Kopač: Coal plants in Energy Community reaping profits as CO2 isn’t priced

Producers of electricity from coal and traders in the Energy Community enjoy record profits as they don’t have to pay for CO2 emissions, Energy Community Secretariat Director Janez Kopač said at the presentation of a study on climate change impact.

While the European Union is working on a Carbon Border Adjustment Mechanism (CBAM) and its Fit for 55 clean energy package, coal power plants in the Energy Community are increasing output, Energy Community Secretariat Director Janez Kopač warned. The utilities running them and electricity traders are using the opportunity as they don’t have to bear carbon dioxide emission costs like their counterparts in the EU, he said.

“The price difference between zero costs for CO2 emissions in the Energy Community and, let’s say, EUR 50 per ton in the European Union makes this business extremely profitable,” Kopač stated at the presentation of a study called Carbon Neutrality in the Energy Community – Drivers and Policy Proposals.

Kopač asserted the discrepancy must be overcome with policy, financial and legal measures or that it could last for several years.

Tax coal emissions to protect vulnerable communities

The money earned from coal needs to be channeled to efforts for a green transition, he added. Otherwise, according to Kopač, the Energy Community Contracting Parties will lose speed in EU integration.

Exporters to the EU are facing the CBAM, a cross-border CO2 tax, unless they start charging for greenhouse gas emissions or match their existing schemes with the EU’s Emissions Trading System.

Kopač earlier proposed the introduction of a tax on electricity generated from coal and to use the proceeds to protect vulnerable communities. The scheme should be designed so that the levy gradually increases and the revenue is directed to vulnerable communities, he said.

Planning saves lot of money

The study on how to achieve carbon neutrality was produced by the Green Policy Center and financed by the European Climate Foundation. It reflects on the EU’s commitment to becoming carbon neutral by 2050 and offers proposals for the contracting parties of the Energy Community.

“It is not an easy process to get to carbon neutrality. It’s unavoidable to get there. It’s not to be debated if there’s climate change or not or whether you need to act or not,” said Regional Director of the European Climate Foundation József Feiler.

The hard way is not to plan and to be pushed to do it by mother nature, he underscored. Feiler added the business and political environment around the globe is changing. “Planning and implementing changes is saving a lot of money. It is solving problems for the people on the ground but also for governments and businesses,” he stressed.

Amount of water in rivers could almost halve by 2100

One of the authors, Predrag Momčilović from the Faculty of Geography in Belgrade, said the Western Balkans are significantly vulnerable to climate change. He wrote in the study that temperature in the region is seen rising by four to five degrees Celsius by the end of the century in the case of a constant global increase in greenhouse gas emissions and that the 1.5-degree threshold is expected to be breached by 2035.

A noticeable change in annual precipitation is projected to begin in the middle of the century – an increase in the northern parts and an increasingly intense drop in the south, including coastal areas. Hot and dry summers that have already been observed will continue with an increase in the frequency and duration of heatwaves, Momčilović said and pointed to expectations of a surge in precipitation in the winter.

Annual river flow could be reduced by more than 45% by 2100 and rural communities may be disproportionately affected by water shortages and the deterioration in its quality, according to the findings.

Threat of hunger, diseases

Momčilović highlighted the risk of invasive species and the spread of pests and diseases in corn, sugar beet, orchards and other important sources of food. Corn yield losses may reach 52% by the end of the century, the study shows.

Climate change and rising temperatures create favorable conditions for outbreaks of diseases such as malaria, dengue and West Nile fevers and cholera, it adds.

Director of Green Policy Center András Huszár said the introduction of carbon pricing in the Energy Community could avoid negative effects of CBAM and raise revenues for a green and just transition. “Climate action should not mean that many people are losing their jobs. It should be about job creation, about retraining,” he stated and underscored that more and more funds would be available for the contracting parties to prevent or handle impacts in a coordinated manner.