In recent years lot has been done to turn this branch of industry into more effective and environmentally friendly. But in spite of it the Estonian chemical industry needs a lot more financial capital, skilled labour and more energetic product development.
Two important chemical sectors are characteristic specificities of the Estonian Chemical Industry: Oil shale chemistry and producing of rare earth metals and their oxides. Industrial production of Estonian shale oil was started in 1924. Producing oil from oil shale is a long-term tradition in Estonia, but a unique process in Europe. It gives a remarkable share into the economy of the country.
| Silmet AS
|VKG AS (Viru Chemistry Group)
||Up to 85% of the chemical industry production is exported. Chemical industry share in processing industry is about 5,2% and its contribution to Estonian GDP is 0,8%.
In 2012, almost 600 000 tons of shale oil was produced by Eesti Energia Õlitööstus AS, VKG Oil AS and Kiviõli Keemiatööstus OÜ. VKG AS and Eesti Energia AS have invested and in coming years are planning to invest millions of euros into building new shale oil plants with the aim to increase the production volumes up to 1 million ton by the year 2015.
In addition to that the Estonian chemical industry is characterized by strong territorial concentration, as more than half of the chemical industry is located in East- Virumaa. It results from the traditions and development possibilities of that region.
Export growth of the Estonian chemical industry relies on two facts:
First - growing demand of oil shale products and competitive pricing.
Second - several Estonian companies belong into international groups. Belonging to these groups favours export inside the group. Export success comes mostly from East-ViruCounty, where the main export articles are shale oil and –phenols, produced by Viru Chemistry Group AS, benzoic acid, sodium benzoate, and plasticizers produced by Eastman Specialities, rare earth metals and their oxides, produced by AS Molycorp Silmet. AS Nitrofert production of urea fertilizers, however, is stopped due to the rise in production prices and low demand. Production of epoxy and urea is finished.
In chemical products export a big role is played by the producers of construction chemicals (the sealants and construction adhesives) Main manufacturers are Henkel Macro-Flex AS and Krimelte AS. Paints, varnishes and other finishing materials are produced by three major producers in Estonia: Akzo Nobel, a subsidiary of ES Sadolin AS, Tikkurila AS, and AS Eskaro. Export volumes of applied chemistry are more modest, but Estonia has a long-term experience in producing cosmetics and applied chemistry. Everyone is familiar with Orto and Flora home care and cosmetic products. Smaller enterprises, as Estko Ltd, located in Harjumaa, Kiili County, produce environmentally-friendly detergents as well as to home and industrial customers as to car owners. Jõgevamaa Tabivere Mayer Industries Ltd., located in Jõgevamaa, Tabivere, produces mainly washing powders for Baltic and Scandinavian markets.
Present and Future Prospects
European chemical industry has traditionally been able to produce twice as much as it consumed and consequently, remaining production is exported. Estoniaconsumes twice as much chemical as produces. This shows potential for development in manufacturing chemical products in Estonia. At the same time no significant investments have been carried out in Estonia. Even the number of small-sized chemical companies has decreased, rather than increased. One of the reasons could be the current EU legislation, according to which it is lot easier for SME-s to exist in large countries than in smaller ones. There is a rule in chemical industry: bigger chemical companies, proportionally smaller quantities of pollution.
It is explained by their ability to apply best, cost effective and non-waste technologies. Thus, in doubling chemical industries in Estonia, the real pollution should decrease.
Total volume of investments into the chemical industry has increased, including into BAT (best available technology). VKG Oil AS, a subsidiary of Viru Chemistry Group AS, being the biggest Estonian shale oil producer, has in past decade invested millions of euros into expanding oil production. A good example of investing is a new oil plant Petroter.
At present, in 2013, the manufacturers of chemical substances had to meet the second registration deadline for their substances, according to REACH Regulation. Depending on the company and substances, the cost of registrations can reach millions of euros. Due to the poor Estonian chemical safety policy and lack of knowledge and skills we are ill-prepared and therefore the majority of this money flows into the pockets of very expensive foreign experts. Goal of REACH is noble and clear - to protect human health and environment from the harmful effects of chemicals. But due to the fees, we have to pay to foreign experts; we are not able to invest into more sustainable and environmentally friendly technology.
Chemical industry of European Union is mostly concerned about the EU climate policy, which regulatory mechanism from 2013 onwards forces to reduce annual C02 emissions of NOx and SO2 emissions by 2020 to the level very challeging to achieve for Estonia. 2013 onwards significant changes are also planned in the current trading system, resulting with the rule that from 2020 onwards the total amount of greenhouse gases must be on free trade/auction markets. In addition, the requirements for companies will be tightened and the number of companies involved in trading will increase, as the regulation area will be expanded to the branches of industry, which previously did not belong to the system. During the transition period in 2013-2020 the branches of industry, involved in greenhouse gas trading system, will be divided into two i.e., common branches of industry and industries with risk of carbon leakage.
These are the branches of industry, active in EU and to which CO2 trading has a significant impact and there is a concern that the abovementioned production will relocate into the third countries. For traditional branches of industries quotas, free of charge are allocated during the transition period. It is allocated in accordance with the BAT 80% to the product and is reduced proportionately by the year 2020, 30% according to the plan. To carbon leakage risk companies, however, up to 100% of the total quota for a whole period is allocated.
In reality the chemical industry around the world worries about their image. Usually, hearing the word chemistry, most people imagine chemical industry, responsible for environment pollution, drugs, fuel and additionally the common belief is that the chemicals are carcinogenic. Usually they imagine Ida-Viru county and its ash hills. Nothing positive, only bad, and it is wiser to keep away from it. In their every-day activities, chemical industries of 53countries, incl. Estonia, have taken responsibility to protect human health and environmental. That is why the chemical companies initiated the "Responsible Care" program, aiming to pay even more attention to safety than the law requires - to care about the consumers of chemicals and to be responsible for the management of chemicals throughout the supply chain to eliminate waste.
A famous medic Paracelsus, who lived five centuries ago, left a golden sentence to the humanity: "All substances are toxic, as non-toxic substances do not exist. The question is only in quantities and how much we use them". In reality chemistry is something mysteriously interesting, where the search-find-found joy probably never ends. Thanks to the chemicals we have clean running water in our taps and lot of other benefits. It is not an exaggeration to say that chemicals guarantee us the quality of life. In spite of the created negative background, chemistry is still the basis of innovation and development for all industrial countries. Without well-advanced chemical industry such kind of industries as biotechnology, nanotechnology, and biomedicine cannot develop...
Development of the Estonian chemical industry, especially further development of oil-shale chemical industry, depends on future development of global markets and investments. Due to the depth of scientific research on oil shale and resources of oil shale with good quality, this branch of industry should be the key industry to the development of Estonian economy. In order to cope with increasingly stringing European Union environmental regulations and to ensure the competitive chemical industry for Estonia, the supportive economic environment is needed. Additionally, preservation and development of scientific potential of chemistry; preparing and educating needed chemists and specialists on chemical safety; development activities of chemical industry through new technologies and processes. These measures would ensure the preservation of production and export capability of chemicals and chemical products and would improve the employment situation. It is necessary to acknowledge the key role of chemical industry as a developer of "traditional" and "new economy" in our society. It is impossible to develop the economy and a whole society without knowledge on chemistry and chemical industry.