BEST PRACTICES FROM ESTONIAN BUSINESSES Introduction The Republic of Estonia will be one hundred years old in 2018. Of this, more than 51 years were influenced by the Soviet occupation, which literally destroyed the entire economy. Since independence was regained in 1991, Estonia has become one of the world’s success stories – in just a few decades we have built a vibrant economy where there is a place for traditional industries with their long history, as well as innovative enterprises. How did we do it? Estonia’s population is small, but our people are smart and innovative and they take the initiative. Estonian soil has no oil or gold, but we have oil shale. The Estonian labour force is not as profitable as that in China or India, but our political and seismographic environments are stable. Estonia does not lie at the heart of Europe, but we have a unique geographic position on the border between the EU and Russia, which makes us a gateway in both directions. This book, “Made in Estonia”, provides the reader with some examples of the Estonian economy: companies stemming from Estonian capital, ideas or history, which are successful in international markets, and for which innovation is integral to their growth. Some of them represent proud moments in the history of the Estonian economy and can boast one hundred years of existence, whereas others are fresh enterprises that are already enjoying the first fruits of success. This book could include a lot more companies, but space is limited. This selection is not conclusive as there is an abundance of great exporting and innovative companies – but hopefully there will be new publications in the future to introduce them. We hope that these examples will awaken an interest in the Estonian economy, help create contacts and show off the beneficial enterprising environment which awaits international companies and new start-ups in Estonia. Shale oil as an alternative to petroleum One of the most used fuels in the world is oil. For decades, this mineral resource has brought wealth to many countries, including Saudi Arabia, Russia, Iran, the United Arab Emirates and even Norway. But now, energy experts are seeing a future in shale oil. Crude oil resources are declining and the price has remained high for several years. For this reason, experts are constantly searching for alternatives to oil – for example, in the United States the use of fracked shale oil is quite widespread. Another alternative fuel is oil-shale oil or just shale oil. The world estimate of petroleum resources is 1.2 trillion barrels and of oil sands 2 trillion barrels. But shale oil resources are noticeably larger than both, namely 2.5-3 trillion barrels. On the other hand, the production of shale oil is much more complex and resource-intensive than oil drilling and for this single reason technological advancements play such an important part in the extraction of shale oil. This is where the extensive experience Estonia has comes into play. Estonia has the longest history of are 45% lower than in ash-burning IEA believes that the demand for fossil working with shale oil in the world – kettles used in traditional electricity fuels will remain the same for decades approximately 100 years. The first production. Enefit technology is in to come. Twenty-five years ago, fossil attempts of producing oil from oil shale accordance with all the strict European fuels covered 82% of the world’s were made as early as in 1919 in the Union environmental standards. energy demand and the percentage has Tallinna Sadamatehas, and within two Estonia has crossed borders in order remained fairly constant. This illustrates years a trial oil factory was started in to share their knowledge about oil how difficult it is to change the energy Kohtla-Järve. Eesti Energia, owned by shale, by attending conferences about resources the world uses. IEA’s prognosis the Estonian State, has been producing energy production and talking about shows that even if methods of saving oil since 1980. their experiences, and by developing energy are used and new, renewable Eesti Energia owns unique shale oil the oil shale industry. Eesti Energia sources are found, by 2035 a quarter factories, where the patented Enefit runs development projects in Jordan of the world’s energy needs will still technology, which has been produced and Utah, in the US. Other developers be covered with fossil fuels. This is by Eesti Energia engineers, is used. This have started oil shale projects in the reason why fossil fuels, including technology enables the production of oil Australia and preparations have begun oil shale, should be used as efficiently even from oil shale with a low calorific in Canada, Mongolia, Morocco, Israel and environmentally consciously as value. As a by-product of this kind of oil, and Uzbekistan. If the projects are possible. Enefit technology is one of the high calorific oil shale gas is produced. successful, the amount of oil produced most environmental-friendly oil shale Both the gas and the residue heat of from oil shale is set to increase rapidly production methods available, and it its production is used for producing in the coming years. So far, shale oil has enables the extraction of all that shale electricity. The ash that is left behind by been industrially produced – besides oil has to offer. the process can be used in construction. Estonia – in China, Brazil, Australia and Shale oil is experiencing a second This means that nearly 100% of the the USA. coming all over the world. Between energy in oil shale is used. The experiences Estonia has in the 1970 and 1985, technologies for shale Up until 2012 Eesti Energia had two field of oil shale industries and shale oil oil production were actively developed Enefit140 machines for oil production. production are valued around the world in the United States, but the whole At the end of 2012 the first Enefit280 and they have opened several doors process slowed down because the price oil production factory was completed. for the country. For example, Estonia of oil decreased and it no longer made The two Enefit140 devices and the was able to join the International economic sense to continue along Enefit280 factory produce up to 3 Energy Agency (IEA) in November 2013. this path. Now, however, the topic of million barrels of shale oil, 140 million The head of the agency, Maria van shale oil production has again become m3 of oil shale gas and approximately der Hoeven, says that it is important attractive, because the price of crude 200 GWh of electric energy a year. for the agency that Estonia has been oil has reached record heights and is Enefit technology is clean – no water is researching oil shale for nearly 100 years showing no signs of reducing. required, the ash produced contains no and is at the forefront of developing organic materials and the CO2 emissions shale oil technologies. 6 Oil production plants of oil shale industry in Kohtla-Järve, built in 1925–1936 The glorious history of brown gold The Estonian oil shale industry will soon be one hundred years old. This resource, which has been named the Brown Gold of Estonia, was first extracted industrially as early as 1916 – and this is the year which is officially considered the trade’s birthdate. But in reality, the story of mining the burning stone started a long time ago. Back in 1870, the local baron Robert von Toll used the resource in running his vodka distillery. There are over 20 locations in Estonia where oil shale has been mined in some point in history. Oil shale is a common resource all over the world, present on all the continents, with over 600 known locations. All deposits are slightly different from each other in terms of colour, calorific value, humidity and other chemical and physical values. But only a few countries are actively extracting it and the Estonian oil shale industry is remarkable for its long history and know-how. 7 Therefore, in some places, it is possible to extract this resource from quarries. If the oil shale lies deeper than 30m, it is more practical to construct a mine. Both methods are in use in Estonia. At least two centuries passed before the initial hints about the burning stone entered modern knowledge. Historian and writer August Wilhelm Hupel (1737–1819) mentioned findings of ‘oil stone’ near a little Estonian manor. German naturalist Peter Simon Pallas (1741–1811) published the notes of A. J. Güldenstädt, a traveller and explorer, who mentioned some 1725 findings of a stone which burned when ignited, in Jõhvi, Estonia. The first scientific studies on Estonian oil shale were conducted by Gregor von Helmersen, who announced in 1838 that local oil shale is suitable for the production of heat energy, oil and gas. Open pit mining of oil shale in Kohtla-Järve (before 1930) Underground mining of oil shale (before 1940) Loading of oil shale on railway carriages (before 1920) Estonian oil shale, or kukersite, was formed more Many other studies were made as well, but large-scale studies than 400 million years ago. It was made by plankton regarding industrial use had to wait until the fuel crisis which sediments in a shallow sea. On closer inspection, the oil followed the First World War. shale often shows up remains of ancient marine animals The first preparations for extensive oil shale mining were made and plants. In Estonia, the oil shale deposits are quite in eastern Estonia, near the village of Pavandu, in a quarry close to the surface compared to many other deposits.