Serbia to officially commit to phasing out coal by 2050

Serbia is soon expected to officially announce its intention to phase out coal as soon as possible or by the end of 2050 at the latest. It is also set to include the goal in its strategic documents and prepare a plan for shutting down coal power plants by 2030.

The obligations to decarbonize and shut down thermal power plants are part of a bill on the ratification of a contract on guarantees for the EUR 300 million loan that state-owned power utility Elektroprivreda Srbije (EPS) secured from the European Bank for Reconstruction and Development (EBRD).

The Government of Serbia sent the bill to the National Assembly at the end of March.

“As soon as practicable following the execution of the loan agreement and the guarantee agreement, the Republic of Serbia shall announce Serbia’s commitment to phase out the use of coal as soon as possible and in any case not later than by December 31, 2050, and this shall be reflected in new or updated versions of national strategic documents,” says a clause in the part of the bill called “other obligations.”

“Serbia shall have committed to working on establishing thermal power plant decommissioning milestones by December 31, 2030,” the document reads.

Serbia currently hasn’t set any decarbonization and coal phaseout targets in its laws and strategies. However, by signing the Sofia Declaration on the Green Agenda for the Western Balkans, it has committed itself to work towards making Europe climate neutral by 2050.

Serbia will accept an obligation to adopt NECP by the end of the year

The proposed law also states that Serbia shall adopt a national energy and climate plan (NECP) by December 31 and provide for a target of over 45% of renewables in Serbia’s electricity generation mix by the end of 2030.

Last year, Serbia prepared the first version of NECP and held a public review.

Among the obligations set in proposed law is an auction for wind farms with a capacity of at least 400 MW, and a three-year plan for auctions. The public call for the first of the auctions, which were prepared in cooperation with the EBRD, was initially announced for the first quarter of 2023, and then for April.

The loan will also be used for the retraining of workers affected by the green transition

The government wrote in the bill that the EUR 300 million loan would solve an urgent liquidity gap by providing financial support to EPS and provide support for the development of a credible decarbonization strategy, including a strategy to phase out coal by 2050.

The loan must not be used for investments in fossil fuels or salaries for workers in mines and coal power plants

The loan also provides support for the retraining of the EPS employees affected by the green transition. However, the funds will not be used for capital investments in fossil fuels. In the case of EPS, this means investments in mines and thermal power plants.

The loan will be used to refinance loans, finance business expenses, except for those related to the coal mining and electricity production in coal power plants, including the expenses of employees in these activities.

The money will also be used to pay incentives to investors in renewables as well as for electricity imports.