Survival of the Unfit : Path Dependence and the Estonian Oil Shale Industry

Sammanfattning: Estonia is the only country in the world, which is totally dependent on oil shale in its energy system. Although this fossil fuel exists in enormous quantities around the world, it has so far not been utilized on a larger scale. The reasons for this have been both economic and, in recent times, ecological. It can therefore be argued that in most cases, oil shale represents an inferior solution compared to other energy sources.This work examines why a technology utilizing oil shale has developed in Estonia and why Estonia appears not to be in a position to switch to other energy sources. In this work it is claimed that oil shale actually has been an appropriate solution to short-term concerns, despite the fact that its long-term drawbacks have been identified. These circumstances led to path dependence. Once the technology was in place, it advanced along its learning curve producing a satisfactory outcome, but not an optimal one. However, this situation has been accepted due to the extremely turbulent institutional environment Estonia has undergone in the 20th century.In Sweden, a somewhat similar (but smaller) oil shale industry was shut down in the 1960s because of poor economic performance, but also because of the competition from other energy sources. Such competition did not take place in Estonia, in part due to the specific institutional set-up of the Soviet Union. This made it possible for the Estonian oil shale industry to develop further, causing the present lock-in. Today the existing infrastructure, the knowledge-base, and the particular socio-political circumstances of Estonia effectively prevent change.Furthermore, it is argued that because there was only little oil shale-related technology developed outside Estonia, most technology had to be developed domestically. This in turn has forced the Estonian oil shale industry to make several highly inconvenient alliances in order to gain room to manoeuvre. Partially as a result of this, there is today wide-spread scepticism towards the industry, but no exit in sight in the foreseeable future.One purpose of this work is to contribute to a broader understanding why human societies have become dependent on fossil fuels and to extend our knowledge on where to search for an exit.