There are two kinds of oil shale in Estonia, both of which are sedimentary rocks laid down during the Ordovician geologic period. Graptolitic argillite is the larger oil shale resource, but, because its organic matter content is relatively low, it is not used industrially. The other is kukersite, which has been mined for more than a hundred years. Kukersite deposits in Estonia account for 1% of global oil shale deposits.
Oil shale (Estonian: põlevkivi; literally 'burning rock') has been defined as a strategic energy resource in Estonia and the oil shale industry in Estonia is one of the most developed in the world. Historically, most of mined oil shale was used for electricity generation. Of all the oil shale fired power stations in the world, the two largest are in Estonia. Although its share decreased in the decade to 2022, direct and indirect use of oil shale still generates about half of Estonia's electricity. About half of mined oil shale is used to produce shale oil, a type of synthetic oil extracted from oil shale by pyrolysis, which is sufficient to keep Estonia as the second largest shale oil producer in the world after China. In addition, oil shale and its products are used in Estonia for district heating and as a feedstock material for the cement industry.
In the 18th and 19th centuries, Estonian oil shale was described by several scientists and used as a low-grade fuel. Its use in industry commenced in 1916. Production of shale oil began in 1921 and oil shale was first used to generate electrical power in 1924. Shortly thereafter, systematic research into oil shale and its products began, and in 1938 a department of mining was established at Tallinn Technical University. After World War II, Estonian oil shale gas was used in Saint Petersburg (then called Leningrad) and in northern cities in Estonia as a substitute for natural gas. Increased need for electricity in the north-west of the Soviet Union led to the construction of large oil shale-fired power stations. Oil shale extraction peaked in 1980. Subsequently, the launch of nuclear reactors in Russia, particularly the Leningrad Nuclear Power Station, reduced demand for electricity produced from oil shale, and, along with a post-Soviet restructuring of the industry in the 1990s, led to a decrease in oil shale mining. After decreasing for two decades, oil shale mining started to increase again at the beginning of the 21st century. Most oil-shale fuelled electricity generation is planned to be phased out by 2030.
The industry continues to have a serious impact on the environment producing ordinary and hazardous waste and greenhouse gas emissions, lowering groundwater levels, altering water circulation, and spoiling water quality. Leachates from waste heaps pollute surface and groundwater. Former and current oil shale mines cover about one percent of Estonia's territory.
