The European Green Deal beyond the EU: What Impact on the Western Balkans?

With a strong external dimension, the European Green Deal was designed to be transformational not only for the European Union (EU), but for its partners as well. The EU has for a long time relied on climate diplomacy as an important tool of its foreign policy, with some notable examples of successful cooperation (e.g., cooperation with China, Japan and South Korea on the design and implementation of their ETS systems), and it is only set to increase in importance with the European Green Deal. By becoming a top priority of the EU agenda, the European Green Deal will change the relationships between the EU and its partners, entailing significant foreign policy consequences.[1]

The region where it can have the most powerful impact is its immediate vicinity. As the stated goal of the Green Deal is to create “the first climate-neutral continent”, engaging the EU’s neighbours in the Western Balkans will be essential to its success.

A complex region, with a tumultuous recent past, the six countries (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia) are strategic for EU’s diplomacy.

Since the end of the wars in the 1990s, the role assumed by the European Union in the region was to ensure lasting peace and stability, with the prospect of eventually opening EU membership to Western Balkan countries. As the EU accession process has been stalling for several years and the perspectives do not look very bright, the EU’s influence has been waning, leaving space for Russia and China to enhance their presence in the region.  

The European Green Deal is a chance to rekindle this relationship, by becoming the catalyser of the region’s energy transition. If the EU succeeds in integrating the Western Balkans in the Green Deal, it will show a powerful example to the rest of the world, and particularly to other developing countries, for whom the starting conditions for the energy transition are unfavourable. Western Balkan countries encapsulate many challenges that developing countries are facing before starting their climate transition: a coal-dependent energy sector, difficulties in financing low-carbon projects and a lack of prioritization of climate issues on the political agenda.

These are not remote problems for the people living in the region: air pollution concentration levels are among the highest in Europe (up to five times higher than the national and EU guideline levels[2]), mostly due to coal combustion, obsolete heating systems and low fuel standards, affecting the health and well-being of millions of people.

Another stark reality is energy poverty: the European Commission estimates that at least 50% of the population spends more than 10% of their net income on energy, which corresponds to the standard definition of fuel poverty.[3] This has repercussions in terms of energy performance as well, as these households lack the necessary income to invest in energy efficiency improvements.[4] Furthermore, with energy demand expected to grow on average by 2% per year[5], modernizing energy infrastructure and diversifying the energy mix will be critical in meeting this growing demand. Finding solutions to their challenges means finding solutions that could be replicated in other lower income countries with similar circumstances. For the EU’s climate diplomacy, succeeding in advancing the climate agenda in its neighbourhood will contribute to enhancing its credibility on the global stage.

In this context, the European Green Deal is likely to become one of the main instruments of EU neighbourhood policy, with positive repercussions on the pace of the changes needed for the energy transition. The six countries (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, Serbia) are all on their way – of course, each at different stages in this ascension process – to joining the EU. To fulfil the EU accession criteria, candidate countries have the obligation to implement the acquis communautaire.

With climate and energy becoming more and more prominent in the EU legislation, keeping the pace with the more stringent environmental regulations will prove significant to their ascension efforts. Western Balkan countries already have a strong record of implementing relevant EU legislation: through their Energy Community membership, the international organization working towards the creation of a pan-European energy market, they have been transposing the EU acquis in the energy field within the region. This will ensure that, in the long term, countries from the Western Balkans will converge to European standards on key matters such as the share of renewable energy, energy efficiency, fuel standards, thus gradually leading to an enabling legal framework for low carbon development.

There are some significant challenges on this path. Most countries in the region are characterized by a highly energy intensive economy (up to three times the European average[6]) and a carbon intensive energy sector, due to the prominence of coal.

Coal-fired power plants represented 43% of total installed capacities and 61% of total electricity production in 2019[7].

Albania is the exception, having a well-developed hydropower sector. Power and heat production are the main sources of CO2 emissions, with nearly 70% of total emissions in the region coming from these sectors[8].  Coal, and more specifically lignite, has been the preferred option for power generation in the region for decades, as it was the cheapest and most secure source of electricity, due to locally available reserves.

In addition to all the related environmental problems, the economic argument for coal is not as strong anymore. An IRENA study shows that members of the Energy Community (which includes, in addition to the Western Balkan countries, Ukraine and Georgia), could increase the share of renewables to 30% by 2030, compared to 19% in the Reference Case, which is built on stated policies.[9] This is mostly driven by current and expected cost decreases of renewables. Instead of delaying the transition and passing on the responsibility of finding solutions for both the people working in the sector and the energy mix, policy makers have the possibility to tackle the problem now.

Not all the benefits are reserved for the future. Coupled with other measures, such as energy efficiency measures and electrification of heating and cooking, replacing coal with clean energy sources would considerably improve the daily lives of people who currently struggle with air pollution and unstable energy supply. Beyond the power sector, industry and transportation are also key sectors to reform in order to enable both COand air pollution reductions.

Western Balkan countries have the support of several international partners, and various strategies and programs have already been launched with the aim of advancing low-carbon development. At the EU level, the Green Agenda for the Western Balkans, adopted in 2020, lays out the EU’s strategy to support decarbonization in the region. This includes the extension of some instruments designed for Member States, such as the Emissions Trading Scheme, the Just Transition Mechanism, or the EU Renovation Wave to the Western Balkans.

Another notable program is the Initiative for coal regions in transition in the Western Balkans and Ukraine.

Launched in December 2020 and managed by the European Commission and 5 other organizations, this initiative was designed as a platform for multi-stakeholder dialogue to share knowledge and best practices in managing a just transition for coal regions. In terms of access to finance, the EU and other international donors have dedicated programs for clean energy projects in the region. But national budgets should also reflect these priorities and public money should not be used to fund energy infrastructure that is unfit for the future of the sector.

Aligning public spending with climate goals is an important signal for the private sector, whose contribution is crucial to securing the investments needed to finance the transition.

To conclude, the EU’s engagement is essential for the transition to a more sustainable development model in the Western Balkans, and numerous initiatives are already in place to support this goal. Replicating successful EU programs can be a winning strategy, drawing on its past experience, as long as they are adapted to local circumstances. Putting people first, and particularly the most vulnerable, will be the key to making the low carbon transition a success in a region where so many are already affected by energy poverty and air pollution, and unless addressed correctly, are bound to suffer the worst effects of climate change.

[1] Bruegel (2021). The Geopolitics of the Green Deal. 

[2] UNEP (2019). Air Pollution and Human Health: The Case of the Western Balkans.

[3] European Commission (2016). MULTI-COUNTRY Regional Energy Efficiency Programme for the Western Balkans (“REEP Plus”). enlargement/sites/near/files/pdf/financial_assistance/ipa/2016/ipa_ii_2016_037-900.10_mc_reep_plus.pdf

[4] Ibid.

[5] World Bank (2018). Western Balkans: Directions for the Energy Sector. Final Report.

[6] European Commission (2016). MULTI-COUNTRY Regional Energy Efficiency Programme for the Western Balkans (“REEP Plus”).

[7] Energy Community Secretariat (2021). WB6 Energy Transition Tracker. Second edition.

[8] Energy Community Secretariat (2020). WB6 Energy Transition Tracker. First edition.

[9] IRENA (2020). Renewable energy prospect for Central and South-Eastern Europe Energy Connectivity.

*Laura Camarut is an EPG Fellow. The views expressed in this paper are those of the author and do not necessarily reflect the opinions of EPG.

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