Outlooks for Oil Shale Power and Shale Oil, Climate Change and Future Transactions
Oil shale has been a unique primary resource for Estonia as well as a pillar of energy security; however, the impact of the oil shale industry has made Estonia one of the most CO2 intense countries in relation to the GDP in the whole European Union.
In-ternational climate change mitigation goals are forcing Estonia’s oil shale energy and shale oil industries to review their outlooks. The article focuses on the possibility of using the prices of future transactions in electricity and heating oil as bases to assess the future potential of Estonia’s oil shale industry. The forecast of the prices of future transactions of electricity until 2025 suggests that the generation of power with the fluidized bed combustion technology would be competitive on the open electricity market only during less than one half of the potential working time. A competitive export of shale oil depends strongly on the future changes of the market prices of heating oil and CO2 emission quotas. One way to hold back the climate change would be the introduction of the carbon capture technology in oil shale in-dustry. We have come to realise that the introduction of the carbon capture tech-nology may not be possible in market conditions because based on the prices of future transactions the revenue from selling the power and oil produced from oil shale would not generally cover the added costs of carbon capture, transport, or storage to the production costs. And this despite reducing the need to give up CO2 emission quotas and saving on environmental charges. Decisions on the introduction of the carbon capture technology lead back to the socio-economic aspects at the national level which require further comprehensive science-based analysis – would the impact of achieving climate goals and the other positive external influences outweigh the need to subsidise the capture technology and the potential negative external im-pacts in the name of ensuring the competitiveness of the oil shale industry in com-parison to energy technology alternatives? Furthermore, we must keep in mind the ability of the actors on the future transactions market to foresee and take into ac-count the events and processes that might take place on the energy market, and in the global economy and environment more broadly – if the prices of future transac-tions fail to adequately reflect the changes taking place, the actual future prices and the prices of future transactions can display a significant disparity.