Official: Running new shale oil plant too expensive for other sectors

Keit Kasemets.
Keit Kasemets. Source: Siim Lõvi /ERR

Eesti Energia must analyze the economic sense in building a new oil shale processing plant as new climate goals suggest it will become unrealistically expensive already by 2035, said the secretary general of the Ministry of Climate on Wednesday.

In response to Eesti Energia's chairman saying the decision to cancel the permit is mainly the decision of the ministry, Secretary General Keit Kasemets said it was the court's ruling and that everyone has to contribute to preserving nature and meeting climate goals.

"According to the Supreme Court, the plant complied with climate objectives when it was granted a construction permit in 2019, but now, in order to operate in a constitutional manner, it is necessary to assess the future objectives that are valid today when granting a complex permit," Kasemets said.

"Just 100 days after the birth of the Ministry for Climate, we can tentatively estimate that if the 2030 emission reduction targets could still accommodate an oil shale processing plant, the 2035, 2040 and 2050 targets would, in all likelihood, not," he said.

Kasemets said the company's emissions rate will be a considerable part of Estonia's total.

"Taking into account the EU's climate targets for a cleaner environment proposed by the European Commission for 2040, Enefit282 emissions would account for 25 percent of total Estonian emissions. Put more simply, the goal of Estonia's people and economy to do things in a cleaner way will become unrealistically expensive for all other sectors and people in 2035 or 2040 unless Eesti Energia reduces the footprint of such plants," said Kasemets.

The official said Eesti Energia has taken a considerable business risk by building this plant without a permit.

In the near future, the ministry will submit plans to the government to add time limits to permits. Companies will also be able to make investment decisions within a clear legal framework.

"In light of the Supreme Court's decision, Eesti Energia needs to analyze the economic feasibility of building the plant, and such a proposal will be forwarded to the Minister of Finance, who acts as the representative of the owner of Eesti Energia," Kasemets said.

Eesti Energia laid the cornerstone for the new plant in November 2021. The initial cost was forecast to be €320 million, which has now risen to €350 million. 

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Editor: Barbara Oja, Helen Wright

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