destroy landscapes, killing animals and plants and thereby reducing biodiversity, even if the area is rehabilitated. This leaves very obvious marks in Estonia, where towering hills of solid waste (ash, char, semi-coke, mining waste) permanently change landscapes. (8)  In fact, one park in northeastern Estonia, the Kiviõli Adventure Centre, is built on top of an old ash hill. Today, it is a popular location for skiing and zip-lining. However, oil shale ash is classified as hazardous waste according to the waste list issued by the European Commission (9). Hence, from 2010 to 2013, 86 ha of ash heaps were covered with waterproof material and new soil for safety. (10) The photos below show a non-rehabilitated area in Aidu, northeastern Estonia (11) and a skiing slope at the Kiviõli Adventure Centre (12). This slope is 90m high, making it the highest artificial hill in the Baltic countries.


Figure 3: Aidu                                                     Figure 4: Kiviõli Adventure Centre

Another ecological issue is water usage. Shale oil production requires up to five barrels of water per barrel of shale oil produced (1 oil barrel (bbl) ≈ 159 L). These ecological concerns partly explain why countries like Estonia are leaders in renewable energy despite their fossil energy reserves.

Figure 5: A historical look at the amount of mined shale by country.

Estonia is a surprisingly important oil shale producer and oil shale is competitive in the Baltic region. The graph above (13) shows the amount of mined shale per year from 1880 to 2010 in different countries. Most oil shale is mined in the United States, China, Brazil, Germany, and Russia. In 1985, when oil shale mining peaked in most countries China mined about 47 Million tons of oil shale and Estonia mined around 30 Million. That is around 60% of shale mined in China with only 0.5% of the surface of China.

Wind Energy

As an alternative to oil shale, Estonia can take advantage of an environmentally friendlier resource — wind. Of course the feasibility of wind power expansion is dependent on a country’s geography. Wind farms thrive in areas such as coastlines, tops of hills, mountain gaps, and even offshore. Although the minimum required wind speed for electricity generation varies by turbine size, the typical cut-in speed is 3.5 m/s (15). Estonian areas with greatest potential for wind power are the northwestern coastal region and the western islands. The inland areas are not suitable for such developments; at 10 meters above sea level, the wind speed is only approximately 2-3 m/s, whereas in coastal areas it easily reaches 5-6 m/s. For example, the largest Estonian island, Saaremma, boasts wind speeds of 8.06 m/s (16). This value is well above the cut-in speed, and the island’s potential has not gone unnoticed. Saare Wind Energy OU plans on building an offshore wind farm with 100 turbines on western Saaremma Island (17). Estonia as a whole, however, is no stranger to wind power. As shown on the following map, Estonia has invested in wind park development on its western coast (18).

Figure 6: Estonia’s neighboring large body of water, the Baltic Sea, has the greatest unrestricted technical offshore wind potential in the EU (21).

Estonia is in an optimal location for considerable offshore wind investment. In comparison to the rest of the European Union’s surrounding bodies of water, the Baltic Sea boasts the greatest unrestricted offshore wind potential 10-30 kilometers from the coast as seen in Figure (21). There is a gradual geological transition that eases the typical offshore wind power difficulties because of the Baltic Sea’s shallow and sandy seabed, meaning that Estonia’s coastal location is ideal for offshore wind projects. Estonia has taken advantage of its oil shale resources for a long time, and rightfully so. But why not take even further advantage of such a stellar location?

While it is unlikely for wind power to take over as Estonia’s prime energy source due to the abundance of oil shale, it is not only clear that the country has proper resources for such projects but also that policymakers are intrigued by wind power’s benefits. Renewable energy in general is an interesting topic to this country; in comparison to neighboring nations such as Latvia and Lithuania, Estonia is quite an “oddball.” In fact, Estonia has actually established policies for operating offshore wind farms (19). One must have permission and a permit in addition to paying an annual fee for using a public body of water, as clarified in the Electricity Market Act.

Thanks to the decision to cut Russian gas imports by a dramatic 73.6% (20), Estonia has plenty of room to develop its renewable energy capacity even further and forge a gradual, sustainable path toward energy independence. However, there are even greater reasons for Estonia to wholeheartedly pursue wind energy than simply diversifying its energy sources or weaning off of its historical Russian dependence.

Figure 7: Levelized costs for 2050 show that wind energy will be the most cost-efficient method for electricity generation in the Baltic region (22).

By analyzing the levelized cost of electricity, or the actualized MWh cost over a project’s entire lifetime (capital costs, operation costs, fuel costs, and CO2 emissions costs), wind energy is expected to be the most cost-efficient alternative for electricity generation by 2050 (22), as depicted in Figure.

Although Estonia is positively differentiated from its post-Soviet state neighbors in that its policymakers have clearly acknowledged the potential of offshore wind farms, there is still work to be done. In relation to Belarus, Latvia, and Lithuania, Estonia’s environmental footprint in 2004 was approximately double (23). While this is a somewhat outdated source, oil shale is still Estonia’s energy “crutch.” In 2012 70% of Estonia’s energy still came from oil shale, and nearly 80% of its greenhouse gas emissions stemmed from oil shale combustion (24) Certainly it is great for Estonia to fuel itself through domestic sources rather than imports from places like Russia, but is oil shale even a “sustainable” option? Transforming oil shale to electricity and heat relies heavily on CO2. In fact, oil shale contributes an equal amount if not more to climate change as coal. When compared to other energy sources such as oil, coal, and natural gas, oil shale actually emitted the greatest number of moles of CO2 per mega joule of heat produced (25), as shown in Figure. Not only is the oil shale heating process is intense but also the decomposition of oil shale’s mineral carbonates. Greater economic and moral enthusiasm toward wind energy can help gradually reduce Estonia’s reliance on oil shale, benefiting both its economy and its environment.

Figure 8: Using oil shale as an energy source releases more carbon dioxide than coal, which may imply greater climate hazards (25).

Estonia and EU Cooperation Mechanism Possibilities

Though Estonia is still heavily dependent on its oil shale as a resource for energy, it has succeeded in reaching and even surpassing the renewable energy target it was assigned by the National Renewable Energy Action Plan (RES) (26). It was given a goal of reaching 25% renewable energy in its gross final energy consumption by 2020, and by 2011 had already reached 25.9% (27). Because of this, it would be beneficial for Estonia to take part in one of the cooperation mechanisms set up under the Renewable Energy Directive by the EU. These mechanisms include statistical transfers, joint projects, and joint support schemes (28). By taking advantage of this system, Estonia would be able to assist another EU country which may be struggling to meet its own 2020 renewable energy target, and in return would reap some financial, developmental, or infrastructural benefit. According to the Estonian Wind Power Association, the Estonian government agreed in 2016 to make the necessary changes to the country’s Electricity Market Act that will allow producers of renewable energy resources in Estonia to participate in these cooperation mechanisms with other EU countries (29).

Each type of cooperation mechanism works differently, and the choice of mechanism should be tailored to the needs, goals, and capabilities of each country taking part. Statistical transfer involves an amount of renewable energy from one country being transferred to another’s target, in return for payment (which can then go toward funding the first country’s costs of maintaining or increasing renewable energy sources) (28). Joint projects involve upwards of two EU countries co-funding a renewable energy project together (in electricity, cooling, or heating), and then sharing the renewable energy resulting from this amongst themselves. Under this type of mechanism, EU countries can also work with non-EU countries under certain circumstances and guidelines (28). The final type of mechanism, the joint support scheme, consists of two or more countries in the EU co-funding a joint support scheme to “spur renewable energy production in one or both of their territories” (28). These can include “measures such as a common feed-in tariff, a common feed-in premium, or a common quota and certificate trading regime”. Statistical transfer and joint support schemes do not involve the physical transfer of energy between countries, but joint projects can include this (but are not required to). Though each of these mechanisms has its own merits and drawbacks, it seems that the two best possible options for Estonia, should the country choose to take part in this, would be either statistical transfer or a joint project mechanism.

A hypothetical statistical transfer situation between Estonia and Luxembourg was laid out and analyzed in a 2014 case study within a project that was carried out by the European Commission (27). Since Estonia has surpassed its RES target for 2020, and Luxembourg will have trouble reaching its 2020 goal (11%), a statistical transfer would be mutually beneficial. Estonia could use the funds it receives from the transfer to “cover the cost of the related RES production and to reduce the burden on electricity consumers”, whereas Luxembourg would be able to meet its 2020 target (27). A statistical transfer was chosen over the other options in this case study for reasons including the technology-neutral nature of the transfer, lower implementation and administrative costs, and the absence of a need to heavily alter state-aid regulations within this scheme. The case study also expressed the hope that receiving these funds from transfer with Luxembourg might incentivize additional RES development in Estonia, benefitting both the country and the EU’s attempts to increase RES usage.

However, Estonia could also implement a joint project mechanism to reap additional benefits from its cooperation with another EU country. For the past several years, Estonian developer 4Energia has been in the process of getting permits to set up a “700 MW to 1,000 MW wind farm northwest of the island of Hiiumaa in the Baltic Sea” (30). Estonia already heavily takes advantage of the country’s offshore wind energy capabilities, but this wind farm would push the country even further in their RES efforts. The only thing necessary to build this wind farm now is adequate financing. 4Energia has proposed to enter into a joint project with another EU country. This would allow Estonia to receive the funds to build a wind farm, while the other country could use this project toward its own RES goal, since “financing a project elsewhere would qualify such a partner as having met its own 2020 target” (30).

In keeping with European Union CO2 regulations, Estonia could turn around its environmentally harmful oil shale production into investments in wind energy with the European Union Cooperation Mechanisms Possibilities plan. By doing so, both Estonia and joint countries would not only increase their green energy usage but also financially benefit from the cooperation mechanism. Estonia has depended upon oil shale production throughout its recent history, but it could well consolidate its leadership in renewable energy.