Blog entry

Navigating the complexities of EU funds: Bulgaria’s struggle

For over three decades, Bankwatch has been deeply involved in the programming and monitoring of European Union (EU) funds at both the EU and national levels. As Bankwatch’s national coordinator in Bulgaria since 2020, my specific role has been to represent environmental non-governmental organisations on the monitoring committee for Bulgaria’s national transport programme. Beyond this, I’m also responsible for overseeing other programmes, partnership agreements, and relevant strategic documents and processes.

When the European Parliament and Council of the European Union adopted the 2021–2027 legislative package for cohesion policy, including the Common Provisions Regulation, no one could have foreseen the series of crises Europe would go through during this period. However, predicting that policy and development challenges, as well as their solutions, might evolve from those identified in 2020, the Regulation anticipated a time for reflection in the form of a mid-term review of national spending plans.

As set out in Article 18 of the Regulation, the managing authorities of each EU Member State are required to submit a mid-term review report. The purpose of this exercise is to assess progress and correct course if necessary. In theory, this provision offers an opportunity to respond to emerging challenges, integrate the European Commission’s country-specific recommendations, and advance progress towards reaching the EU’s climate and social targets. In practice, however, this task has proved to be a considerable challenge – particularly in Bulgaria.

The disconnect between national implementation and EU policy goals

After many years observing the implementation of EU funds in Bulgaria, it’s clear that the national approach applied by managing authorities is not fit for purpose. Programmes rarely align with overarching EU policy goals, and the operations underlying them frequently lack the necessary level of project maturity. In fact, many of the deficiencies flagged in the country-specific recommendations and independent evaluations often go unaddressed – which is what we’re seeing now for the third programming period in a row. By allowing these recurring problems to persist, managing authorities have placed themselves in an extremely difficult position. Under Article 73 of the Regulation, they’re expected to ensure operations are consistent and align with EU policy objectives. But that’s a tall order when the foundations are so shaky.

A tool for reform or reinforcing the status quo?

The mid-term review was intended as a mechanism to address implementation issues and reallocate resources to priority areas. In reality, however, it has taken a very different turn. Instead of using the review to raise ambition and improve programming quality, Bulgaria’s managing authorities have used it to quietly lower expectations, scaling down large-scale strategic investments into smaller-scale fragmented projects just to ensure funds don’t go unused.

Even before the Commission announced its new mid-term review proposal in April 2025, it was already clear to many of us that the current framework was falling short, especially in countries like Bulgaria. The Commission’s proposal includes revisions to cohesion policy and Just Transition Fund allocations, which would shift resources towards dual-use defence infrastructure, water resilience, affordable and social housing, and decarbonisation support for large enterprises. And while these adjustments may create new opportunities, they also risk diverting and delaying critical funding away from the just transition, social cohesion, and climate action – policies so crucial for modernising central and eastern European economies. This potential shift requires careful scrutiny to ensure the EU stays true to its long-term goals.

Unfortunately, our attempts to improve the mid-term review process in Bulgaria, which have seen us submit recommendations to both the responsible managing authorities and the central coordination unit for EU funds, have been largely ignored. In addition, the monitoring committees tasked with overseeing the use of these funds have not provided the necessary counterbalance we had hoped for. Instead of demanding better planning, stronger performance, and more transparency, they’ve remained passive, offering support to the managing authorities rather than holding them to account.

Strategic funds, missed opportunities

The 2021–2027 Transport Connectivity Programme – with a budget exceeding EUR 2 billion – is Bulgaria’s largest EU-funded initiative under the current Multiannual Financial Framework. The programme included a strategic road rehabilitation project – the Ruse–Veliko Tarnovo motorway – intended to enhance Bulgaria’s integration into the Trans-European Transport Network (TEN-T) and strengthen links to NATO corridors. Yet during the mid-term review process, this flagship project was considered high-risk due to significant delays. As a result, two of its sections were cancelled. In their place, the government redirected funds to another route: European route E85 to the Serbian border, channelling traffic towards a non-EU country. This has increased costs for citizens and businesses in the form of border controls and rising motorway tolls.

Witnessing for so long the same mistakes repeated in Bulgaria, we strongly recommend the following changes for the next EU funding cycle:

Set stronger obligatory standards for the mid-term review process, including standardised questions and assessment criteria;
Ensure these are discussed not only with the European Commission and relevant monitoring committees, but also shared with citizens through open consultation;
Reassess the impact of EU funding in Bulgaria under shared management and how it has contributed to EU policy objectives in Bulgaria over the last three programming periods;
Identify systemic issues and propose concrete reforms to ensure alignment with the EU’s policy framework and improve the quality of planning and implementation;
Reform the national programming model given the complete inadequacy of the current model, which fails to fully realise the potential of EU funds in supporting the Union’s long-term strategic goals.

As we cannot expect any drastic changes to the national administration’s approach, my personal conviction is that, under the current circumstances, more inclusive and meaningful public participation is one of the most effective ways of improving how EU funds support the implementation of EU policies and how national programmes adapt to the real needs of Bulgarian citizens.

Bulgaria’s opportunity to address energy and transport poverty: The Social Climate Fund challenge

To access funding under the Social Climate Fund, the Bulgarian government must submit a draft of its national social climate plan by 30 June 2025. The European Commission will then provide comments on the draft and, following a series of consultations, approve the final version by the end of the year.

There is much at stake. In Bulgaria, energy and transport poverty are the result of a complex mix of economic, social, and cultural factors. But the task of addressing these issues is complicated by a lack of reliable data and clear definitions, making it difficult to target vulnerable groups and select the most effective measures.

The preparation of the national social climate plan marks Bulgaria’s first serious attempt to respond to these challenges in a comprehensive and strategic way, with expectations understandably high.

Civil society recommendations

Over the past year, a coalition of Bulgarian civil society organisations – including Za Zemiata, WWF Bulgaria, and Habitat Bulgaria – as well as associations representing small businesses in energy efficiency and building renovation, has been actively engaging in the process.

The coalition has already submitted three formal statements to the Bulgarian government, expressing their concerns about the organisation and coordination of the plan. Regrettably, the first two statements were disregarded, and the prospects for meaningful cooperation remain uncertain.

In its most recent communication, submitted in March 2025, the coalition put forward a series of recommendations to various government ministers and parliamentary committees. These proposals aim to ensure that the reforms and investments underpinning the plan are delivered on time, and result in social and climate benefits. The coalition urged the government to:

create an open and transparent platform for dialogue that brings together the national coordination bodies responsible for drafting the plan and managing the fund, regional and municipal authorities with on-the-ground knowledge of local challenges, and civil society organisations and small businesses, whose close ties with communities offer valuable insights into citizens’ needs;

engage scientific institutions in these discussions at the earliest possible stage to ensure the data informing the plan is robust and reliable;

identify vulnerable groups and their specific needs through an inclusive and evidence-based process, ensuring that relevant measures and reforms are oriented to regional and local contexts; and

ensure that all proposed measures contribute clearly and measurably to emissions reductions in line with the goals of the Social Climate Fund.

Missed opportunities and unacceptable delays

Unfortunately, instead of pursuing an inclusive, science-based approach, the process has fallen short – with less than a month remaining before the draft plan is due.

In 2024, the Bulgarian government declined invitations from the European Commission’s Directorate-General for Climate Action to apply for technical assistance – support specifically designed to help national governments prepare and finance the development of their social climate plans.

Much of that year was then consumed by internal governmental debates about which ministries should lead the process and which should play supporting roles. These discussions were further disrupted by multiple changes to institutional structures and civil-servant positions.

Finally, in April 2025, the government published a framework document for public consultation, outlining the governance structure for developing the national social climate plan. Regrettably, this process failed to meet the minimum standards for transparency and participation. There were no open working groups for interested or affected members of civil society, no clear pathways for exchanging information or expertise, and no information on the application of data standards.

Institutional resistance and poor strategic planning

This is not the first time the Bulgarian government has resisted inclusive processes and shown reluctance to engage in meaningful reform and strategic dialogue on the root causes of the environmental and social challenges facing the country.

Too often, the government has avoided adopting transparent procedures, clear timelines, and well-defined responsibilities for planning and implementation. Instead, decision-making has favoured the interests of entrenched ‘business-as-usual’ lobbies and centralised, state-controlled operations.

The public is frequently left in the dark about missed opportunities for financial support that could enable greener, more progressive measures to improve their lives. This inertia has already resulted in inadequate planning and implementation across several EU investment and reform instruments, including the national energy and climate plan (currently the subject of a Commission infringement procedure), the Just Transition Fund, and the Modernisation Fund. It has also contributed to the effective shutdown of Bulgaria’s access to funds via the Recovery and Resilience Facility, with the second payment suspended for well over a year now.

Short-sighted planning threatens long-term outcomes

Public engagement in the planning process has been minimal. The first stakeholder consultation meeting took place on 5 February 2025, organised by the Directorate-General for Climate Action. However, this was not followed by a structured or inclusive process.

The second consultation meeting, held on 13 May 2025 at the Council of Ministers, confirmed many of the concerns already raised by civil society. At the session, representatives from the responsible ministries acknowledged the systematic lack of data. And although several draft measures were presented – most of which broadly align with the requirements outlined in the Social Climate Fund Regulation – there was still no clear identification of vulnerable groups or their geographic distribution.

At this meeting, officials also explained that all justifications would be elaborated further. However, deciding on measures before clearly defining the problems they are meant to address or identifying the groups of citizens and businesses most susceptible to energy and transport poverty is a clear sign of flawed planning.

Looking ahead

There’s still time to prepare and submit an adequate, targeted plan that delivers social and climate benefits for Bulgarian citizens. Constructive input from interested partners and citizens remains essential. Equally important will be the role of the European Commission in upholding the standards set out in the Social Climate Fund Regulation, particularly regarding the quality of public consultation and the overall coherence of the plans.

If used effectively, the Social Climate Fund could substantially improve the lives of Bulgaria’s most marginalised citizens. To ensure these people are not left behind, Bulgarian civil society will continue to propose constructive solutions and communicate them to national and regional authorities, as well as the relevant services of the European Commission.

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.

Landmark moment for Berlin’s heating transition: BTB bids farewell to coal

BTB – part of the E.ON group and one of Berlin’s three district heating operators – provides heat to 80,000 households, businesses, and public buildings, generating 682 gigawatt-hours (GWh) of heat and 22 GWh of electricity annually. Encouragingly, despite their ability to grow by 10 MW every year, BTB is now reducing emissions, thanks in part to its long-term strategy to become fully decarbonised by 2045.

With the end of coal at Schöneweide, BTB is embracing a more diverse and sustainable set of heat sources. One particularly exciting development is the integration of a heat pump that draws thermal energy from the nearby River Spree.

Beyond that, BTB is actively exploring innovations such as heat storage, grid optimisation, and advanced heat forecasting tools to ensure resilience and efficiency of its new system. In addition, the company would like to harness and integrate heat from wastewater treatment and data centres to harness the unused heat produced from their respective processes.

The district heating system of Berlin is one of the largest in Europe and is very similar to heat networks in central and eastern Europe. Like its counterparts in central and eastern Europe, it was a result of socialist planning during the post-war reconstruction period and was traditionally based on coal. Connected to over one million homes, its path to decarbonisation will be technically and economically challenging.

Public funding as a catalyst for change

Thankfully, financial support from the German state is making much of this transformation possible. Since September 2022, the government has launched the Bundesförderung für effiziente Wärmenetze (BEW) programme which is a financial source for district heating companies to decarbonise their systems, via renewables and heat recovery. This programme is worth EUR 3 billion until 2030, making it one of the largest district heating decarbonisation financial schemes of its kind in Europe, and can also be an example for countries in central and eastern Europe looking to develop district heating decarbonisation financing schemes.

But progress is far from frictionless. Like many other district heating providers, BTB faces a systemic issue: the lack of coordinated, city-level planning. For instance, infrastructure like wastewater treatment facilities – often a goldmine for heat recovery – are rarely designed with district heating in mind. Without integrated, cross-sector planning, valuable opportunities for sustainable heat generation are being lost.

Another, more delicate challenge is Germany’s cultural resistance to digitalisation – an issue that’s often overlooked in public discourse. Tools like smart metering and digital energy management are essential for a decarbonised heat network. Yet, due to strict data protection norms and public scepticism around digital tools, implementing these technologies at scale remains a significant hurdle.

The heat transition isn’t just an engineering challenge – it’s a social one, too. If we want to decarbonise effectively, we need the public on board. That means making these conversations accessible—not just for engineers and plant operators, but for everyday citizens as well. Bridging the gap between technical innovation and public understanding is the key to decarbonisation success.

Beyond technology

BTB’s move away from coal is a powerful symbol of what’s possible when policy, innovation, and ambition align. It also offers key lessons for municipalities across Europe, especially in central and eastern Europe.

But Berlin’s experience also highlights the complex terrain ahead – from digital transformation and infrastructure integration to public engagement. The heat transition isn’t just about replacing boilers and pipes – it’s about reimagining how cities generate, distribute, and value heat.

To succeed, the transition must be a shared effort across sectors and city agencies – but also one that includes the people who will ultimately live with its outcomes. Berlin’s farewell to coal is just one chapter, but a hopeful one, in the broader story of Europe’s heat transition.

Latvia’s cohesion policy at a crossroads: Balancing security priorities and green investments

Even before the European Commission announced in April 2025 that it would be seeking to propose a regulation amending EU cohesion policy funds under its mid-term review, the Latvian government had been reviewing its national spending plans for several months with the aim of identifying opportunities to redirect cohesion policy funds towards bolstering its national defence and security infrastructure.

Latvia’s new policy direction is understood to involve reallocating flexibility amounts and potentially cutting previously planned investments. And while funds will formally remain within the main thematic priorities, including those dedicated to climate and green investments, they may also be used for dual-use purposes such as supporting renewable energy projects that also enhance energy independence and security.

Though many amendments under the mid-term review are necessary and justified, some changes threaten to weaken climate and environmental policies. For instance, certain shifts appear unrelated to security, raising questions about their true benefits.

With final decisions still pending, the Commission and the Latvian government must carefully assess the country’s long-term needs and the consequences of all proposed changes before proceeding with the mid-term review reallocations.

Diverting funds from transport decarbonisation

One of the most concerning proposals, which affects the Just Transition Fund, would see a reduction in funding for decarbonising the transport sector, undermining Latvia’s climate and energy targets. Specifically, EUR 14.7 million initially allocated for zero-emission electric buses is set to be redirected to industrial park development.

This would be a considerable setback given the transport sector’s escalating emissions and significant investment gap. Apparently, the rationale for the decision is limited municipal interest due to doubts over the sustainability of electrified transport in rural areas with poor road conditions.

However, instead of ditching the measure completely, the authorities should engage with municipalities to understand the obstacles and amend the programme rules while maintaining the overarching goal of zero-emission public transport.

If no viable solution can be found, support should be redirected to other target groups within Latvia’s just transition regions, such as entrepreneurs tasked with promoting zero-emission mobility. In any event, the most important thing is to maintain investment in transport decarbonisation in alignment with the funding allocated under Latvia’s national energy and climate plan.

There is also the risk that industrial park investments may raise overall emissions. While these parks are expected to promote a climate-neutral economy, municipalities cannot guarantee that the facilities will offer greener alternatives to existing high-emission products and services. Currently, there is no rigorous selection or monitoring mechanism in place that would ensure only climate-positive companies benefit.

Additionally, significant funding originally designated for railway electrification is now expected to be diverted to Rail Baltica – the large-scale railway infrastructure project connecting the Baltic states and Poland. But while the project is much needed in terms of both sustainable mobility and regional defence, its ballooning costs and funding issues should not jeopardise crucial domestic railroad upgrades aimed at promoting public and zero-emission transport.

Circular economy investments dropped

Risks associated with the mid-term review are also evident in the likely elimination of funding for circular economy initiatives involving small and medium-sized enterprises, including projects aimed at improving product design, repair, and reuse.

EUR 1 million previously earmarked for this purpose is now set to be channelled into energy infrastructure that strengthens Latvia’s energy security, such as mobile transformer substations, emergency generators, and improved grid capacity for industrial parks.

Unfortunately, delays in developing regulations for the circular economy measure have made it an easy target for reallocation. Its focus on smaller, innovative projects, which typically require more administrative resources than large-scale ventures, may have also played a part.

One possible solution could be to amend existing waste management programmes under Latvia’s cohesion policy funds, reallocating some resources to small and medium-sized enterprises pursuing waste prevention initiatives.

Promising renovation programme needs more funding

The Latvian government recently launched a national multi-apartment renovation programme supported by EUR 173 million in cohesion policy funding. However, the available funds as of now have already been fully reserved. This is partly due to relaxed rules allowing project applications to be submitted before all technical documentation has been finalised, which could lead to some projects failing to reach the contracting stage.

Nevertheless, the huge interest in the scheme is encouraging. For years, the pace of building renovations in Latvia has lagged due to low public interest fuelled by financial fears and scepticism. Fortunately, the high demand now suggests a shift in public sentiment.

This latest programme introduces several progressive elements: up to 70 per cent support for prefabricated wood-panel renovations; up to 50 per cent support for cluster renovations involving three or more neighbouring buildings; up to 45 per cent for renovations involving the installation of ventilated façades; and targeted support for individual energy efficiency measures in the Latgale region – one of Latvia’s just transition regions.

Given this early success, additional funding should be allocated to maintain momentum. Continuity between support schemes is crucial, both for sustaining public interest and for preserving the capacity of the construction sector.

Striking a balance

Final decisions on the mid-term review amendments have yet to be made. But while the geopolitical crisis understandably requires funding priorities to be reassessed, this should not come at the expense of Latvia’s long-term sustainability goals.

Public resources are limited and precious. Their use must be based on thorough and transparent assessments of needs and impacts to ensure that short-term security concerns, however pressing, do not derail the environmental transformation already underway.

Black wool over the EBRD’s eyes

In July 2023, the EBRD approved a EUR 100 million loan to North Macedonia’s publicly-owned energy utility AD ESM. It was intended to provide ‘vital liquidity support to continue to endorse ESM’s decarbonisation strategy’ after the energy crisis and to keep the country on track with its coal phase-out commitments.

We were immediately worried that the company would abuse this financial support, at the very least by using savings in its own funds for further investments in coal infrastructure. However, the EBRD claimed in the project’s Board Report that this loan was not just ring-fenced from investments in coal, it was also conditioned on ESM’s commitment to decommission all coal-fired power plants by 2027 and to stop any coal mining operations or further coal exploration.

What the loan was not ring-fenced from is the country’s and company’s extensive track record of not complying with their commitments. ESM is continuing to pursue plans for new coal exploration and mining.

Four days after the loan was approved, on 25 July 2023, the company notified the Ministry of Environment of its intent to open a new open-cast lignite mine near the village of Zivojno. In December 2023, less than six months later, the company published a public procurement notice for project documentation for road infrastructure to transport coal from the planned Zivojno coal mine to the Bitola power plant. Just three months later, in March 2024, ESM signed a contract with a company to produce a feasibility study on a concession for the exploitation of coal at the Gusterica deposit near Oslomej, a power plant that — based on the commitment cited in the Board Report — was already supposed to be closed by the end of 2023.

We flagged to the EBRD that the company was not complying with its commitments, and after several months of back-and-forth communication, we received a response that:

ESM responded, clarifying that the Procurement process for the Zivojno mine was cancelled and such study was not performed. They further explained that the Study for Gusterica was not capital investment in new coal assets, but preliminary analysis made by the old local management of the TPP Oslomej. ESM’s new management, appointed in August 2024, confirmed that ESM or the Government do not plan any investment in new coal mines, as evidenced by ESM’s Investments plan and the Government’s single project pipeline list. Finally, ESM provided assurance that ESM is fully committed to the green energy transition.

We received this response on 21 March 2025. Just one day beforehand, on 20 March, the Ministry of Environment published an Environmental Impact Assessment (EIA) for the Zivojno mine. Public consultations were then announced and a public hearing held on 12 May 2025.

The study explains that the mine will have a surface area of seven km2, and the deposit of around 23.6 million tonnes of lignite will be extracted over a period of ten or more years. The extraction will begin three years after the project is approved since it will take more than two years for the surface soil layers to be removed. Such a project not only delays the 2027 coal phase-out – it completely disregards it and enables further coal use beyond 2040.

Legend:

Dark purple area – coordinates from the Zivojno concession agreement

Light purple area – coordinates from the Zivojno EIA study

Teal area – coordinates of a recently opened privately owned coal mine — Zabrdo

Top left corner – existing Brod-Gneotino coal mine in North Macedonia

Bottom right corner – existing coal mines in Greece

When asked about this during the public hearing, the experts working on the EIA claimed that the mine is only intended to bridge the gap until the coal-fired power plant becomes unnecessary for the country’s energy system, while allowing the company to avoid expensive lignite imports from Greece. But this is not a small project that has just appeared as a temporary solution to a new problem — it has been brewing for years, if not decades. There has been more than enough time to think of and implement alternatives since the first setting of a coal phase-out date in 2019, but ESM has never demonstrated real commitment to this goal. Somehow, three different governments and successive ESM management teams have managed to pull the wool over everyone’s eyes, claiming that the country is heading towards a quick and planned coal phase-out. The EBRD is not the only one who has been fooled.

Under the pretence that it is advanced in its decarbonisation efforts, North Macedonia has received technical assistance to prepare a Just Transition Roadmap. It was also one of the few chosen to be part of the Climate Investment Fund’s Accelerating Coal Transition programme and prepare an investment plan for the just transition. ESM has received millions of euros of technical assistance and loans for renewables projects that are yet to see the light of day. In addition, it received in excess of EUR 369 million from the national government during the energy crisis to ‘bridge the financial gap’ created by the need to import expensive coal and heavy oil. The EBRD’s EUR 100 million loan was just the cherry on top.

After all this, the only major ESM project that is going forward is a new open-cast lignite mine. The company is constantly using someone else’s money to produce high ambition plans that are not implemented, and that has freed up enough of its capital for investments in projects that are not aligned with either the country’s strategic priorities or EBRD policies.

This must stop – ESM needs to put its own money where its mouth is. The EBRD and other international financiers need to stop enabling ESM’s coal addiction. As long as they continue to pour money into a declarative decarbonisation and green energy transition that has no political will behind it, the company – and the government – will never transform into a responsible and accountable partner. The EBRD must insist that ESM cancels the Zivojno coal mine plans or immediately repays the entire loan. In future, it also needs to more closely scrutinise its clients’ performance and look at their deeds, not only their words.

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