Renewable energy – smart solutions bring economic and social dividends Department of Thermal Engineering Ülo Kask Brussels, 11.10.2006

Content Introduction - Location. General data. Local energy sources of Estonia Role of Oil Shale Role of Renewables Socio-economic background Targets for Future

General data. Local Energy Sources of Estonia Total area - 45 277 km2 Population - 1 344 684 (as 1 of January 2006) Currency Estonian kroon (1 € = 15.6466 EEK) Active, economic mineable reserve of oil shale, bed operating ratio of energy over 35 GJ/m2, sufficiently explored is 1.167 billion tons. According to last taxation data of Estonian forests we have 2,25 Mha (51,5 % from country area) forest land with growing stock of 462 million s.m3. Of the total resources of peat 2.37 billion tons, 1.1 billion tons are accounted in the State Register of Mineral Reserves. Agricultural lands cover 25% of the territory.

General data. Domestic Energy Sources of Estonia Production of primary energy from domestic fuels and renewable sources on 2005, TJ (terajoules): Oil shale - 129 423 Peat - 3 550 Wood fuels - 24 151 Other fuels (biogas, town gas) - 150 Hydro and wind energy - 270 Consumption of fuels for electricity and heat generation based mainly on local fuels, over 80%

Share of domestic fuels in primary energy resources of Estonia, 1990–2004

Role of Oil Shale Oil shale gained its leading role in the energy balance of Estonia already before the Second World War – in 1934 the share of oil shale in total industrial consumption was 56.8%. During the years have mined in Estonia over one billion ton oil shale, produced 200 million barrels shale oil and generated 550 TWh electricity on oil shale. At the current volume of consumption (12 t/y), the total active supplies of oil shale will last for sixty years calculated on the basis of the technical-economic conditions of power stations

Role of Renewables The share of wood fuels in total primary energy supply have stabilized on the level of 11% and peat on 2%. The role of renewables (biomass, biogas, hydro, wind, etc.) is not considerable in electricity production (about 0.8–1.0% in 2006), but is important in heat generation in boiler houses (wood fuels and biogas 29%, peat 4% on 2003).

Socio-economic background In 2005 the gross domestic product (GDP) at current prices was 164.9 billion kroons, increasing by 9.8% compared to the 2004. Approximately 3% of employed people (607 400, in 2005) aged between 15-74 years is occupied in mining (oil shale) and energy sector (incl. heat production) These sectors form a part of ~4% in cross domestic product. Changeover from fossil fuel to wood to generate 4 GWh heat (equivalent to annual production of 1 MW boiler) will increase employment. Every MW installed into wood will create about 3 new jobs.

The consolidated data about the Estonian resources of bio fuels and peat in longrun in 2030 are as follows, TWh (theoretical potential of primary energy) Fuel wood and harvesting residues 4.6 Wood pellets and briquettes 1.2 Straw 0.8–1.0 Energy plants 9.8 Reed 0.4 Biogas 0.6 Food waste 0.1 Black liquor 0.2 Peat fuels 8.3 Total 25.8–26.0 One of the most important preconditions is the suitable legislation and tax system, which makes the utilization of bio fuels economically competitive and turns the theoretical potential into reality.

Directions for Future Against the preferred utilisation of domestic energy sources, however, there is a perceived need to reduce the share of fossil fuels in the energy balance and to increasingly focus on renewable sources of energy. The most prospective among them are wind and biomass energy, i.e. biodegradable fraction of products, waste and residues from agriculture, forestry and related industries. Being rich in forests, Estonia has a high potential for energy production from wood-based fuels, i.e. firewood and wood-based by-products.

Targets Increase the share of renewables in electricity inland consumption up to 5.1% by the year 2010 (set by EU). Planned percentage of alternative fuels for year 2010 is 5.75% The national indicative target of 12% of gross national energy consumption by 2010. By 2008 the ecological tax reform should give input for the energy products taxation to meet the criteria for efficient use of resources and products and better reflect the environmental costs. To support the increase of the electricity production from renewable sources in market in Electricity Market Act the support scheme through the obligation of distribution companies to buy the electricity produced from renewable sources with feed-in tariff 5.2 €sents/kWh.