NALED calls for applying ‘polluter pays’ principle in Serbia

In order to encourage businesses and people to reduce their negative impact on air quality, Serbia needs to introduce the “polluter pays” principle, expand the list of harmful gases that are taxed, and improve the system of incentives for switching to cleaner energy sources, according to the National Alliance for Local Economic Development (NALED).

Air pollution in Serbia is up to 20 times higher than European Union member countries, and revenues from eco-taxes and fees are insufficiently invested in solving the problem, warns NALED, which gathers companies, local authorities, and non-governmental organizations with the aim of improving the business environment through institutional reforms.

The existing fixed amounts of environmental fees do not encourage companies to reduce harmful emissions, nor do they reflect the amount of pollution. Currently, even those who do not do any damage are charged a minimum fee of RSD 5,000, while large polluters pay little compared to the actual amounts of pollution they create, says Jelena Kiš, president of the Association for Environmental Protection at NALED.

However, to avoid making environmental taxes and fees just an additional financial burden on the economy and citizens, without changing practices, it is important to design a sustainable support system for a transition to cleaner fuels in the form of subsidies and other incentives, the organization stressed.

Nearly 80% of households have no gas installations or district heating, while heating plants still burn fuel oil and coal

When it comes to individual household heating, which is responsible for a large portion of harmful particulate matter in the air, NALED warns that nearly 80% of households in Serbia have no gas or district heating connection, while heating plants, although they mostly rely on natural gas (65%), also still use fuel oil (18%) and coal (15%).

Also, household heating is not subject to any kind of control, and heating devices sold on the market do not comply with environmental standards, according to the press release.

Increasing the price of coal would encourage people to switch to cleaner fuels

NALED recommends increasing the price of coal in order to encourage people to switch to cleaner sources of energy. On the other hand, according to Kiš, it is encouraging that the Ministry of Environmental Protection has sent three public calls to local governments, allocating a total of RSD 400 million for the replacement of individual combustion units, reconstruction of old boiler rooms, and forestation.

It is also necessary to include road transportation in the environmental fee system as the tax on the use of motor vehicles does not encourage fleet renewal in Serbia, where more than half of vehicles have old engines whose import is banned in both the EU and the region, according to the statement.

Cleaner air calls for EUR 2.3 billion investment

The recommendations are part of a new analysis of the performance of fiscal instruments in reducing pollution, and their full implementation would ensure an additional EUR 18.5 million in the state budget for investment in environmental protection, said NALED.

In 2015, revenues from the emissions fee were RSD 3.05 billion, while the amount more than doubled in 2019, to RSD 6.26 billion. However, total investment needed to improve air quality is estimated at some EUR 2.3 billion, according to NALED.