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Estonia flush with oil shale - for now.

Friday, November 01, 2013 - 02:46

Nov 1 - Euro zone member Estonia is the first country in the world to meet almost all its energy needs through oil shale, and its economy is reaping the rewards. But as Ivor Bennett reports, the benefits may not last for long.

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It's the biggest of its kind in the world - the turbine hall stretches for half a kilometre. This is Narva power plant in Estonia. It alone produces more energy than the entire country can consume. Plant director Tõnu Aas. SOUNDBITE (English) EESTI ENERGIA, POWER PLANT DIRECTOR, Tõnu AAS, SAYING: "We are producing something like 10 terawatt hours per year of electricity. And something like 1.3 million barrels of oil per year." Estonia's entirely energy independent. What's unique, is that most of it comes from this...oil shale. Unlike the gas, it's found in rocks just 30 metres underground. Oil's released when the rocks are heated. Estonia mines 20 million tonnes of the stuff a year - second only to China. SOUNDBITE (English) REUTERS REPORTER IVOR BENNETT SAYING: "Only when you're this close do you really understand just how big an industry this is. This shovel is 15 cubic metres and it can dig up to 70 metres in a week." The trenches end up being a mile long. At the moment, most of what comes out is used to produce electricity. Just a quarter is refined. But that balance is about to change - promising lucrative rewards. Deputy energy secretary Ando Leppiman. SOUNDBITE (English) ANDO LEPPIMAN, SAYING: "For the state economy basically, this is, I would even call a silver bullet. Because it could boost the economy quite substantially because of high oil prices in the world markets at the moment." Compared to the rest of the Euro zone, Estonia's booming. 4 percent growth last year - nearly 10 percent in 2011. The oil shale industry accounts for 4 percent of GDP. Estonia plans to boost revenues by exporting its expertise. It's already building an oil shale plant in Jordan. And it's just bought up a chunk of Utah - in the heart of the world's largest reserves. But the industry is by no means clean. While emissions are cheap for now, they may not be for long. Alvar Soeso is professor at Tallinn's Technical University. SOUNDBITE (English) TALLINN TECHNICAL UNIVERSITY HEAD OF PHYSICAL GEOLOGY DEPARTMENT, ALVAR SOESOO, SAYING: "I would say it's very sensitive. These taxes can change the industry. To raise environmental taxes say two or three times the energy may become so expensive that no one wants to buy it anymore." The EU tax on carbon emissions is currently just 4 euros a tonne. 5 years ago it was as much as 30. There are plans to push the price back up - but only then will Estonia break its dependence on oil shale. A risky strategy, but at the moment, it's one that's paying off.