Concerns raised over new coal mining project in light of North Macedonia’s decarbonisation goals

In 2018 and 2019, during the preparation of its Energy Development Strategy until 2040, North Macedonia decided to go in a direction that was revolutionary for the Balkans – to phase out coal use for electricity generation in 2027. This was delayed by a couple of years in the country’s National Energy and Climate Plan (NECP), mostly because of the Covid pandemic. However, compared to its neighbours, this was still very ambitious. Serbia was in the process of building a new coal-fired power plant and Bosnia and Herzegovina had several plants planned. 

North Macedonia’s ambition was hailed by the European Commission and attracted the interest of international financing institutions. The EBRD was the first to support practical projects that support these goals, such as the conversion of the Oslomej coal mine to a utility-scale PV plant. Significant contributions started coming in, such as EU technical support for the preparation of a Just Transition Roadmap, Climate Investment Fund support for an Investment Plan for Accelerated Transition, and additional EU grants for more solar projects.  

Based on commitments by AD ESM, the state-owned electricity utility, to carry out a swift and just coal phase-out and not to open new coal mining capacity, in 2023 the EBRD also supported the company, with a EUR 100 million liquidity loan. 

During the same period, a completely different parallel process was apparently unfolding in ESM. In May 2019, the company concluded a contract for the main project design and environmental impact assessment (EIA) for the Zhivojno lignite deposit. The project was developed during 2020 and most of the environmental research was completed then as well. After that, an EIA study started periodically appearing and disappearing from the Ministry of Environment’s website, creating confusion as to what was happening with the project – until finally, in May 2025 a public consultation on the EIA was officially announced. 

The EIA is missing the mark on many key issues, but most importantly, it completely disregards the country’s strategic priorities and international obligations. We took part in the public hearing at the Novaci local authority’s premises, in the region where the mine is planned, and submitted extensive written comments. Among the most critical points are: 

• Strategic conflicts: The project contradicts the Energy Development Strategy until 2040 (2019), the NECP 2021-2030, and the Nationally Determined Contributions (NDCs) for climate change mitigation. These documents state that North Macedonia aims to cease coal use for electricity generation by 2029 at the latest and begin intensive decarbonization of the energy sector. 

• International commitments: The country has received technical assistance from the European Union to develop a Just Transition Roadmap, with an initial annual plan already prepared. Furthermore, North Macedonia is among the few globally selected participants in the Climate Investment Fund’s Accelerated Coal Transition programme, thanks to its ambitious decarbonization plans. An Investment Plan for Accelerated Transition has also been developed with significant technical support. 

• Financial obligations: The investor, ESM, has secured substantial loans conditioned on adhering to these strategic commitments and not opening new coal mines. This project, if implemented, could jeopardize the country’s integrity and reputation with the international community and financial institutions, risking loan repayments and the spending of public funds. In the long run, it could severely limit access to further financial aid crucial for the decarbonization and just transition processes. 

• Timeline discrepancies: The EIA study mentions that the mine’s exploitation will conclude before the energy sector’s decarbonization process, but the precise timing remains unclear. With the current date for coal phase-out set for this decade, and the start of the mine’s operation potentially taking more than two years, the start of exploitation would be very close to this deadline. Other information in the study suggests a 14-year lifespan for the mine, extending operations until around 2040 – a decade past the coal phase-out date.  

• Scope of assessment: The EIA study evaluates the project as an isolated mining venture, failing to consider its specific purpose and characteristics within the existing Bitola mining and thermal power complex. The project is intended for lignite extraction to fuel the power plant, making it an integral part of the energy system, not just a mining project. This oversight leads to inadequate analysis of alternative ways to achieve the same goal and underestimation of the project’s ultimate climate impacts. 

• Data concerns: Much of the baseline data was collected in 2020, and is now outdated. North Macedonia’s environmental legislation stipulates that project approval expires after two years if construction has not commenced, unless conditions in the project area remain unchanged. At the very least, the study should have provided an update on the current conditions compared to the 2020 baseline and should preferably have included new data on significant impacts like groundwater and air quality. 

These significant concerns need thorough examination and resolution. It’s crucial for any project to align with national and international environmental commitments, especially those aimed at addressing climate change and ensuring a sustainable future. Open discussions, transparent assessments, and careful consideration of all alternatives are necessary to make informed decisions that benefit both the economy and the environment. 

This situation highlights the importance of consistency between the country’s strategies and individual projects, and integrity in pursuing energy goals, respecting international obligations, and prioritising sustainable development for the long term.  

Ultimately, there is no way the environmental and climate impacts of a new coal mine in North Macedonia can be managed in a way that the country remains true to its commitments. ESM must either withdraw its request for approval of the EIA or the Ministry must reject it. Failing this, the EBRD must require immediate payback of its loan and significantly improve its due diligence on similar liquidity projects in the future.