Region must take energy transition planning back into its own hands

The European Union and the Energy Community are preparing big decisions for the energy sector of the region, decisions that the region itself knows very little about. This, according to Professor Mirza Kušljugić of the Faculty of Electrical Engineering at the University of Tuzla, means that the region has handed the strategic planning of its energy future over to foreign consultants, non-governmental organizations, and the administration in Brussels.

In an interview with Balkan Green Energy News, Kušljugić explains why he believes that these are decisive moments for energy transition in the region and reveals the results of the Renewable Energy Policy Consensus (REPCONS) project, aimed at enabling the region to plan and manage the energy transition process with the help from domestic experts.

The conversation with Kušljugić, one of the leading experts in the region, took place at Mount Jahorina, on the sidelines of a regional workshop held as part of the REPCONS project, which brought together experts from Bosnia and Herzegovina, Montenegro, and Serbia.

What are the results of the REPCONS project so far?

When we launched the project, our sole objective was to create a platform that would enable university and industry experts to exchange views on energy transition. Through anonymous surveys, using the Delphi method, we have obtained opinions of about 220 experts from all three participating countries, and I believe that we have gained some useful insights.

Around 90% of experts think that energy transition is inevitable, but they are divided on the question of its pace

To me, the results are, in part, a little surprising, because around 90% of experts think that energy transition is inevitable, but they are divided on the question of its pace. The percentage of those who believe that energy transition should not be pursued and that the future is in coal, is not higher than 10%.

The project will have two main outcomes – it will identify experts’ general positions on energy transition as well as obtain recommendations for integrating intermittent renewable energy sources, creating a common market, and facilitating investments in green energy.

The situation changes within a span of three months, and decisive moments are ahead of us

Creating a network of experts from the academic community and the industry is indeed a challenge, but we are hoping that, for a start, several dozen experts from across the region will accept to participate in the model of cooperation that we are developing. Activities of such a network must be continuous. It is not enough to hold conferences once a year, because everything is happening too fast. The situation changes within a span of three months, and decisive moments are ahead of us.

At the workshop you said: “A plan is less important. What matters is the planning process.”

If you establish a sound planning system, it will not be a problem for you to develop new plans to adapt to the constant changes, and if you work with local experts, then you can update plans regularly, every couple of years.

However, if you devise plans the way we have done so far – first write a project, then wait for someone to approve hiring foreign consultants, then spend some three months acquainting them with the situation here, and eventually, some day, when they finish the job, nobody knows how or what they have calculated – it will not be good.

Why isn’t the region more active in its engagement with the Energy Community and the EU when it comes to defining energy and climate goals?

We must be aware of the region’s economic power and the problems that our countries’ governments are facing. Energy transition is not a political priority here.

At the time when energy transition is becoming the EU’s key policy, the situation in the region is as follows: at some point the region agreed to prepare National Energy and Climate Plans (NECPs), and then it waited for the Energy Community Secretariat to set goals. The secretariat hired consultants, who took regional production and consumption data, applied it to their models, and determined which country can achieve which goals. Fortunately, those goals were not accepted, and all countries were given six months to come up with their own proposals, meaning that they were given the opportunity to show initiative.

It is critical to articulate the expert community’s position as soon as possible

How important is it to create a network of experts in the region in order to strengthen their influence on decision makers and the wider public?

The key actors of the transition are opinion makers, policymakers, and decision makers. It should not be expected that the complex and demanding changes that energy transition entails will be initiated by decision makers-politicians alone. The expert community forms positions that provide a basis for policies, and it has to offer solutions to the complex challenges of the transition or else those in favor of business as usual will use the well-known mantra: What do we do when there’s no wind and when the sun doesn’t shine?

So, it is critical at this moment to articulate a position of the expert community. At the moment, we do not have such a position because the expert community does not feel called upon to be an active participant in the transition. We are talking about experts who have not received a signal from politicians-decision makers that this should be pursued, and it is clear that they know a lot about the challenges and opportunities presented by energy transition.

You are involved in the preparation of a NECP for BiH. What is your experience with that?

We have identified several paradoxes that could only be detected by local experts.

For example, if you increase energy efficiency in buildings which use biomass for heating, you will reduce energy consumption, but also the share of renewable energy sources in overall consumption, which means that you will not help cut CO2 emissions. Also, one of the power utilities in BiH – Elektroprivreda Hrvatske zajednice Herceg-Bosne (EPHZHB), which produces 100% of its energy from renewable sources – exports all electricity purchased from privileged renewable energy producers that exceeds its own needs, because the price on the regional market is higher than in BiH.

So, BiH exports energy produced at power plants that use renewable sources, while at the same time it needs green energy to decarbonize its own consumption. Also, private investments are being announced into renewable energy facilities whose output would be exported.

A third issue, which shows how the region is interconnected, is BiH’s plan to export 5 TWh of electricity surpluses from thermal power plants in 2020. How do we decarbonize that output? If there is a market for it, then it will be exported. It can also be decarbonized if Croatia, Hungary, or Greece increase their renewable energy production and reduce imports from BiH, but that is out of our hands. So, we have identified the regional context and particularities regarding the decarbonization of energy consumption and production.

The EU’s regulatory framework for decarbonization makes sense only if applied to the bloc’s member states

All this suggests that the EU’s regulatory framework that serves as a basis for decarbonization makes sense only if applied to the bloc’s member states. If, however, you attempt to partially apply that framework to planning the decarbonization of an energy sector that is connected to the EU market, as the Energy Community is doing, then you get these paradoxes.

The introduction of a form of tax on CO2 emissions (the carbon border adjustment mechanism) is also in the pipeline?

That, in my opinion, would be a snap decision on how to treat electricity exports from BiH. The rationale is that electricity comes from thermal power plants and that it needs to be taxed in some way. I firmly maintain that if we are to introduce a carbon pricing scheme, we should do it by gradually joining the EU’s Emissions Trading System (EU ETS), rather than establishing our own national or regional systems.

This should be negotiated with the EU, because that is our biggest export market. The EU is also preparing the European Green Deal, which will be adopted in the form of law by June, as well as the Green Agenda for the Western Balkans. No one in the region knows anything about this agenda, or is taking part in its creation.

If we are to introduce a carbon pricing scheme, we should do it by joining the EU ETS, rather than establishing our own systems

The bottom line is that big decisions are being prepared, decisions we know very little about, and this means that we have handed the strategic planning of our energy future over to foreign consultants, non-governmental organizations, and the administration in Brussels. This is reflected in the results of our poll, with 70% of the respondents saying that the main influence on the region’s energy transition will come from the EU – that is, from external pressure. This is not a good thing, because pressure and conditioning have never produced a favorable outcome.

Pressure and conditioning have never produced a favorable outcome

Perhaps the solution is to organize workshops, after the countries of the region complete their respective NECPs, which would bring together those who worked on the plans, as well as policy makers, and then send a joint position to the Energy Community, instead of waiting for the Energy Community to send something to us.

We must also keep in mind that the EU intends to increase the already incredibly ambitious targets for 2030, envisaging a CO2 emissions reduction by at least 50%, instead of 40%, which in turn will require countries in the region to adopt a more ambitious approach as well.

You have said that experts are undivided on the inevitability of energy transition, but that they disagree on the speed of changes?

Well, some of them think that the region should switch to renewable energy immediately, and that a timeframe should be set for the abolishment of coal, while others maintain that the pace should be somewhat slower, which means building one replacement coal-fired block each, while simultaneously investing in renewable energy. The former stance is dominant in Montenegro, while both are equally present in Serbia and BiH.

Montenegro has implemented a model of transition. What are the key points of a sustainable energy transition in the region?

We must clearly define what decarbonization means to us. I believe that energy transition is sustainable if you set a goal to complete most of the decarbonization process by a certain year and if you do not have public pushback in the first two or three years.

This means that transition must be carried out in an organized and transparent manner and that it must be managed. In order to manage it properly, we must clearly state that we accept the EU’s energy and climate policies as an external framework for planning, including all technologies that are being developed in the field of renewable energy sources and energy efficiency.

A sustainable transition is one that eventually results in the democratization and decentralization of the energy sector

In my opinion, a sustainable transition is one that eventually results in the democratization and decentralization of the energy sector, with a lot of small investors and prosumers, while also being just, meaning that there must be no losers of the transition.

The transition can be accelerated or slowed by problems with the integration of intermittent renewable energy sources into the system. How do we ensure effective integration of such energy sources?

In developed countries which are leading the decarbonization process, this has been proven empirically. To successfully integrate intermittent renewable energy sources, and we are talking about 20% of energy from wind and 10% from solar by 2030, the best model for the region is ensuring enough interconnections and establishing a common market. However, this also our weakest link, because organized markets are virtually non-existent, while those that do exist are not liquid.

This is the top-priority problem, which we must resolve within the next two to three years, or else the integration of intermittent renewable energy sources will be very expensive.

Cooperation in the region is inevitable, and it is in everyone’s interest.

Of course. Cooperating within the region and then going to Vienna and Brussels with jointly agreed positions is one thing, whereas reducing all cooperation, as is currently the case, to visits to Vienna only when you are summoned by the Energy Community is another. The latter is not cooperation at all. We cannot manage the process unless we develop plans ourselves.

We cannot manage the process unless we develop plans ourselves

While working on the NECP for BiH, we determined goals which can be realistically achieved and which, from our point of view, are sufficiently ambitious. These goals, however, are close to the goals that the Energy Community regards insufficiently ambitious. This means that we should now debate our differing views.

How will the coronavirus pandemic affect the decarbonization process?

This pandemic, whose health, economic, social, and even political impacts are still difficult to assess, has shown how interconnected the world is and demonstrated that the greatest challenges can only be tackled through coordinated action. Climate change is one such challenge, which calls for a global response that must involve all countries.

Although the UN’s annual climate summit, COP26, has been postponed until the early next year, I believe that decarbonization remains a strategic commitment of key international actors, and especially the EU. This is confirmed by current stands of the European Commission. Governments in the region should take this into account when developing plans for economic recovery. The crisis could also be an opportunity for a sustainable and inclusive development.