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Carbon capture, utilization, and storage (CCUS) have emerged as pivotal technologies for curtailing emissions while maintaining fossil fuel. Estonia faces a challenge due to its dependence on carbon-intensive oil shale, but the need for energy security, highlighted by the war in Ukraine, makes reducing CO₂ emissions a priority while maintaining energy independence. In this context, the presented study determines the environmental impact of combustion of the Estonian oil shale from the release of SO₂ emission and compares sulfur retention in the ash between different oxyfuel combustion campaigns in a 60 kWth CFB test facility. The pilot was operated under air, O₂/CO₂, and with recycled flue gas (RFG), and we tested the application of extremely high inlet O₂ up to 87%_vol. The key objective of this study is to examine how different combustion atmospheres, operating temperatures, and excess oxygen ratios influence SO₂ formation. Additionally, the research focuses on analyzing anhydrite (CaSO₄), calcite (CaCO₃), and lime (CaO) in ash samples collected from the dense bed region (bottom ash) and the external heat exchanger (circulating ash). The results indicate that increased inlet O₂% does not significantly affect SO₂ emissions. Compared to air-firing, SO₂ emissions were higher than 40 mg/MJ under a 21/79%_vol O₂/CO₂ environment but were significantly reduced, approaching zero, as the inlet O₂% increased to 50%. Under O₂/RFG conditions, higher SO₂ concentrations led to increased sulfur retention in both the bottom and circulating ash. The optimal temperature for sulfur retention in air and oxyfuel combustions is below 850 °C. This study for the first time provides a technical model and discusses the effects of operating parameters on sulfur emissions of the Estonian oil shale CFB oxyfuel combustion.