BiH’s NECP: coal power plants to be shut, 2 GW of renewables installed

Bosnia and Herzegovina’s draft national energy and climate plan until 2030 envisages the shutdown of a part of coal-fired power plant capacity and the addition of renewable electricity plants of more than 2,000 MW in total. The document foresees the introduction of the European Union’s Emissions Trading System (EU ETS) model to avoid paying the EU’s upcoming CO2 border tax.

The draft national energy and climate plan (NECP) of Bosnia and Herzegovina was presented for the first time at the Energy Summit 2023 in the country’s only coastal town of Neum.

Admir Softić, Assistant Minister of Foreign Trade and Economic Relations, said the final proposal of NECP should be submitted to the Energy Community Secretariat by June.

The plan envisages a reduction of greenhouse gas emissions by 41.21% from the 1990 level to 15.65 million tons of CO2, a renewable energy share of 43.62%, primary energy consumption of 6.84 million tons of oil equivalent and final energy consumption of 4.34 million tons of oil equivalent. Measures to achieve the goals are also an integral part of NECP.

BiH needs to request from the EU to grant the country’s coal regions the same status as in the EU to secure funds for decarbonization

If BiH does not implement the measures, including the establishment of a power exchange and the introduction of an EU ETS model, both firms and citizens will suffer, Softić warned.

He said all necessary decisions need to be made as soon as possible, such as the adoption of a roadmap for the transition of coal regions to enable access for BiH to funds for a coal phaseout.

BiH should ask EU institutions to treat the country’s coal the same as their counterparts in the EU so that they can get the same decarbonization funding, Softić added and warned that BiH cannot be decarbonized without such funds and private capital.

He noted that BiH has accepted the obligation to prepare the NECP, reduce CO2 emissions and become climate neutral by 2050 by signing the Energy Community Treaty, the Sofia Declaration and the Paris Agreement.

No more coal power plants will be built

The energy sector is responsible for more than 70% of emissions in BiH, so it must be transformed, he said. NECP envisages the shutdown of coal power plants with a total capacity of 410 MW and no new projects while some of the existing ones would be switched to biomass.

The draft plan is to install over 2,000 MW of renewable electricity plants, of which 1,500 MW in solar power, Softić said.

He particularly stressed the plan to establish organized electricity and natural gas markets and argued that without a power exchange there is no energy transition.

BiH will soon be the only country in the region without an exchange, so the Ministry of Foreign Trade and Economic Relations is working to change that, the official pointed out.

The introduction of an EU ETS model is envisaged by 2025

Among the foreseen measures is the introduction of systems for trading emissions and guarantees of origin. He pointed out that BiH intends to establish an EU ETS model to avoid paying taxes under the EU’s Carbon Border Adjustment Mechanism (CBAM).

According to the accompanying analysis, BiH would contribute EUR 220 million a year to the EU budget through CBAM. With an EU ETS model, the domestic budget would get EUR 440 million a year. The calculation was made for a CO2 price of EUR 50 per ton of carbon dioxide equivalent and only for electricity.

If the obligations are not meet, it will be a disaster for businesses in BiH

Highlighting that more than 70% of BiH’s exports go to the EU, Softić stressed it would be a disaster if the country doesn’t meet its obligations.

In the NECP, necessary investments are estimated at EUR 6.7 billion to EUR 8 billion. They include a just transition for the country’s coal regions, for which between EUR 465 million to EUR 1.4 billion would be needed, the document shows.

The preparation of the plan began in 2019, led by the Ministry of Foreign Trade and Economic Relations and entity ministries in charge of energy and the environment. GIZ, USAID, UNDP, and the World Bank.