Erik Gamzejev: Energy transition cannot be allowed to suffocate the economy

Just as it is wrong to ridicule renewable energy, it is counterproductive and harmful to revile and ostracize oil shale. The important thing is to make sure the green transition happens smoothly and without suffocating the economy or causing other negative consequences, Erik Gamzejev writes.
In recent times, Estonian politicians have treated the country's energy sector the way football club managers might handle an aging team: failing to carry out a timely generational shift only to make frantic, ill-considered moves to compensate.
Contracts with formerly celebrated players are not renewed and replacements are brought in from foreign clubs, as the younger players haven't yet matured enough for the big leagues. This kind of squad overhaul is more like playing the lottery: a win isn't impossible, but more often than not, losses must be accepted. Team cohesion suffers and scoring becomes a rare feat. Managing the club grows more difficult and once-loyal fans start to turn bitter.
Estonia's oil shale power plants resemble those aging players who have been written off. Instead of being honored for their past contributions, they've been politically sidelined from the energy market by emissions quotas. But when the team is in trouble and can't even field 11 players for a match, they are hurriedly called back. The new players suffer from the doldrums and the foreign players can't make it to the game as the lines are down. The veterans, after receiving painkiller injections to ease their knee or back pains, step up, play their assigned minutes with pride and never let the team down.
This figurative account is not meant to glorify oil shale energy or dismiss renewable energy. The question is how balanced the energy transition has been, how thoroughly its impacts have been considered and at what cost it has been pursued.
Estonia has been remarkably successful in reducing its carbon dioxide emissions. In 1990, the baseline year for EU climate policy, Estonia's energy sector emitted over 33 million tons of CO₂ annually. In recent years, this figure has fallen below 10 million tons — a more than threefold reduction achieved by only a few countries.
Last year, the Environmental Agency announced that Estonia's air is among the cleanest in the world, despite the ongoing operation of oil shale plants and oil production facilities. This improvement is largely thanks to oil shale companies investing in cleaner technologies.
This progress doesn't mean that further improvements shouldn't be made in the future. But it's essential to consider the side effects of chasing new records in other areas of life.
The energy transition has significantly increased electricity prices. The decline in domestic electricity production has cost Estonia thousands of jobs and hundreds of millions of euros in lost tax revenue. Electricity has become an import commodity.
Expensive electricity is one of the main factors weakening the competitiveness of domestic businesses, which in turn hampers economic growth and overall well-being. Against the backdrop of hybrid attacks from our eastern neighbor, it is increasingly clear that weakened domestic electricity production has become a national security risk.
Oil shale energy cannot ensure energy security in the long term, but for now, it remains an indispensable player. It should be rehabilitated to the point where it can participate in the game for longer periods — not just brief emergency appearances — at a price affordable to Estonian consumers and businesses.
Looking further ahead, building another oil shale power plant may not be a sensible move, despite the proposal from the chairman of the Center Party, Mihhail Kõlvart, in a letter to the prime minister. He is correct in pointing out that oil shale electricity could be produced more sustainably and efficiently than it currently is, a possibility that has been neglected due to plans to shut down the industry. However, it's worth remembering that the pledge to phase out oil shale electricity by 2035 was made in a coalition agreement four years ago between the Reform Party and the Center Party itself.
The costliness of oil shale electricity is largely due to the price of carbon emissions allowances, which account for about two-thirds of total expenses. Exiting the EU's emissions trading system, as some opposition politicians suggest, would not benefit Estonia.
However, Estonian politicians should push for temporary free quotas or a reasonable cap on emissions prices. This would allow domestic electricity production to continue at prices acceptable to Estonians, even when the wind isn't blowing or the sun shining. Given the current security situation, there should be credible arguments to present to the European Commission to justify this.
At the same time, Estonia must present a concrete, scheduled plan to ensure sufficient environmentally friendly, controllable production capacities for the future. Whether that means a nuclear power plant or something else, it's clear that such solutions will take many years to implement. In the meantime, Estonia must manage with the resources it has.
Even the most enthusiastic green activists should recognize that if the energy transition causes economic instability, it will pave the way for political forces that may abandon environmental concerns altogether.
It's wrong to ridicule renewable energy, but it's equally harmful to stigmatize and marginalize oil shale energy. The energy transition must not create negative societal side effects. Oil shale energy is a transitional energy source for Estonia, and in the coming years, there is no better alternative available.
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Editor: Marcus Turovski