Germany supports Serbia in clean energy supply, environmental protection

The Republic of Serbia and Germany’s KfW Development Bank signed a loan agreement on July 18 for EUR 135 million for the second phase of the credit program Green Transition Development Policy Operation (DPO II).

The signatures underscore the joint activities by Germany and Serbia aimed at a climate-compliant and socially just energy transition, said Chargés d’Affaires ad interim Carsten Meyer-Wiefhausen from the Embassy of the Federal Republic of Germany in Serbia. “We will continue to be with Serbia on this path and support its reform efforts,” he stressed.

Within the financing for the reforms, the World Bank, French Development Agency (AFD) and the German KfW Development Bank are supporting the Republic of Serbia in conducting its ambitious reform agenda. The goal is to accelerate the transition to energy from clean sources and align with EU standards in environmental protection and climate.

Series of reforms through DPO II

Several successful reforms have been materialized within DPO II, among which:

1. Promoting investments that are acceptable in environmental and climate terms: Public investments are graded under environmental criteria and with regard to the risk of natural disasters, and with models developed solely for the purpose. The citizens of Serbia benefit from the government’s more sustainable investment decisions.
2. Enhanced transparency in the public budget: The Government of the Republic of Serbia has committed to publishing information on the execution of the public budget, not only at the end of the fiscal year, but also during the year. It improves the transparency of public expenditures, primarily concerning investments in environmental and climate protection.
3. Affordable energy prices: The Government of the Republic of Serbia has rolled out temporary targeted subsidies for households with low income, like citizens with low pensions. The share of households receiving such aid has grown from 2.7%, registered in 2021, to last year’s 8%.
4. Improvement in waste disposal: Aligning with EU standards brings a better approach to sanitary landfills, namely from 42% (2021) to last year’s 50%. The citizens of Serbia benefit from improved waste disposal and a cleaner environment.
5. Prepared for CBAM: Since this year, large industrial facilities and power plants report their CO2 emissions in line with EU standards. That way Serbia is more prepared for the upcoming full implementation of the European Carbon Border Adjustment Mechanism (CBAM) for carbon prices. For instance, the country would be able to price CO2 emissions and charge them.

Financing reforms within climate partnership

Germany’s contribution to financing reforms is an integral part of Germany’s climate partnership with Serbia and the entire Western Balkans. The purpose of the partnership is to support Serbia’s work on achieving its national climate goals and adapting to climate change. The key goal of the partnerships is for the transformation that is necessary to meet climate goals, in the interest of Serbian citizens, to be socially just, a just transition.

This year, Serbia and Germany are celebrating the 25th anniversary of their development cooperation. In the meantime, KfW financed projects worth EUR 2.5 billion in Serbia.