Estonian shale oil producers not worried about CO2 reductions in shipping

Tallinn Passenger Port.
Tallinn Passenger Port. Source: Siim Lõvi/ERR

In early July, the International Maritime Organization (IMO) decided to adopt an accelerated strategy for the reduction of greenhouse gas emissions in international shipping. However, companies in the Estonian shale oil industry, whose output is one of the components of shipping fuels, are not overly concerned. By the time the changes come into effect and they hope to have switched to greener alternatives.

"As both the transformation of the oil shale industry into a chemical industry and the reduction of the shipping industry's carbon footprint are long processes, we don't see this agreement having a significant impact on our operations," Enefit Power CEO Andres Vainola told ERR.

Irina Bojenko, a spokesperson for the Viru Keemia Group (VKG), also referred to the long-term nature of the initiative. "Looking at what is happening in the shipping industry, the majority of new ships will continue to be built for conventional fuels, with an average lifespan of around 40 years."

Bojenko said, that the International Maritime Organization's (IMO) desire to reduce the intensity of carbon emissions in shipping is understandable and to some extent expected. "However, the implementation of this target in practice requires a strong technological solution and proper investment," Bojenko added.

At its meeting on July 7, the IMO's Marine Environment Protection Committee (MEPC) renewed its strategic plan to move towards climate neutrality in the international shipping sector. Under the refined plan, the sector should be close to achieving net zero greenhouse gas emissions by 2050.

To reach this target, by 20230, the industry needs to reduce its emissions by 20-30 percent from 2008 levels. By 2040, emissions ought to be at 70-80 percent of the levels they were in 2008.

Rene Reisner, Head of the Marine Environment Department at the Estonian Ministry of Climate, explained to ERR, that the plan does not involve a direct ban on the use of the types of marine fuels currently in use or being produced. It does, however, list a number of ways in which greenhouse gas emissions can be reduced.

"The energy efficiency of ships needs to be improved, which means for instance, that new ships being built should have engines, which generate or use energy more efficiently. There are also plans to encourage and incentivize the use of new fuels with either lower greenhouse gas emissions, or none at all," Reisner said.

"In addition, there are technologies, which are able to help capture and 'package' greenhouse gases so that they are not emitted into the atmosphere. Their uptake should also be increased, particularly where the large-scale use of fossil fuels cannot be abandoned," Reisner added.

Due to its low sulfur content, lower viscosity and low pour point, shale oil is mainly used to improve the properties of heavy fuel oil. It is therefore often used as an additive for marine fuels, a raw material for the chemical industry as well as for heating boilers and industrial furnaces.

At the same time, emissions produced by the international shipping sector account for around three percent of global greenhouse gas emissions, and have been rising in recent years.

"The contribution of shale fuels and other fossil fuels to greenhouse gas emissions is undoubtedly significant. In the current context, where greenhouse gas emissions need to be drastically cut, trends like greenhouse gas reductions concern all producers, operators and consumers of fossil fuels," said Reisner. "Therefore, in the near future, the sector will certainly have to take into account changes in the global fuel market, which will lead to increased use of completely different fuels, which have significantly lower, or no, greenhouse gas emissions," he explained.

Vainola said, that the company plans to transform the products it currently markets as liquid fuels into raw materials for use in the chemical industry.

"This means that we will gradually replace the production of liquid fuels with the production of plastics and compounds for other industries. In addition to oil shale, we will also use plastic waste and used tires as raw materials. We are already planning to begin production from scrap this year. In this way, we will create a closed loop in the future, whereby the waste that comes to our plant can be used to generate additional barrels of unpumped raw materials, which can then be used to produce new products," he explained.

"The production and export of liquid fuels from oil shale, tire chips and, in the near future, waste plastics, is a necessary step in the gradual transition from liquid fuels to raw materials for the chemical industry," the CEO added.

Enefit Power currently produces around 400,000 tonnes of liquid fuels per year, most of which are exported as liquid fuel components.

The drive towards greener production was also underscored by VKG's Bojenko: "We will continue with our plans to produce around 665,000 tonnes of shale oil this year, which will reach the global oil market through distributors and be consumed as a component of heavy fuel oil for ships. In terms of our future outlook, we are exploring green economy projects in the form of chemical recycling for plastic waste and the production of bioproducts, in parallel to our shale oil production."


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Editor: Michael Cole

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