Identifier
Created
Classification
Origin
06TALLINN1042
2006-11-20 15:53:00
UNCLASSIFIED
Embassy Tallinn
Cable title:  

OIL SHALE ENERGY: FACING ENVIRONMENTAL

Tags:  PREL PGOV SENV ENRG EN 
pdf how-to read a cable
VZCZCXYZ0001
RR RUEHWEB

DE RUEHTL #1042/01 3241553
ZNR UUUUU ZZH
R 201553Z NOV 06
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 9268
INFO RUEHCP/AMEMBASSY COPENHAGEN 1585
RUEHRA/AMEMBASSY RIGA 2815
RUEHVL/AMEMBASSY VILNIUS 6584
RUEHHE/AMEMBASSY HELSINKI 5119
RHEBAAA/DEPT OF ENERGY WASHDC
UNCLAS TALLINN 001042 

SIPDIS

COPENHAGEN FOR EST COUNSELOR
STATE FOR OES
DOE FOR TONY DAMMER

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV SENV ENRG EN
SUBJECT: OIL SHALE ENERGY: FACING ENVIRONMENTAL
CHALLENGES AND LOOKING TOWARDS THE FUTURE


UNCLAS TALLINN 001042

SIPDIS

COPENHAGEN FOR EST COUNSELOR
STATE FOR OES
DOE FOR TONY DAMMER

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV SENV ENRG EN
SUBJECT: OIL SHALE ENERGY: FACING ENVIRONMENTAL
CHALLENGES AND LOOKING TOWARDS THE FUTURE



1. (U) Summary. Oil shale is a key Estonian national
resource, whose existence has allowed the country to remain
relatively independent of Russian natural gas supplies.
Despite the high cost of compliance, the GOE and power
utility Eesti Energia are confident they will bring
Estonia's oil shale fired power plants into compliance with
EU environmental directives affecting ash landfills and air
emissions by mandated deadlines. Environmental activists
are concerned, however, that Eesti Energia may delay the
forward-looking upgrades until the last minute in order to
maximize output in the short term. A Ministry of
Environment Committee is currently reviewing a draft
Development Plan that will serve as the basis for a new
National Strategy for Oil Shale. End Summary.

OIL SHALE USAGE IN ESTONIA


2. (U) For decades, Estonia's energy sector has been the
country's single biggest consumer of water and mineral
resources and the biggest producer of waste. Combustion of
fossil fuels (oil shale, heavy fuel oil, and natural gas)
to generate electricity and heat accounts for a large
percentage of the solid particles and greenhouse gases
emitted into Estonia's air. The majority of these
emissions are due specifically to the burning of oil shale.
GOE-owned Eesti Energia, the supplier of approximately 95%
of Estonia's electricity demand, owns the largest oil shale
based power plants in the world. Three of its four power
plants produce electricity by burning oil shale: Eesti
Power Plant, Balti Power Plant, and Kohtla-Jarve/Ahtme
Power Plant. These plants are located in the northeastern
oil shale producing region of Estonia. (Note. Eesti
Energia's fourth plant, Iru Power Plant, is a small
combined heat and power plant located in Tallinn and fueled
by natural gas and liquid fuels. End Note.)


3. (U) There is considerable debate as to the quantity of
useable oil shale in Estonia. The most optimistic
estimates put Estonia's oil shale reserves at seven
Gigatons, an amount that would last for approximately 100
years at current usage rates. However, more conservative

industry estimates predict that reserves of high quality,
easily accessible oil shale will only last for another 15
years. The deeper the oil shale is located, the more
difficult it is to mine and the lower the quality.

EU ENVIRONMENTAL DIRECTIVES: MEETING THE CHALLENGE


4. (U) When Estonia joined the EU in 2004, the country
agreed to comply with certain environmental restrictions to
be phased in over the course of several years. For
example, EU Directive 1999/3/EC restricts hydro
transportation (mixing oil shale ash - a bi-product of
combustion - with water and pumping it into a landfill).
The low-grade composition of Estonian oil shale results in
large amounts of waste ash after it is burned.
Traditionally, this ash was disposed of in the manner now
specifically prohibited by the EU regulation. The EU and
Estonia have agreed on a transitional period for
implementation of EU 1999/3/EC until July 16, 2009. In
addition, EU Directive 2001/80/EC requires that large
combustion plants reduce sulfur dioxide and solid particle
emissions. The EU and Estonia agreed to phase in emissions
reductions by December 31, 2015.


5. (U) Eesti Energia estimates that EU compliance
(including EU landfill and air pollution directives and the
cost to clean up past pollution) will ultimately cost the
company approximately USD $2 billion. According to Mati
Uus, Development Manager for Eesti Energia, Estonia's
compliance with EU environmental regulations is on track
and the deadlines will be met. In addition, Heido Vitsur,
Economic Advisor to the Minister of Economy and
Communication, confirms that the GOE is ready to upgrade
its oil shale plants to meet the EU's environmental
standards. Specifically, Eesti Energia plans to reduce air
emissions by rQlacing old high pressure pulverized firing
boilers with more efficient circulating fluidized bed
boilers. Eesti Energia also plans to install sulfur
dioxide and nitrogen dioxide "scrubbers" on smoke stacks to
further reduce emissions. Additionally, the company
intends to replace existing oil shale ash hydro transport
systems with more environmentally friendly methods
including trucking dry ash to better insulated landfills.

By 2007, two old ash landfills will be closed and bQ2013
existing ash storage sites will be renovated to prevent
leaching. (Note. For the past 45 years a private company,
AS Silbet, has used waste oil shale ash to produce
construction materials, including concrete. In August, the
company opened a second production line to increase output.
While it is encouraging to see some waste ash being turned
into useful products, due to the sheer volume of ash being
generated it is not an overarching solution to the landfill
problem. End Note.)

TIMING ENVIRONMENTAL UPGRADES


6. (U) There is concern among domestic environmental
organizations and others that Estonia's interest in
increasing electricity exports could delay planned
environmental upgrades. The GOE currently exports
electricity to Latvia and Lithuania. This month Estlink,
an undersea electricity cable to Finland, will come online.
Valdur Lahtvee, former Environmental Manager of Eesti
Energia and current Director of the Sustainable Development
Institute, expressed concern that the GOE's interest in
producing a maximum amount of energy for export could
result in a delay in replacing old, polluting boilers. In
order to maximize production, Eesti Energia might opt to
completely exhaust the old boilers and wait to make
upgrades until just before the EU compliance deadline.
Additionally, Eesti Energia may delay replacing old boilers
if studies indicate future oil shale reserves are indeed
inaccessible or of poor quality. Importing energy via
Estlink may ultimately prove more economically sound than
continuing to mine an inefficient resource. Thus, while
some environmental upgrades have already taken place in
accordance with EU environmental directives, Eesti Energia
has significant incentive to take a "wait and see" approach
before making further investments.

DETERMINING THE FUTURE OF ESTONIAN OIL SHALE


7. (U) Last summer, the Ministry of Environment (MOE)
formed a 5-member Working Group (WG) to determine the best
and most sustainable strategies for oil shale mining and
power production. The WG was comprised of members from the
National Science Academy, the Ministry of Education and
Research, Tallinn University, a former director of Eesti
Energia power plants, and Lahtvee as a representative of
Estonia's Green NGOs. The MOE tasked the WG with drafting
an oil shale Development Plan, including a Strategic
Environmental Impact Assessment and an Implementation Plan.
The WG submitted a draft Development Plan to the MOE in
late October. The draft concludes that current rates of
oil shale mining are sufficient to cover Estonia's needs
for electricity, heat, and moderate oil production through
the year 2015. After 2015, the draft recommends that
mining capacity decrease and the use of renewable energy
increase. Further, the draft Development Plan calls for
new mining licenses to be issued only to those companies
that implement environmentally friendly technologies and
have projects to improve the environment in mining areas.


8. (U) The draft Development Plan is currently being
evaluated by a MOE-appointed 17-member Committee that will
simultaneously deal with the economic, security, social,
and environmental aspects of oil shale utilization. This
is a first for the GOE, as previous oil shale studies were
primarily focused only on economics. A round-table
comprised of MOE-appointed stakeholders from local
governments, civic groups, and the general public will also
review the draft Development Plan and offer opinions. By
May 1, 2007, the MOE Committee must complete its review of
the draft Development Plan and submit a draft National
Strategy for Oil Shale to the Cabinet. The various
political parties and interests in the Cabinet will
ultimately determine whether a final National Strategy for
Oil Shale bill is submitted to Parliament for approval.

WOS