Estonian Fund for Nature says investing in shale oil not consistent with EU objectives

TALLINN – The construction of a shale oil pre-refining plant with money from the European Union's modernization fund is not consistent with the aims of the fund and using the money elsewhere than in the renewable energy sector is regrettable, Piret Vainsalu, climate expert at the Estonian Fund for Nature, says. 

"The Estonian state must not be unambitious in shaping its energy policy and plan the channeling of investments of the modernization fund into solutions that are non-sensible in the long term and place a burden on both the economy and the environment," Vainsalu told BNS on Wednesday.

Vainsalu said that modernization of the oil shale energy sector, just like the planned shale oil plants and a refining plant, are in no way consistent with the aims of the modernization fund, based on which investments entailing low carbon emissions should be supported specifically. 

"It is regrettable that directing of financing towards developing of alternative solutions, including providing an assurance of the development of the renewable energy sector, are still not the direction that Estonia wishes to take in shaping energy policy,"  Vainsalu said.

Auditor General Janar Holm sent a letter to Minister of Economic Affairs and Infrastructure Taavi Aas in July pointing out that while the Estonian state is planning to invest hundreds of millions of euros in shale oil production facilities, production and refining of shale oil may not be profitable in the future as a result of the European Union's climate policy.

Holm said the National Audit Office has on repeated occasions over the years drawn attention to the need to take potential economic risks arising from the EU's ever more ambitious climate policy and a higher price of carbon dioxide emission credits into account when making investments into fossil fuel utilization capacities. 

The government has mulled the establishment of a shale oil pre-refining plant that could cost an estimated 600 million euros, about one-third of which the sector's businesses expect to get from the state or the EU modernization fund.

Aas said in his response that the pre-refining plant project is in the planning phase and the exact size of the necessary investment will become clear in two and a half years after the conduct of design tenders.