June 23, 2024
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Western Balkans: Chaotic and fake decarbonization in the energy sector

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The consensual view of energy experts in the Western Balkans (WB) region is that the existing European Union (EU) policies, support measures, and established mechanisms for the implementation of the energy transition, especially for the realization of the decarbonization targets until 2030 and 2050 adopted within the Energy Community (EnC), will not attain the expected results and will not secure implementation of the sustainable energy transition in this European region.

Quite the opposite, the expert’s opinion is that without significant adjustments to EU policies and support mechanisms for the WB, the trend of disor[1]dered decarbonization where the countries provide merely lip service in their policies towards decarbonization will continue. This is the key conclusion of the research, based on a survey of more than 100 experts from the WB countries performed from January to September 2023. The research objective was to evaluate how experts view the eeffectiveness of the current EU energy and climate policies in this region and to identify challenges and bottlenecks in the decarbonization of the WB power sector. The research was coordinated by the RESET – Center for Sustainable Energy Transition from Sarajevo, Bosnia and Herzegovina.

Reasons for this alarming conclusion:

a) A non-transparent, non-democratic, and non-inclusive top-down mechanism established by the international treaty of the EnC does not secure broad public support for the energy transition processes in the WB countries, which is a necessary prerequisite for the sustainability and acceleration of this process.

b) Application of the EU Carbon Border Adjustment Mechanism (CBAM) will not contribute much towards accelerating the decarbonization of the WB power sectors, nor will it urge the introduction of a carbon pricing mechanism in this region (despite current statements of intent from the governments).

c) The WB governments consider that the public electric utilities will be the main pillars of the energy transition process and will lead the development of renewable energy. However, these companies do not have the necessary “financial and expert capacities for such a task since they must undergo internal restructuring. In contrast, the role of other players (i.e., private investors, local governments, SMEs, and citizens) in a sustainable energy transition is mainly neglected.

d) Although one of the main focus areas of EU energy policy is the just transition, making available an extensive set of technical and financial assistance to the coal regions within the EU, in the Western Balkans, there is an insistence on implementing the just transition programs without the fundamental preconditions (i.e., political decision of the governments for the power sector decarbonization, the legal basis for reaching climate neutrality including binding decision for the coal phase-out data, strategies and plans for shutdown of the thermal power plants, secured proper funding) been adopted.

e) Without allocating cheaper public funding (including international financial assistance), making it concessional, and tying it to programs for a just and inclusive energy transition (supporting citizens’ energy, mitigating energy poverty, and socioeconomic restructuring of coal-dependent regions), decarbonisation will not be achieved. Therefore, it is unrealistic to expect that the energy transition in the WB will be financed mainly by state budgets and local energy consumers (citizens and businesses). Implementing a sustainable energy transition in the Western Balkans (economically the poorest European region) will not be possible without substantial financial support from the EU and the other developed countries, to which they committed within the Paris Climate Agreement.

To speed up the process of sustainable, just, inclusive, and locally driven energy transition in the WB that is aligned with EU energy and climate policies and activities, the EU institutions should:

a) Regularly evaluate the work and results of the EnC, based on the reviews performed by independent evaluators, aiming to encourage a broad debate regarding the progress of the energy transition in the Western Balkans.

b) Greater involves a broader set-up of EU institutions, like the EU Parliament, in the oversight of the policies and rules introduced by the European Commission (EC) and EnC when it comes to the decarbonisation of the Western Balkans.

c) Initiate changes in the Energy Community Treaty to explicitly include the national parliaments of the contracting parties in the decision-making procedure, thus ensuring a democratic, inclusive, and just policy-making process in the EnC Secretariat. This is necessary to secure national ownership of the process and to ensure that the energy transition is not seen as something administered top-down in the WB countries by the EU.

d) Ensure full inclusion of non-governmental organizations and the expert community in the processes of creating, implementing, monitoring, and evaluating the energy transition policies in the WB countries and on the regional level, thus ensuring expertise and transparency in the energy transition process in the EnC.

e) Program increased and long-term dedicated technical and “financial assistance directed towards the decentralized energy transition (development of citizens’ energy and small-scale installations by households, local public entities, and small and medium enterprises) to initiate active participation of the local actors: local governments, non-governmental organizations, local businesses, and citizens and their communities in the decarbonization process.

f) Provide dedicated support for improving professional capacities in the WB countries to increase the adoption of new technologies and business models by facilitating the actual transfer of R&D and up-skilling and re-skilling of the workers, especially those in the coal regions.

g) Prepare a plan for the gradual integration of the WB countries into the EU ETS and cease promoting the establishment of the regional ETS system. In negotiating conditions for integration into the EU ETS, the WB countries should be provided with free allocation of CO2 certificates. This approach will secure initial funding for decarbonizing the dirty industries in the WB countries, which are ready to commit to the coal phase-out.

h) Start “hitting energy poverty with increased funding and technical assistance, enabling long-term sustainable solutions instead of applying palliative short-term solutions that do not bring people out of poverty.

i) Establish a dedicated EU fund for co-financing technical assistance, projects, and socioeconomic restructuring programs in the coal regions in transition in the WB, focusing on the projects planned and implemented by the local actors, not external consultants, with a dedicated decade[1] long budget for each coal region.

j) Support immediate re-structuring of the power utilities, which includes improving the liquidity of their accounts and designing a plan for retiring the coal assets.

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