Experts from BiH, Montenegro, Serbia start work on Barometer of Sustainable Energy Transition

Experts from Bosnia and Herzegovina, Montenegro, and Serbia have started developing a Barometer of Sustainable Energy Transition, as part of the REPCONS 2.0 project. The purpose of the Barometer is to help monitor progress in the implementation of the energy transition and assess the countries’ readiness to carry it out, as well as to highlight the fundamental problems and ways to speed up the process. The Barometer, according to participants in the project, is necessary because countries in the region have committed to achieving climate neutrality by 2050, but the envisaged reforms, primarily in the energy sector, have not seen much progress.

In its pilot stage, during 2021, the Barometer of Sustainable Energy Transition will assess the preparedness for the energy sector transition in BiH, Montenegro, and Serbia. The Barometer will be developed by about 20 experts comprising the project’s core team and a further 80 expert representatives of all key actors in the region as part of a wider team. Work on developing the methodology for the Barometer has identified the fundamental problems hindering the region’s energy transition as well as missteps on the part of the European Commission and the Energy Community (EnC).

“The intention is for the work on the Barometer to produce a consensus among the participants regarding the preparedness of the states to carry out a sustainable energy transition,” Mirza Kušljugić, a professor at the Faculty of Electrical Engineering at the University of Tuzla and chairman of the RESET Regional Center for Sustainable Energy Transition, has told Balkan Green Energy News.

About 100 experts from the region will take part in the development of the Barometer

Apart from Kušljugić, the team developing the Barometer’s methodology comprises Damir Miljević, energy transition consultant from BiH, who is also a member of the RESET board, and Miroslav Vujnović, a financial consultant from Serbia with expertise in energy.

REPCONS 2.0 builds on the Renewable Energy Policy Consensus – REPCONS project, which was successfully wrapped up last year. REPCONS 1.0 has demonstrated that the region has experts capable of defining energy transition models and sent a message to decision makers, the expert community, and the wider public that if  countries in the region fail to define their own models, then someone else will do it for them, which would not be a good solution.

Barometer will be an important tool for speeding up the energy transition

Professor Mirza Kušljugić recalls that reforms in the energy sector in the Western Balkans have been ongoing since the establishment of the Energy Community in 2006, but that the contracting parties have mainly failed to meet the commitments they have made.

For this reason, according to him, the question remains – why, even after 15 years, is there no substantial progress in reforming the energy sectors based on market principles and in compliance with environmental protection standards?

How prepared are the countries in the region to implement the commitments regarding the energy transition?

“By signing the Sofia Declaration, the countries of the region committed to joining the European Union’s ambitious plan to mitigate climate change – the European Green Deal, which includes the energy transition aimed at achieving full decarbonization by 2050. The logical question, according to Kušljugić, is: how determined and ready are the countries of the region, which are not meeting their obligations towards the Energy Community, to implement the commitments they signed on to regarding the energy transition

The Barometer will be prepared by local experts in regular intervals

The motivation for developing the Barometer of Sustainable Energy Transition comes from the need to devise a tool that would monitor progress in implementing the energy transition in a methodical manner and asses its implementation by key actors: state institutions, market players, the academic and expert community, and the public. The Barometer would be prepared by local experts in regular time intervals (e.g. once a year).

As part of the REPCONS 1.0 project, says Kušljugić, experts voiced their conviction that external drivers of the reforms/transition in the electrical energy system, besides the continuing decline in the costs of technologies needed for the transition, will be: the EU’s political influence through the Energy Community and the effects of market forces. For this reason, the aspects of the regional countries’ cooperation with the EU will be particularly addressed. Also, the reasons will be assessed for the poor results so far in the implementation of the reforms initiated by the European Commission and the Energy Community.

Fundamental problems in implementing the energy transition

Kušljugić says that research conducted so far in developing the Barometer’s methodology has identified the following fundamental problems in implementing the energy transition in the region:

• An unreliable international regulatory framework (based on the transposition of the EU acquis through the Energy Community Treaty), which does not provide the required level of legal security to potential investors.
• The view of the electricity sector liberalization (the first energy transition) and decarbonization (the second energy transition ) as obligations imposed by the EU with the aim of achieving its own commercial and political interests and goals, resulting in the fundamental rejection of these processes. This position follows from the observed practice where EU policies and plans are readily accepted in form, but are not being implemented in substance. The most striking example is the failure to meet the targets from the national emission reduction plans (NERPs) in all Energy Community contracting parties, which significantly undermines competition on the regional electricity market.
• Failure to understand the wider context of sustainable development (e.g. the UN Sustainable Development Goals) and the green economy (e.g. the European Green Deal)) as key elements of the ongoing industrial revolution.
• The existence of politically and economically powerful interests who benefit from the status quo – the electricity sector’s dependence on fossil fuels (especially coal) and the incentives schemes based on feed-in tariffs.
• Failure to understand the concept and the insufficient institutional capacities for conducting the process of a sustainable energy transition.

The expert team

Taking part in this important regional project are numerous local experts from BiH, Montenegro, and Serbia with multi-year experience and significant accomplishments in the energy sector. Apart from Professor Mirza Kušljugić, Damir Miljavic, and Miroslav Vujnovic, a substantial contribution to analyzing the achievements of the energy transition, as well as the absence of results, will be provided by Ognjen Marković, an energy expert and member of the RESET board, Vjekoslav Domljan, the dean of the Sarajevo School of Science and Technology (SSST) University and member of the RESET board, Jasna Hivziefendić, a professor at the International Burch University in Sarajevo, Nikola Rajaković a professor from the School of Electrical Engineering at the University of Belgrade and president of the Association of Energy Sector Specialists and Power Engineers, Dejan Stojčevski, chief operating officer at SEEPEX, Saša Mujović, a professor at the Faculty of Electrical Engineering in Podgorica.

Mistakes made by the EU and the Energy Community Secretariat

Within the REPCONS 2.0 project, experts from the region have also identified some (un)learned lessons from the actions of the Energy Community and the European Commission in the promotion of the EU’s energy and climate policies. The Energy Community, according to Kušljugić, was conceived as a mechanism to expand the EU acquis pertaining to the energy sector to the contracting parties.

The transposition of the EU acquis is set as a prerequisite for free access to EU markets, which was supposed to attract the much needed investments in the energy sector’s modernization.

The Energy Community Contracting Parties do not comply with the EU’s second and third energy packages, and are just at the beginning when it comes to the fourth

“Progress reports by the Energy Community Secretariat on each of the contracting parties, as well as the Energy Transition Tracker report, indicate that there is no substantial progress in the modernization of the sectors, particularly the electricity sector, not even after 15 years. So, no contracting party meets the requirements of the EU’s second and third energy packages, while with regard to the fourth energy package (the second energy transition), they are at the very beginning of the process. There are no significant sanctions for such behavior, resulting in legal insecurity that fends off investors,” says Kušljugić.

Without sanctions for failure to meet obligations, as is the case in the EU, no significant progress in the energy transition can be expected

The failure to comply with the EU’s Large Combustion Plants Directive (LCPD) and the Industrial Emissions Directive (IED) is the latest glaring example of such a state of affairs. Delays in the functional unbundling of power utilities, the continuation of the practice of subsidizing the fossil fuels sector (especially coal), as well as the failure to establish functioning and liquid markets allows state power utilities to block the arrival of competitors, which also delays the necessary modernization of their operations.

“Unless there are fundamental improvements in the “external legal framework,” which would contain “punishment” mechanisms for failure to meet obligations, as is the case in the EU, no significant progress in the implementation of the energy transition can be expected. These problems are probably one of the reasons why there is no progress in the Western Balkan countries, whereas in the Southeast European countries which are members of the EU and which were at the same starting point in 2006, progress is noticeable,” says Kušljugić.