Western Balkans decarbonisation is urgent: but the EU enlargement package is still sending mixed signals

The European Commission’s annual reports on the Western Balkan countries’ EU accession progress vary considerably on decarbonisation, sending mixed messages on coal and especially gas. The EU needs to take a more consistent approach if the region is to achieve decarbonisation by 2050 at the latest.

As the European Commission published its annual enlargement package this week, all eyes were rightly on its recommendations to open accession negotiations with Ukraine and Moldova and grant candidate status to Georgia. It’s no exaggeration to call this a unique opportunity to inject much-needed dynamism into the enlargement process and honour the enormous efforts the people of these countries are putting into joining the EU.

For the Western Balkans, it felt more like Groundhog Day. Still, despite slow or no progress, the reports for each country represent rare opportunities to get beyond the PR visits and handshakes to see what the Commission really has to say to the governments. And a careful look shows that the messages differ considerably, including on decarbonisation.

Some messages are relatively consistent across the board, for example the need to adopt or update National Energy and Climate Plans, adopt carbon pricing, speed up sustainable renewables development and properly apply EU environmental law. But the coal phase-out only seems to be really taken seriously for Montenegro and North Macedonia. And on gas infrastructure, the Commission fervently encourages projects like the Greece – North Macedonia and the Croatia – Bosnia and Herzegovina Southern Interconnector pipelines, only occasionally remembering to sound notes of caution.

Albania

The Commission rightly underlines that hydropower-dependent Albania needs to continue diversifying its renewables supply and improving its grid interconnections with neighbouring countries, but sounds overly supportive of Albania’s intentions to become gas-dependent by connecting the Vlora thermal power plant with the Trans-Adriatic Pipeline (TAP) and an LNG terminal – a move it says would ‘improve energy security for the country and the region.’

It’s unbelievable that in 2023 the Commission is still supporting new gas infrastructure in a country that is so far gas-free. Albania is uniquely placed to leapfrog straight to electrification of heat and transport – and gas will only hinder this process.

The Commission does note that these plans have raised concerns from civil society. But it only mentions the protection of Vlora bay as an issue, not the myriad other reasons to avoid gas dependence.

Bosnia and Herzegovina

The Commission is clearly critical on coal: ‘Measures to improve security of supply of electricity need to be redirected from coal to renewables,’ and Tuzla 7 ‘may increase the country’s security of supply, but might also significantly prolong dependency on coal which is not in line with the country’s commitments to decarbonisation.’ It also mentions the illegal lifetime extension of Tuzla 4 and Kakanj 5. But it still does not mention Republika Srpska’s continued attempts to push the Ugljevik III and Gacko II new coal plants, nor the need to plan for a phase-out and a just transition for coal-dependent communities.

But on gas, the Commission is extremely supportive of building new pipelines from Croatia – the northern and southern interconnectors – despite admitting that this fossil fuel makes up only three per cent of Bosnia and Herzegovina’s energy supply. In particular, it beseeches the Federation to ‘accelerate the adoption of the law and permit procedures on the Southern Gas Interconnector project, one of the flagship projects of the EU’s Economic and Investment Plan, that will contribute to strengthening the integration into the European gas market and increasing the security of supply.’

The Economic and Investment Plan actually says ‘…the Commission will examine the costs the benefits and the impact of the following priority investment flagships and their corresponding project proposals with a view to taking them forward actively and expediently.’ But no such assessment has ever been made public for this pipeline. The Commission has jumped straight to lobbying for it without providing any evidence that it makes sense. The Commission laments Bosnia and Herzegovina’s heavy dependence on ‘carbon-intensive infrastructure’, but proposes to build some more.

Kosovo

The Commission rightly criticises Kosovo’s coal plants for their failure to comply with the pollution ceilings under the national emissions reduction plan, but its recommendations on coal are quite weak. It recommends continuing the upgrade of the Kosova B thermal power plant and decommissioning works for non-working parts of Kosova A, but doesn’t comment at all on the Energy Strategy’s overblown plans to renovate one or two of the three ancient Kosova A units at a cost of EUR 120 million per unit. It also doesn’t comment on the fact that Kosovo has only set a closure date for one of the Kosova A units (2026), despite the fact the newest one is 48 years old.

Just transition is notably absent from the Commission’s assessment for Kosovo, which is strange because the need for coal will almost certainly decrease before 2030 with the gradual demise of Kosova A, so presumably there will also be a need to support workers and the communities around Obiliq.

On gas, the report notes that Kosovo’s new energy strategy does not foresee new gas infrastructure, but this wise move does not attract any recognition from the Commission. On the flip side, the Commission does not comment on Kosovo’s plans for joint gas power plant projects beyond its borders with Albania, North Macedonia, and/or Greece – they are just mentioned in passing, without any warnings on the risks.

Montenegro

The Commission’s clearest messages on coal are aimed at Montenegro:

‘…the ecological reconstruction plan for the Pljevlja coal power plant will not address the core issues. Montenegro needs to step up its efforts to permanently close the plant to meet EU emission standards. Montenegro needs to plan for a just transition in the region, by providing economic alternatives to the communities that will be affected the most by the coal phase-out.’

Such clear language is a rarity in EU enlargement reports, but is much needed as Montenegro has wasted years with ill-advised plans such as Pljevlja II, the Pljevlja reconstruction and the Komarnica hydropower plant, and has needlessly delayed several large-scale solar and wind projects. The longer it procrastinates, the narrower its options become.

But on gas the Commission sends mixed signals. Despite Commissioner Varhelyi’s recent controversial pledge that the EU will help Montenegro build a liquified gas (LNG) terminal at Bar, the project is thankfully not mentioned. In fact, the Commission takes a relatively cautious tone on gas in general, with a reminder that all infrastructure investment needs to ‘comply fully with the EU standards on public procurement, State aid and environmental impact assessment’ and that investments need to ‘address changing strategic priorities, decarbonisation, digitalisation and resilience of transport and energy networks, including prior cost-benefit analyses carried out in line with EU best practice.’

This appears to suggest, in very diplomatic language, that building gas infrastructure in a so far gas-free country might be a bad idea. But this needs to be said much more clearly, especially since the report also mentions the advancement of the Ionian-Adriatic Pipeline, implying that this is somehow a condition for EU accession – which it isn’t.

North Macedonia

Montenegro and North Macedonia are the only countries where the Commission makes recommendations on a just transition for carbon-intensive regions:

‘The Government adopted a Just Transition roadmap and a coordination mechanism for governing and monitoring, in June 2023. The transition towards clean energy should include measures mitigating the negative social and economic impacts of the planned phase-out of coal-fired power plants in the concerned regions.’

This may be reflective of the imminence of the countries’ coal phase-out, but is inconsistent given that coal use will also decline in Bosnia and Herzegovina, Kosovo and Serbia in the next few years because of the age of the coal fleet, coal availability problems and pollution control legislation.

If I were the North Macedonian government, I would really not know what to make of the Commission’s messages on gas. On one hand it is peddling the outdated and evidence-free idea that ‘the distribution of natural gas is advancing, as an intermediate step in the decarbonisation process…’, and praising the oversized Greece-North Macedonia gas pipeline project:

‘The development of a natural gas interconnector between North Macedonia and Greece, a flagship project in the Economic and Investment Plan (EIP) for the Western Balkans, is a priority to enable security of gas supply in North Macedonia and is progressing well.’

In 2021, North Macedonia’s highest gas-consuming year so far, the country used 426 million nm3, yet the pipeline’s initial capacity would be 1.5 billion cubic metres per year. Thus it clearly encourages the country to massively increase its gas use, particularly as the existing pipeline will also continue to operate.

But – finally! – the Commission also remembers to say that ‘As the energy crisis has demonstrated, North Macedonia needs to accelerate its transition towards green energy and reduce its dependence on gas and coal.’ (Our emphasis).

How it can do this by building a pipeline that encourages it to more than triple its gas consumption is not explained.

Serbia

In the energy sector, the emphasis – perhaps expectedly – is reducing dependence on Russian gas. But as works on the new Bulgaria-Serbia pipeline are quite advanced, this short-term focus seems to excessively detract from the longer-term perspective, and decarbonisation is mentioned only very generally, and with no deadlines e.g.:

‘(…) Despite coal shortages which continued in 2023, due to mild winter conditions and winter rainfall, electricity imports ceased. Significant investments in new renewable capacities are needed in order to take forward the decarbonisation of the Serbian economy. (…).’

Some important issues are mentioned, such as the need to remove the new coal plants from Serbia’s draft spatial plan, to improve environmental inspection and law enforcement and increase capacity to manage integrated permitting processes. The need for carbon-pricing instruments in light of the forthcoming Carbon Border Adjustment Mechanism and phasing out coal subsidies are also underlined.

But other issues such as the closure of the subsidy-guzzling Resavica coal mines, the need to close the illegally-operating Morava power plant, and the need for a clear coal phase-out timetable overall are not even mentioned. Just transition is barely mentioned, with acknowledgement of the ongoing work on a Just Transition action plan due to be adopted by December 2023. No further recommendations are provided on how to ensure support for workers and communities in mining regions, despite the urgency of dealing with Resavica.

Sustainable and just decarbonisation is urgent

Reading the reports, one gets the impression that the Commission doesn’t really believe in decarbonisation in Bosnia and Herzegovina, Kosovo and Serbia, and this is why it doesn’t push them to decide on closure dates for illegally-operating plants or to properly plan an overall coal phase-out and just transition measures. Or it might be that the governments lobby to water down the reports and muddy the waters about their commitments.

But whatever the reason, the time for mixed messaging and diplomatically skirting around issues is over. Decarbonisation is urgent. Due to coal supply issues and technical problems at coal plants, there is an increasing threat that it will be an uncontrolled process, which must be avoided.

It is high time to stop being distracted by gas and concentrate hard on energy efficiency, heat pumps, improving distribution grids and building suitably-sited solar and wind.

Pippa Gallop, Southeast Europe Energy Policy Officer

November 10, 2023

Originally published by Bankwatch Network