Renewables

Coal regions in Western Balkans and Ukraine lack dedicated funds for just transition

Coal regions Western Balkans Ukraine funds just transition

Photo: Energy Community Secretariat Director Artur Lorkowski speaks at the annual meeting (Initiative for Coal Regions in Transition in the Western Balkans and Ukraine)

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November 29, 2022

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Published:

November 29, 2022

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Regions with coal mines and energy facilities that burn the solid fuel have a chance to switch to groundbreaking technologies and turn their economies around, according to participants at the annual conference of the Initiative for Coal Regions in Transition in the Western Balkans and Ukraine. For the process to succeed, it must be just and inclusive, but nevertheless the areas in question still don’t have access to sufficient funding.

The Initiative for Coal Regions in Transition in the Western Balkans and Ukraine has held its annual meeting in Brussels. It is included in the European Green Deal and mirrors a similar framework within the European Union.

The idea is that no transition to clean energy sources would be successful if it’s not fair to the industries and workers and their families, according to officials from the European Commission and its partners in the initiative: the World Bank, Energy Community Secretariat, European Bank for Reconstruction and Development, European Investment Bank, Poland’s National Fund for Environment Protection and Water Management, and College of Europe.

Their activities are aimed at sharing the best practices between coal regions in the EU and their counterparts in the Western Balkans and Ukraine, with the aim to gradually stop mining and using coal and achieve carbon neutrality by mid-century.

Retraining workers, renewable energy securing post-carbon future

The initiative, launched in 2020, is conducting exchange programs through study trips. There are upcoming workshops and webinars for stakeholders. A learning academy is about to be established, for remote courses.

Citizens, firms, local authorities and nongovernmental organizations are being acquainted with opportunities for funding and the introduction of renewable energy and energy efficiency solutions. Retraining coal sector workers for other professions and re-purposing coal land for solar and wind power plants are some of the general directions toward a sustainable economy.

Top officials from the initiative stressed the importance of preparing the Western Balkans and Ukraine for the Carbon Border Adjustment Mechanism or CBAM, essentially a carbon border tax for commodity and electricity exports to the EU. Other segments of the framework deal with improving air quality, tackling energy poverty and gender issues and achieving quick results for local people to get them on board for the deployment of innovative technologies.

EU’s aid for its own coal regions is insufficient as well

According to the headline speakers at the event, the energy crisis and Russia’s invasion of Ukraine are making the transition away from fossil fuels more critical for the future of coal regions in Europe.

The EU’s Economic and Investment Plan for the Western Balkans, with grants amounting to EUR 9 billion and EUR 30 billion in total expected investments, is one of the major tools for funding a just transition. There is still no specialized, dedicated mechanism for the Southeastern European region or Ukraine. On the other hand, the Just Transition Fund in the EU only has EUR 17.5 billion in aid available for the entire 27-member bloc.

It is difficult to imagine a smooth switch to a futuristic economy in any coal region without enabling the locals to participate in decision making, assisting vulnerable groups and supporting innovative projects

Coal regions are facing hardship, so the local population and companies need assurances that they will be able to get through the unavoidable changes. It is difficult to imagine a smooth switch without them participating in decision making, and support for innovative projects or just plain aid for survival. Places around coal mines and power plants are already being abandoned and many areas are devastated.

Focus on technologies to phase in instead of on coal phaseout

“The transition can happen much faster than we anticipate,” said Aleksandra Tomczak from the European Commission, reflecting on cutting reliance on Russian gas after the start of the war in Ukraine.

She pointed to the role of raising awareness of the need for a transformation of the energy system. Instead of only focusing on a coal phaseout, it would be useful to endorse a concept of phasing in new technologies. Costs in the renewable energy sector have dropped so much that it became unbearable for coal assets as regards competition, in her view.

Renewables are so cheap that it became unbearable for the competition

“It is very unlikely that any rational investor would put their money into opening new coal mines when you can be producing electricity much cheaper today from cleaner alternatives,” Tomczak stated.

Energy Community Secretariat Director Artur Lorkowski noted that 75% of greenhouse gases in the Western Balkans and Ukraine come from electricity production. Albania is an exception, as it still almost entirely relies on hydropower. The share of coal in domestic power production ranges from 30% in Ukraine to 95% in Kosovo*, he added.

Nuredini: Joint carbon pricing system in Western Balkans is necessary to avoid CBAM

North Macedonia is making significant progress in the energy transition compared to the rest of the Western Balkans, even if most of it comes down to planning for now. Minister of Environment and Physical Planning Naser Nuredini acknowledged that the energy crisis forced his country to boost the use of fossil fuels, like many others in Europe, but he also said that it is the most ambitious among the six countries when it comes to lowering emissions and phasing out coal.

North Macedonia covers only 75% of its electricity demand from domestic production

Unfortunately, North Macedonia meets only 75% of its electricity needs with domestic production and 66% of the output is from coal. Energy prices are hitting the state budget very hard as the government is subsidizing bills to keep costs lower for citizens, Nuredini explained.

In the minister’s words, the Western Balkans need a joint carbon pricing system as it is the only way to avoid CBAM and keep the funds that the EU would take through the cross-border CO2 tax. But North Macedonia isn’t prepared to roll out a levy on emissions on its own.

“We as a country, we cannot do that just by ourselves. If we do that by ourselves, then we are actually, potentially going to be putting an obstacle for our own economy, and the other countries will continue as they are,” Nuredini underscored.

Degraded land is key for sustainable local economy

As for decarbonization action on a municipal level, Mayor of Živinice Samir Kamenjaković said the city has 1,000 to 1,500 hectares available for solar power plants, translating to over 1 GW. The city in northeast Bosnia and Herzegovina is repurposing devastated locations left from coal mining operations to open the path for economic progress and save agricultural land.

Samir Kamenjakovic Zivinice Mayor Bosnia and Herzegovina coal regions decarbonization
Photo: Živinice Mayor Samir Kamenjaković

The local authority intends to allow private investments, but also public-private partnerships on municipal land, aiming to make citizens feel like owners of energy assets, he asserted. A part of the former coal land in Živinice was turned into a regional sanitary landfill and industrial zone, to offer employment opportunities for the population as an alternative to the mine.

The ambitions don’t stop there as planning is underway for the production of hydrogen, Kamenjaković revealed and added that the municipality is working on the introduction of the circular economy concept. The mayor urged the EU and its partners in the project to set up a fund for coal regions in the Western Balkans to spur the establishment of public-private partnerships and strengthen public institutions in the process.

“Our focus is not on the mine. Our focus is on degraded land. Mines will remain open for as long as they have a market,” Kamenjaković said.

* This designation is without prejudice to positions on status and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.
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