Estonian oil shale producers seek exemption from EU rules
The heads of Estonia’s two largest oil shale oil producers — Eesti Energia and Viru Keemia Grupp (VKG) — have appealed to Prime Minister Kristen Michal. They are asking him to secure an exemption for Estonia from the changes to the emissions trading system proposed by the European Commission. According to the companies, without such an exemption, production could become unprofitable as early as 2031–2033.
ERR News reports that the European Commission presented proposals a month ago to change the greenhouse gas emissions trading system, including reducing free allowances for industry.
The difficulty of reducing emissions
Eesti Energia CEO Andrus Dureiko and VKG head Ahti Asmann said in their letter to the prime minister that free allowances for the sector will not disappear immediately. At the same time, companies will be required to invest in reducing emissions at the same production facilities.
According to Dureiko, decarbonizing oil production is extremely difficult because oil contains carbon and is a fossil fuel. Industry representatives propose retaining an exemption for Estonia for as long as the European Union imports liquid fuels. In their view, the volume of free allowances over the next decade should remain at its current level.
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Asmann said that without an exemption, VKG’s tax burden at the beginning of the next decade could increase twofold or threefold. According to him, the company currently pays about €50 million in taxes annually.
The new plant and Iru CHP plant
Against the backdrop of these statements, Eesti Energia plans to officially open a new oil production plant in Auvere on Thursday. According to Dureiko, the facility is already operating at nominal capacity. The company calculated that, if current legislation remains in force, the plant will be economically viable for 14 years.
The changes proposed by the European Commission also provide for extending the emissions trading system to waste incineration. According to Eesti Energia, if the allowance price exceeds €105 per tonne, the Iru CHP plant near Tallinn will lose its competitive advantage in waste incineration compared with biomass, including wood chips. The allowance price currently stands at about €80 per tonne, and by 2030 the European Commission, according to the company, expects it to rise to €110.
