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Path Dependence and the Estonian Oil Shale Industry Survival of the Unfit Path Dependence and the Estonian Oil Shale Industry Rurik Holmberg Linköping Studies in Arts and Science No. 427 Linköping University, Department of Technology and Social Change Linköping 2008 Linköping Studies in Arts and Science x No. 427 At the Faculty of Arts and Science at Linköping University, research and doctoral studies are carried out within broad problem areas. Research is organized in interdisciplinary research environments and doctoral studies mainly in graduate schools. Jointly, they publish the series Linköping Studies in Arts and Science. This thesis comes from the Department of Technology and Social Change at the Tema Institute. Distributed by: Department of Technology and Social Change Linköping University 581 83 Linköping Sweden Rurik Holmberg Survival of the Unfit Path Dependence and the Estonian Oil Shale Industry Upplaga 1:1 ISBN 978-91-7393-934-8 ISSN 0282-9800 ©Rurik Holmberg Department of Technology and Social Change Printed by: LiU-Tryck, Linköping University, Linköping This thesis is based on work conducted within the interdisciplinary graduate school Energy Systems. The national Energy Systems Programme aims at creating competence in solving complex energy problems by com- bining technical and social sciences. The research programme analyses processes for the conversion, transmission and utilisation of energy, combined together in order to fulfil specific needs. The research groups that participate in the Energy Systems Programme are the Division of Solid State Physics at Uppsala University, the Division of Energy Systems at Linköping Institute of Technology, the Department of Technology and Social Change at Linköping University, the Department of Heat and Power Technology at Chalmers University of Technology in Göteborg as well as the Division of Energy Processes at the Royal Institute of Technology in Stockholm. www.liu.se/energi Acknowledgements The problem when acknowledging some persons’ contribution to a work is that some other persons may risk being left out because of the author’s limited memory capacity or insufficient notes. This certainly holds true in this work. I have done my best to try to recall those who in one way or the other have contributed to the present work, but if somebody is forgotten, I sincerely apologize. Of course, my colleagues at the Department of Technology and Social Change at Linköping University and the national Energy Systems Programme have been of great importance with their comments and criticism. Especially those colleagues participating in the seminar series on technology, values and political processes have eagerly commented on my draft texts and if they read this text carefully, they will most likely recognize discussions stemming from those seminars. Moreover, colleagues at the Department for Industrial Economy at the Royal Institute of Technology have also contributed with several valuable suggestions. I would like to express my particular gratitude to all people in Estonia who have helped me in various ways in finding material for this work, even if I occasionally have sensed certain astonishment about the foreigner being interested in this, in their view perhaps rather odd topic. The staff of the Estonian National Library in Tallinn has always been very helpful and so has the staff of the National Archive at Madara Street in Tallinn (who even made a great deal of information search and copying long after closing time in January 2007). I am also very grateful to the Russian speaking female engineer in Kohtla-Järve, who agreed to show me around the production facilities in October 2005. Unfortunately my notes do not disclose her name. This “sightseeing” was made possible by Sergei Doilov, whose dry humoristic comments still amuse me. Moreover, another similar visit was made possible by the company VKG in January 2007, thanks to Ms Meelika Nõmme and Mr Jaanus Purga and the company guide and driver. Moreover, during my stays in Estonia, I was also able to do some research work in the facilities of the Estonian Academy of Science, which was very valuable. The staff of the Oil Shale Museum in the village of Kukruse was very helpful although the exhibition was in disarray after moving to new facilities. This work, or parts thereof, has been read by Helle Martinson, Jaak Valge and Martin Klesment in Estonia. Thank you for all valuable comments. Gray Gatehouse of Örebro University has done the English proof reading of my text. His contribution becomes even more important, because, as a rule, the sources have been in other languages than English. Finding the proper English expressions has therefore been far from straightforward. My supervisors, Staffan Laestadius, Mats Bladh and Mats Söderström have all taken their tasks seriously and read my drafts thoroughly. Staffan, who is my main supervisor, has shown a special interest for the big picture and several times presented various new interpretations of my material, while Mats Bladh has repeatedly challenged me with details not fitting into the whole. Mats Söderström, with his technical background, has reminded me (with my background in economics and social sciences) that in the end, technology has a hard core that no social reasoning can alter. This project would not have been possible without generous financial support from the Energy Systems Programme and the Swedish Energy Agency. I do not write these lines because of compulsory courtesy. The opportunity to have a decent salary, travel grants and reimbursements during the almost five years I have been working on this thesis has been a luxury. My wife, Tünde Puskás, who herself is amidst the process of finishing her own thesis, has contributed with numerous valuable comments in addition to being a good listener when I have been thinking aloud about how to proceed with my work. This book is dedicated to my daughter Julianna, 7, who says she wants to become an author, but not writing “boring books” like me. My smaller children, Dorothea and Zakarias, have not expressed any opinion about my work, yet. Perhaps they will, once they learn to talk. Contents Contents ...................................................................................................................................... 1 List of Tables and Figures .......................................................................................................... 3 1. Introduction ............................................................................................................................ 5 1.1. Survival of the unfit? ....................................................................................................... 5 1.2. Oil shale and the industry ................................................................................................ 9 1.3. Further questions ........................................................................................................... 12 2. Methodological Considerations ............................................................................................ 17 3. Theoretical framework ......................................................................................................... 25 3.1. A systems perspective ................................................................................................... 26 3.2. Path Dependence ........................................................................................................... 29 3.2.1. Definitions and criticism ........................................................................................ 29 3.2.2. Co-evolution of technology and institutions .......................................................... 42 3.2.3. Knowledge as a path-dependent process ................................................................ 50 3.2.4. The scope for remedies........................................................................................... 57 3.3. A summary of the theoretical argument ........................................................................ 65 4. Oil shale industries worldwide ............................................................................................. 67 4.1. USA ............................................................................................................................... 70 4.1.1 The U.S - Estonian cooperation agreement ............................................................. 74 4.2. Canada ........................................................................................................................... 75 4.3. China ............................................................................................................................. 75 4.4. Australia ........................................................................................................................ 76 4.5. Brazil ............................................................................................................................. 78 4.6. Jordan ............................................................................................................................ 78 4.7. Sweden .......................................................................................................................... 79 4.8. The failure of the oil shale industry to take off internationally .................................... 79 5. The emergence of the Estonian oil shale industry ................................................................ 83 5.1. The beginning, 1916-1934 ...........................................................................................
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