Published on July 14, 2021

What are the new just transition opportunities for the Western Balkans and Ukraine?

by Victoria Shevchuk

June 2021 was a historic month for just transition in the Western Balkans: North Macedonia announced a coal phase-out date, one of the first among WB6 countries to do so. And it was in this optimistic context that the newly created Initiative for Coal Regions in the Western Balkans and Ukraine organised its first annual meeting, on June 23-24.

Voices from the Coal Regions

While still done remotely because of the pandemic, the annual meeting was two intense days of heated discussions and knowledge exchange about current just transition trends in the regions.

Representatives of the countries in the Western Balkans and of Ukraine spoke about challenges they faced related to energy poverty issues and confirmed that this topic would be on the forefront of their agendas for the next two decades.

The meeting organisers dedicated the first day to listening to voices from the coal regions, which was a way to underscore that just transition has to be an inclusive process in which all concerned citizens have a seat at the table from the start.

During the meeting, representatives from Germany, Poland, Ukraine, Montenegro, North Macedonia, and Bosnia and Herzegovina had the floor to present their ideas, planned next steps, fears, and experiences with the just transition process.

The mayors of affected coal regions – including Igor Golubović, the major of Pljevlja, Montenegro; Bego Gutić, the mayor of Banovići, Bosnia and Herzegovina; Oleksander Brykalov, the mayor of Myrnohrad, Ukraine – presented their own perceptions of the just transition process and demanded funding and international support for the long journey ahead towards the transformation.

Funding opportunities

A question that’s always on top of people’s minds when it comes to the just transition agenda is that of funding available for the affected coal regions. And it’s easy to see why. According to a World Bank estimation, emerging and developing economies need $4 trillion of annual investments by 2030 in order to cope with just transition challenges and shift to clean, modern and resilient energy. Speaking at the annual meeting in June, participants highlighted an apparent shortage of funding support for the Western Balkans and Ukraine to implement a meaningful just transition.

Thankfully, the IFIs leading the Initiative for Coal Regions in the Western Balkans and Ukraine were able to present some plans they had to provide assistance, although more needs to be done (see the Bankwatch recommendations below). For instance, the World Bank introduced its just transition approach for the coal-affected areas, which consisted of three main stages, each of them coming with financial support from the Bank. The World Bank also announced its new Climate Action Plan for 2021-2025, which it expects to unlock $83 billion for five years, a record amount of funds to tackle climate change and address the Paris Agreement goals in developing countries.

At the same time, the European Bank of Reconstruction and Development (EBRD) focused on the private sector support they intend to provide, including their financial assistance to current initiatives in solar power plant construction in North Macedonia. The EBRD promised strong cooperation with governments of coal-dependent countries, in order to help them diversify the economies.

The European Investment Bank (EIB) underlined their contribution to the Initiative and ambition within the region. The EIB offers financial products, namely loans and guarantees, and technical assistance to governments, to fill the infrastructure gap and reach the European Union standards. The EIB, the bank’s representatives said, is committed to infrastructure development, economic recovery and the Economic Investment plan implementation for the Western Balkans.

Knowledge exchange

The global differences in the speed and scope of decarbonisation of each coal region is evident. To minimize these differences, the EU Commission and the other six organisations  leading the Initiative (the World Bank, the Energy Community Secretariat, the EBRD, the EIB, Poland’s National Fund for Environment Protection and Water Management, and the College of Europe in Natolin) launched the Coal regions exchange programme. It is a supportive instrument for participating regions to start a direct dialogue with different stakeholders via transferring specific knowledge exchange, expert support, study visits, and network development. Indeed, the annual meeting brought together interested parties and provided a floor to open multi-stakeholder dialogue and to start cross-border cooperation, together with knowledge exchange.

More to be done

Being invited as a “voice from the ground”, Bankwatch presented  its precise demands within the Panel discussion 1: Voices from the coal regions on socio-economic challenges. Our recent observations indicate that there is still a lack of concrete steps to accelerate the just transition in the region, despite many institutions declaring their support for transition in developing countries.

Based on its experience working on just transition in central and eastern Europe, Bankwatch presented three concrete demands:

Firstly, it is urgent to establish a Just Transition Fund for the Western Balkans and Ukraine. Countries in just transition need money for the rapid development of clean and affordable energy supplies. At present, it is mainly loans or small-scale projects from different institutions that are available, but no dedicated fund.

Secondly, it’s essential to give a voice to the affected coal communities by setting up a cooperation environment. Governments need to develop public participation mechanisms, specifically just transition local platforms, working groups, public awareness campaigns, and community consultations and involvement.

Thirdly, it’s imperative to convince countries to set coal phase-out dates – and soon. Without clear signposts, building a meaningful transition process is impossible.

In conclusion, the annual meeting offered a starting point to representatives of coal regions who are searching for contacts and solutions in their just transition journey. The commitments of major institutions to provide assistance and finance are welcome. But much more needs to be done.