by Pippa Gallop
A new study by the Friedrich Ebert Stiftung Southeast Europe Dialogue and Bankwatch analyses barriers to a sustainable energy transition in Southeast Europe and suggests way to overcome them.
Southeast Europe, like most of the world, is currently undergoing a transition towards an energy-efficient, renewables-based economy. If it is to succeed, it has to be an environmentally, socially and economically just and sustainable transition. Among other things, this means phasing out coal, oil and gas, as well as avoiding seduction by unsustainable or overrated technologies along the way. The potential benefits include clean air, warm and comfortable housing, and employment generation, but such a transition also has costs for those currently employed in the fossil fuel industry, which need to be dealt with in an open, participatory way.
It is no secret that some countries in southeast Europe are lagging behind while others move ahead, and that the process is far from linear. Costly mistakes are being made along the way, such as the destruction of countless rivers and streams for climate-vulnerable hydropower plants, or gasification of countries which will have to un-gasify again in a few years’ time. To better understand the barriers hindering a sustainable energy transition and how to overcome them, Friedrich Ebert Stiftung Southeast Europe Dialogue and Bankwatch have been working together to develop the recently published Political Economy of Energy Transition in Southeast Europe – Barriers and Obstacles study.
The study looks at nine southeast European countries – the Western Balkans Six, plus Bulgaria, Romania and Croatia. It looks at the causes for inaction and mis-steps by decision makers, private interests, and other structures, based on Bankwatch’s own experience and a series of interviews with local partners. It then provides recommendations on how various actors, political avenues and platforms can contribute to moving a sustainable transition forward.
In a series of forthcoming articles we will zoom in on different countries, but overall we found that most of the barriers go far beyond the energy sector, touching on the hardest-to-crack issues like state capture, geopolitics, and lack of rule of law and accountability.
Too often, energy sector decision-making puts special interests ahead of the public interest. State-owned utilities like Serbia’s Elektroprivreda Srbije (EPS) or the Bulgarian Energy Holding (BEH) exert massive influence on policy-making, while at the same time governments depend on them for their voter base. Opaque energy deals with Russia and China tend to reinforce the role of fossil fuels, even if China has expressed its willingness to back renewable energy as well. And renewable energy incentives schemes too often benefit businesses close to governments instead of stimulating cost reductions in new technologies.
But it is not always clear whether poor decisions on energy policy result from special interests or simply outdated perceptions of the sector. Our experience suggests it is often a mixture of both. Decision-makers in the region often opt for technologies which stay as close to the status quo as possible, for example seeing biomass or gas as alternatives to coal, or sticking with hydropower as a technology already widely-used across the region. The idea that the energy sector is a heavily decentralised network has hardly started to take hold yet. And where it has, it has been in the worst possible way: by building hundreds of damaging small hydropower plants on rivers and streams, while the region’s huge potential for energy efficiency, solar and suitably-sited wind has hardly been touched.
Political will and detailed knowledge of contemporary energy sector trends can’t be conjured up overnight, but implementing EU legislation affecting the energy sector can help to move things in the right direction. EU environmental legislation also helps prevent destruction of sensitive areas, e.g. by energy and transport infrastructure. All of the countries we examined should be implementing EU environment, climate, energy and State aid rules, whether as EU Member States or as Contracting Parties of the Energy Community Treaty. Though they vary in their levels of compliance, pollution control, air quality, State aid and biodiversity protection remain problems in most cases.
Strongly related to this is the lack of political courage by decision-makers across the region to show leadership, apply market rules and make the transition work for their countries. Opening markets and moving to cost-reflective energy tariffs is a major political difficulty in several countries. People are used to low, regulated prices and many cannot pay more, due to a vicious circle of energy inefficiency and energy poverty. But coal or no coal, price rises are inevitable, and any country that does not have a plan is going to be in trouble.
So far it looks like this is actually a much bigger problem than direct political pressure from coal mining unions in most of the countries. But indirect pressure certainly exists due to the interdependency between governments and public utilities mentioned above. And together with the fact that most governments have developed no plans to mitigate the social impacts of the transition in coal regions and other fossil fuel-dependent areas, it is no wonder that many decision-makers are reluctant to commit to a rapid coal or wider fossil fuel phase-out.
One problem which seems to have intensified rather than diminishing in recent years is political instability and lack of institutional capacity. In countries like Montenegro, North Macedonia and Croatia, which are politically in favour of energy transition – even if not always a very sustainable one – a shortage of experienced staff at the central and local government levels is emerging as a key issue preventing better progress. It is also an issue in the other countries, but other factors such as state capture seem to play a stronger role at the moment.
Considering the potential benefits of a sustainable energy transition, decision-makers across the region need to grab the bull by the horns and take ownership of the process. Instead of fearing public participation they need to embrace it, finding ways to utilise the collective expertise available from experts, civil society and the private sector. Decarbonisation can and must be made to work for the wider public in the countries, not least by including them at the local and household level in generating, storing and saving energy.
But most of the barriers we have identified are much wider than the energy sector and require more consistent efforts by all actors to improve democratic development, the rule of law, institutional capacity and transparency and accountability of decision-making. There is no alternative but to step up the painstaking work done every day in this field by public institutions, journalists, civil society organisations and the international community and to make sure that decision makers are held accountable for their actions.
The international community also has a major role to play. For the EU Member States, the EU’s role in oversight and enforcement of EU legislation is clear, but needs to be stepped up. For the Western Balkans, the EU and EU governments can also make a difference by supporting the strengthening of the Energy Community Treaty, sending consistent messages to governments, sticking to no-regrets investments and insisting on transparency, real public participation, institutional ownership and coherence with EU policies as conditions for any donor-funded projects.
The Political Economy of Energy Transition in Southeast Europe – Barriers and Obstacles study can be found here.