Published on May 22, 2020

Just transition in Serbia, off to a difficult start

, Mirjana Jovanovic (Belgrade Open School), Ognjan Pantic (Belgrade Open School)

Decision-makers in Serbia are very far from the idea of preparing for a just transition, so civil society will have to play a key role in opening up a national debate.

On May 14, Serbian President Aleksandar Vucic visited the Kolubara coal basin to send an impassionate message about the future of coal in the country. Dubbing Kolubara “the heart of Serbia’s energy sector”, the president made sure to keep that heart pumping by announcing a new, 500 million euro-worth, investment in the overground coal pit. This investment, the president said, would bring 13 million tons of coal annually to Serbia’s energy sector.

While other European countries are looking to the future, already planning robust policy measures to ensure carbon neutrality, produce cleaner energy and safeguard the environment, Serbia’s decision-makers seem to have their gaze stuck into the bottom of the coal pits in the Kolubara region. This approach could, however, cost Serbia and its citizens a lot, much more than the aforementioned investment.

Heads buried in coal

Just transition is a concept that involves a complex set of social, economic and environmental policies that guide a society through transforming the economy from fossil-fuel dependency to clean energy reliance. Even though the concept is known for some time, and the European Union has developed a number of mechanisms to support just transition already, in many countries on the outskirts of the EU, just transition is still largely unknown.

Despite being on its way to joining the European Union, Serbia today continues to be a very carbon-intensive country. Around 50% of primary energy consumption and more than 70% of electricity are covered from coal. Energy intensity in Serbia is up to four times higher than in the average EU country, while carbon intensity is up to 3-4 times higher.

The coal industry in Serbia is dominated by a single state-owned utility company, EPS (Javno preduzeće Elektro privreda Srbije). This company owns coal mines (mostly open-pit lignite mines) and thermal power plants, and is one of the largest employers in Serbia, with 27,772 permanently employed and around 3,000 more employees on temporary contracts. With 5,17GW of installed capacity in eight thermal power plants across Serbia, EPS is the single largest producer of electricity in the country. Even though the energy market has been liberalised, EPS is still dominating, producing more than 90% of the electricity traded. EPS is, hence, an important economic factor in the stability of the Serbian economy, with high potential to either significantly increase or decrease the Serbian GDP.

As an EU-membership candidate country and having strong economic ties to the EU, Serbia is in the process of aligning its policies with the block. However, striking differences between Serbian and EU energy and climate policies remain. While the EU plans for climate neutrality by 2050, the Serbian Energy Sector Development Strategy envisages that coal could, given technology advancements, be the main energy source in Serbia well beyond 2050. To this end, new coal-fired facilities are being constructed (backed up by Chinese investments and loans).

Serbia is also an Energy Community Contracting Party and as such, it has undertaken various obligations related to the energy sector and its decarbonisation. Different pieces of environmental, energy and climate regulations require significant investments in the Serbian energy sector, in order to provide clean air, a safe environment, reduce GHG emissions and liberalise the energy market, among others. There is no carbon-pricing mechanism in place in Serbia at the moment. However, Energy Community Contracting Parties will in the foreseeable future have to transpose the Emission Trading Scheme Directive and to introduce carbon pricing. This will create an additional economic burden to the coal-reliant energy sector. A recent Energy Community study showed that state subsidies to the coal ndustry prevent Serbia and other Contracting Parties from effectively undertaking the decarbonisation of their economies.

While most EU countries and even some neighbours in the Western Balkans are planning to phase out coal, in Serbia, the energy transition is perceived as a distant and uncertain possibility. This is clearly illustrated by the rhetoric of the highest state officials, such as that employed by President Vucic on May 14. As a result, there is no public policy framework that would support the just energy transition.

Policy landscape

To examine just transition policy options in Serbia, a baseline study was conducted by the Belgrade Open School in 2018. The research examined the public policy landscape in which just energy transition is to be carried out, and mapped the main stakeholders and their positions.

The policy framework analysis showed that major policies – such as energy, climate, education, employment and labour market ones – do not recognize energy transition as a factor that will affect the Serbian economy and labour market.

Several policy documents have only vague references to “green industry and green jobs”, but no concrete policy instruments are put in place, nor is funding for such instruments envisaged anywhere.

The stakeholder analysis showed that there is no interest in developing just transition policies among actors with power of decision-making.

The research looked at different stakeholder groups such as governmental institutions and bodies, the energy industry, trade unions, the research and academic community, civil society organisations and local communities in coal regions. The majority of them is of the view that the energy transition will never involve a coal phaseout in Serbia.

Only within the education and academic community was there a clear understanding of energy transition and its related social, economic and environmental processes.

The most influential actor- EPS – does not express any interest in the subject. In fact, EPS is currently building a new thermal power plant in the Kostolac coal region, and planning for three new ones in the near future, which would effectively lock Serbia in fossil-fuel dependency for decades.

Coal trade unions, elsewhere interested in just transition policies, are not involved in energy or climate policy development. Nor are they seen by coal workers as an agent of change when it comes to just transition. Two focus groups of coal workers in two major coal regions in Serbia showed that they do not have faith in trade unions to protect their future jobs. Instead, coal miners have expressed a feeling of being left alone in front of an uncertain future.

Focus groups of communities in coal regions in Serbia showed that there was a clear understanding that coal jobs are no longer “secure and well paid”. For the past 50 years, living nearby a coal mine meant safe jobs and a prosperous economic situation, but this is no longer the case. Nowadays, local residents report that jobs are difficult to find and, even when available, come with precarious contracts, offering no certainty and poor pay. Thus, local communities already see the energy sector as “unfair, unjust”. And, just like the coal workers, they believe that they will be left on their own to deal the social and economic consequences of a potential transition.

Lagging behind

Climate and energy policies in the EU and the Western Balkan region are developing towards climate neutrality as we speak. The pace might be insufficient to achieve the Paris Agreement goals, but Serbia is lagging even further behind.

The European New Green Deal, which sets the EU economy on the climate neutrality path, will present new and even more serious challenges to the Serbian economy, given the strong economic ties with the EU.

All of this means that the transition is anyway coming to Serbia, whether we are ready or not. If Serbia does not start planning for a just transition now, tens of thousands of livelihoods will be at risk.

With decision-makers focused on short-term priorities and reluctant to make changes to the energy sector, and citizens insufficiently familiar with the topic, it is up to civil society to initiate a much-needed nationwide debate on energy transition in Serbia. Civil society will also have to support decision-makers and other relevant actors in designing and implementing mechanisms for the just transition.

At least there are plenty of encouraging stories to learn from, in other countries which are planning ahead much faster.

Photo by Flickr user stefanogiantin.