Blog entry

Latvia’s REPowerEU chapters – progress made and necessary investments

Latvia will receive a significant boost of EUR 123.9 million as a grant under the REPowerEU chapter of its recovery plan. In addition, Latvia will have access to up to EUR 2 billion in loans for energy investments.

The Ministry of Climate and Energy, Ministry of Economics, and Ministry of Finance are currently finalising the proposed investments and coordinating the preparation of the REPowerEU chapter, which is being carried out alongside suggested amendments to the approved recovery plan. The previous timeline indicated that the consultation with the European Commissionwill commence by the end of April via the electronic portal of legislative acts; however, this has not yet begun.

Latvia does intend to informally share the draft proposal with the European Commission, and informal communication with them has already begun. However, the overall timeframe for the process remains uncertain, posing a challenge for the meaningful involvement of civil society organisations.

What are the planned investments in Latvia’s REPowerEU chapter?

Thus far, informal information has been made available about one investment area that will be proposed under the REPowerEU chapter. The minister for climate and energy has mentioned the addition of funds to an existing measure in the recovery plan (measure 1.2.1.5.i.) with the aim of modernising the electricity grid in urban areas to promote electrification and increase the capacity of transmission lines.

Although further details are not yet available, these investments are significant for Latvia’s decarbonisation efforts and can be seen as a positive step forward. However, the status of loans available under REPowerEU remains unclear, as political consensus has not yet been reached.

Investments that would make the best use of REPowerEU funds

Investments that could maximise the use of REPowerEU funds in Latvia include those targeting residential building renovation, spatial planning for sustainable wind energy, and energy community projects such as smart local energy systems and green industrial parks.

Residential building renovation

Latvia is experiencing the pressing challenge of energy inefficiency in its residential building stocks, which cannot be adequately addressed through existing strategies alone. To accelerate renovation projects and achieve meaningful results, additional measures need to be introduced under REPowerEU, with the allocation of funds focusing on reforms. These measures include:

A standardised approach to improving energy efficiency. Latvia should aim to develop a standardised approach for improving the energy efficiency of Soviet-built multi-apartment buildings of the same type. This approach, similar to what is being implemented in Estonia, would streamline the renovation process for most buildings of the same type by organising joint procurements and producing standard panels industrially.

Municipal capacity-building programmes. Latvia should propose a programme where municipalities can apply for support to increase their administrative capacity. This would include training and hiring project managers to encourage and support residents throughout the application and renovation process. Additional support could be provided to the capital, Riga, to implement a district-based approach with a dedicated team.

Administrative changes for renovation incentives. Latvia should propose to introduce administrative changes in line with the recent amendments to the Energy Efficiency Directive. This includes the introduction of a fee for owners of certain types/ages of houses who do not start renovations within a certain period. Latvia should also consider reducing the value-added tax rate for measures that improve energy efficiency.

Spatial planning for sustainable wind energy

Latvia needs detailed geographical ‘mapping’ for strategic wind energy development. This would allow a concentrated use of knowledge and institutional resources to reduce the risks of biodiversity damage, reduce economic conflicts between land users, increase public acceptance and establish sustainable energy supply systems as soon as possible.

However, the Law on the Necessary Relieved Construction Procedures of Energy Supply Facilities for the Promotion of Energy Security and Independence, passed in September last year, has been criticised by industry representatives for failing to address the real bottlenecks in the deployment of wind power. It should be recognised that a suitable solution has not yet been found and that the act may only be suitable for part of the project plans.

Amendments to the recovery plan should therefore prioritise the task of spatial planning for wind energy.

Energy community projects – smart local energy systems and green industrial parks

Interest in the creation of energy communities is not limited to civil society representatives, but also extends to economic actors and local authorities, including the Association of Latvian Municipalities. Energy communities are emerging as new market players whose level of integration into energy supply systems may vary. It is important to note that energy communities are not primarily focused on financial profit but are value-driven and involve significant investments that can stimulate economic cooperation between various stakeholders, including small and medium-sized enterprises.

Cohesion funds will facilitate electricity sharing in apartment buildings, which will be provided through funding for building renovations. The recovery plan should also support the development of other types of energy communities, such as those in urban neighbourhoods, rural villages in cooperation with local authorities, farms (not only those for biomethane production), and production and service buildings. This holistic approach can promote diverse and inclusive energy communities and contribute to the transition to a more sustainable and decentralised energy system in Latvia.

Public involvement in the preparation of the REPowerEU chapter

To date, no public consultations or discussions have taken place, with government officials citing time constraints as the reason.

Green Liberty has proactively sent letters with recommendations for investments/measures to be included and met with representatives from the Ministry of Economics in July and August last year. This was followed by a second letter requesting a consultation and reminding the ministry of the recommendation process in February. It is not known at this stage whether or to what extent these recommendations have been considered.

The social partners – including the Latvian Association of Municipalities, the Chamber of Trade and Commerce and the Confederation of Latvian Employers – have submitted their recommendations to the ministries. However, these were not considered due to REPowerEU’s limited financial resources.

An opportunity to submit comments on the proposed investments was planned to be made available at the end of April during the reconciliation/consultation procedure within the electronic portal for legislative acts; however, at the time of publication of this post, this procedure has not been initiated yet. Also, only legal entities will be able to submit their opinions, whereas individuals most likely won’t have the chance to comment on certain procedures. It is probable that, apart from sending recommendations, this will be the only opportunity for public participation. However, there is a strong possibility that this process will be rushed and formal to avoid delays in the adoption process.

Although it is understandable that the REPowerEU process is time-constrained and that funds need to be spent as quickly as possible, its design should not be at the expense of public participation. While it is vital that funds are made available quickly to support energy independence, it is even more important that these public funds are truly used for the benefit of the public and in the most strategic and thoughtful way possible.

‘EU climate bank’ keeps back door open for fossil fuel giants

The EIB’s move to adopt the framework followed criticism that it had failed to take concrete measures to restrict its financing of high-carbon companies. Research that we conducted in 2018 showed that despite eliminating direct financing for coal projects (both in the mining sector and in energy production), the EIB was still indirectly financing the coal sector. Between 2013 and 2017, the EIB provided EUR 3.9 billion to several companies that either had a high share of coal in their power and heat generation portfolios or planned to develop new coal power capacity.

The PATH Framework was supposed to revolutionise the EIB’s approach to financing corporations whose climate impacts go beyond EIB-financed projects due to their operations in high-emission sectors, such as oil and gas extraction or steel and fertiliser production. It acknowledged its support of companies that continue to engage in activities at odds with the long-term goals of the Paris Agreement, and that the Bank must therefore ‘address legitimate concerns from stakeholders around the risk of “greenwashing”’.

But the Framework had yet to be even fully implemented when the EIB suddenly announced it would relax the rules for companies involved in the most polluting activities incompatible with the Paris Agreement, such as fresh investments in new high-carbon oil production techniques, thermal coal mines or coal-fired power plants. Originally, these companies were restricted by the Framework and could only, in exceptional cases, access financing for innovative low-carbon projects involving carbon capture, utilisation and storage, renewable hydrogen, advanced biofuels, deep geothermal energy or floating offshore wind. Now they are off the hook, free to access financing for all renewable energy projects as well as electric vehicle charging stations.

The EIB’s recent loans to energy companies Polska Grupa Energetyczna (PGE, Poland) and Repsol (Spain) show that the sieve-like PATH Framework has done nothing to stop major oil, coal and gas corporates from continuing their dirty business of polluting the planet. Effectively given carte blanche, they are now able to run their environmentally- and climate-damaging operations while simultaneously accessing attractive public loans.

The case of PGE

The EIB is a long-term financier of Poland’s state-owned utility PGE. In 2022, PGE received EUR 725 million from the Bank to modernise its electricity distribution infrastructure, supplementing the three other existing EIB loans on its balance sheet.

PGE is Poland’s biggest coal-heavy energy utility, responsible for approximately 40 per cent of the country’s electricity generation. It produces energy on a vast scale. Based on 2021 figures, 89 per cent is produced from burning hard coal and brown coal (lignite) and 6 per cent from gas, but a measly 4.4 per cent of the company’s energy production comes from renewable energy sources. In 2021, PGE’s production of electricity from lignite increased by 25 per cent in comparison to 2020, while its production of electricity from hard coal also increased by 20 per cent. Over the same period, renewable electricity production remained at the same minimal level. PGE operates two open-pit mines (Bełchatów and Turów), which delivered almost 47.2 million tonnes of lignite in 2021, increasing extraction by 18 per cent in comparison to 2020. The company is also a shareholder in hard coal mining group Polska Grupa Górnicza (PGG).

PGE, which owns and operates the notorious 5.3 GW brown coal-fuelled power plant in Bełchatów (the largest in Europe), remains one of the biggest carbon dioxide emitters in Europe. In 2022, PGE started selling coal and lignite for heating purposes to external institutions and individual consumers. The use of lignite for home heating had been illegal before the latest legislative changes to address coal shortages were introduced in 2022. Despite knowing that combustion of lignite is extremely toxic, especially when used by individuals to heat their homes, PGE continues to sell it to consumers regardless.

PGE’s greenwashing strategy of reaching climate neutrality by 2050 and its anti-EU public campaign

In 2020, PGE announced a new strategy aimed at achieving climate neutrality by 2050. However, the EIB failed to ensure that the company submit its strategy under the PATH Framework criteria. Instead, it granted the company a one-year period to update its strategy. In 2020, Greenpeace filed a lawsuit against PGE – the largest ever filed in Poland – demanding it halt all fossil fuel investments. During the court proceedings, PGE refused to deliver a decarbonisation plan for its part in producing electricity from coal. Serious doubts remain as to whether the company ever plans to deliver a sound decarbonisation strategy in line with the PATH Framework, which requires the strategy to address all activities, including lignite mining and fossil fuel-based electricity production. For now, PGE’s current preference is to rely on the indulgence of its lender.

Shortly after announcing its climate neutrality strategy, the company added 2.3 gigawatts (GW) in brand new coal capacity to be used for at least the next 30 to 40 years: 900 megawatts (MW) each for two new hard-coal-fired units in Opole; and approximately 500 MW for a new lignite-powered unit in Turów. And if the pattern of the company’s capital expenditure is anything to go by, PGE is only going to follow one path – in the last six years, the PGE group has spent a meagre 3.5 per cent of its investments on renewable energy sources (4 per cent in 2021).

In early 2022, PGE along with other Polish energy utilities launched a controversial anti-EU ‘light bulb campaign’. Huge billboards displayed across the country pushed the misleading narrative that EU climate policies equate to expensive energy costs and high prices. The campaign cost PLN 12 million. The Polish Advertising Council stated that the campaign breached standards of reliable advertising by falsely claiming 60 per cent of energy production costs were directly caused by the EU’s climate policy. The Council concluded that the campaign’s real aim was to reduce the responsibility of the energy companies for the increase in energy prices.

In its response to the campaign, the European Commission rejected the idea that EU climate policy is responsible for 60 per cent of consumer electricity bills, claiming it to be inaccurate.

The case of Repsol

Repsol, a fossil energy multinational and Spain’s top greenhouse gas emitter, is also benefiting from EIB financial support. In December 2022, the Bank signed a EUR 120 million loan for Repsol’s first biofuels plant, enabled by a newly introduced ‘exception’ under the PATH Framework.

Located in Cartagena, Spain, the plant is intended to produce fuels for transport ‘from different types of waste primarily from the agri-food industry, such as used cooking oils’, according to the EIB. But these so-called innovative fuels are also deeply problematic. One of the plant’s products, hydrotreated vegetable oil (HVO), is often synthesised from palm oil, the exploitation of which has led to extensive deforestation and human rights violations. In 2016, the European Commission designated palm-oil-based biofuels as a high-risk indirect land use change (ILUC) biofuel and, in 2019, decided to initiate a complete phase-out given its catastrophic environmental and social implications. Producing HVO from palm oil can hardly be considered sustainable by any yardstick, let alone a legitimate use of EU public money.

In justifying its loan for the project, the EIB claims it is ‘supporting Repsol’s decarbonisation strategy’. But even if this project were ever to be deemed environmentally sound, it’s only a drop in the dirty bucket that is Repsol’s fossil fuel business. Even the EIB has acknowledged that Repsol, which is also engaged in shale and oil production, pursues ‘activities that are considered incompatible with the Paris Agreement in the PATH framework’. Yet the Bank has sought to legitimise its support for Repsol by focusing on the ‘innovative nature’ of the project while ignoring the multinational’s core business.

Apart from being a repeat climate offender, Repsol also has a dismal human rights and environmental track record. In January 2022, a Repsol-owned refinery was behind a major oil spill on the coast of Peru. Nearly 12,000 barrels of oil contaminated the ocean and coasts, dealing a devastating blow to approximately 3,000 families, many of whom depend on fishing and tourism for their livelihoods. In their report on the spill, UN agencies UNEP and OCHA state: ‘Vulnerable communities who rely on the sea are facing uncertain futures amid beach closure, safety concerns and limited options.’

In late February, activists from the environmental group Ecologistas en Acción staged a protest in Madrid in solidarity with the Peruvian fisherfolk affected, demanding Repsol be held accountable for the vast damage wrought by the spill.

As a result of its role in the environmental catastrophe, Repsol has thus far been issued with over EUR 16 million in fines by the Peruvian authorities. With local ecosystems not expected to recover for many years, farmers who depend on them for their livelihoods are now demanding just reparation.

Quite apart from the environmental and humanitarian consequences of Repsol’s actions, it is morally unacceptable that EU public funds should be used to support a major, discredited energy multinational that raked in a net income of EUR 3.2 billion within the first nine months of 2022 alone.

It is ludicrous for the self-styled ‘EU climate bank’ to be channelling public money into fossil fuel companies such as PGE and Repsol. By financing their so-called ‘sustainable energy projects’, the EIB has not only turned a blind eye to the core business of companies that have made fortunes on the back of a historic energy crisis, but has also made itself complicit in their brazen attempts at greenwashing.

Transalpine oil pipeline expansion: REPowerEU funds must not swell the coffers of energy crisis profiteers

Scope of TAL+ project remains unclear

Established in 1967, the TAL Group, which operates the existing pipeline, is made up of three oil companies: Austria’s Transalpine Ölleitung in Österreich GesmbH, Germany’s Deutsche Transalpine Ölleitung GmbH and Italy’s Società Italiana per l’Oleodotto Transalpino SpA (SIOT).

The TAL pipeline serves 100 per cent of Bavaria’s needs, 90 per cent of Austria’s and 50 per cent of the Czech Republic’s. In the Czech Republic, the pipeline is connected to refineries in Kralupy and Litvínov through the Ingolstadt–Kralupy–Litvínov (IKL) oil pipeline.

Since the beginning of Russia’s full-scale war in Ukraine, there have been discussions about increasing TAL’s supply to help the Czech Republic and other countries diversify from dependence on Russian oil. The Czech government plans to use a REPowerEU loan to finance the expansion of the pipeline through the TAL+ project, which aims to:

increase TAL capacity by an additional 4 million tonnes of oil per year to replace Russian oil supplying the Czech market (in 2021, the Czech Republic imported about 6.8 million tonnes in total, about half via this route);
increase the oil storage capacity of tank farms along the IKL pipeline, which connects TAL with the refineries in Kralupy and Litvinov; and
modify the Druzhba pipeline to replace Russian oil with supplies from other sources and to eventually transport fossil gas or non-fossil fuels (despite the fact that the technical and economic feasibility of this plan remains unproven).

The Italian government is also looking to develop its fossil energy generation capacity as part of the TAL+ project, possibly also courtesy of REPowerEU funds. However, due to an overall lack of transparency, it is unclear whether the Italian arm of the project will receive any form of public subsidy.

Plans for the Italian section of the pipeline, which flows through the Friuli Venezia Giulia region, involve the construction of four fossil gas combined heat and power (CHP) plants at pipeline pumping stations – each expected to produce 7.7 megawatts (MW) of electricity and 7.2 MW of heat – along with investments in Trieste’s port and storage facilities.

While the generated electricity will be used for the pumping stations along the pipeline, the generated heat is planned to raise the temperature of crude oil by 1 °C to increase flow speed, delivering supposed energy savings and environmental benefits. The investment is reported to cost EUR 58 million.

Feeding the fat cats

By including this project in the REPowerEU chapter of its recovery plan, the Czech government will be using EU money to subsidise even further the already highly profitable oil industry. In particular, this will benefit the TAL Group, whose shareholders include some of the largest oil companies in the world, such as OMV, Shell, Rosneft, ENI, C-BLUE BV (Gunvor), ExxonMobil, Mero, Phillips 66/Jet Tankstellen and Total.

Perpetuating fossil fuel lock-in

The increased capacity planned for the Czech Republic aims to replace the oil currently imported from Russia, which represents 50 per cent of the total oil supply. But simply changing one oil source for another will do nothing but prolong the ongoing climate crisis, which has already severely impacted the country’s environment, economy and society. This course is also incompatible with the EU’s goal of reducing greenhouse gas emissions and achieving climate neutrality by 2050.

The Czech Republic needs to substantially step up efforts to decrease oil demand, not to satisfy it. An analysis by Charles University in Prague, which, among other things, examined projected fuel consumption by the transport sector in the Czech Republic between 2015 and 2050, found that there is unlikely to be almost any decrease in the need for fossil fuels by 2025 and only a small decrease by 2030. Instead of supporting a project that effectively leads to carbon lock-in, the Czech Republic should use REPowerEU money to finance measures that decarbonise the transport sector.

Likewise, the Italian arm of the project substantially undermines Friuli Venezia Giulia’s regional decarbonisation strategy to 2045. In fact, the additional greenhouse gas emissions from the four new cogeneration plants would be equivalent to the emissions of about 40,000 households of four or more people per year.

Inadequate environmental assessment

On 22 September 2022, the environmental organisation Legambiente sent a letter to the former Italian Minister for Ecological Transition requesting the revocation of authorisations granted to three of four ‘high-efficiency cogeneration projects’ submitted by SIOT to the regional administration in Friuli Venezia Giulia.

The TAL+ project and connected investments have been split into individual units for the purpose of environmental assessment. However, this prevents a comprehensive evaluation of the project’s cumulative impacts on the environment, with no consideration given to costs, benefits or reasonable alternatives.

Lack of consultation results in public opposition

Local concerns over the expected environmental and climate impacts of the project and the absence of any public consultation with affected municipalities have led to protests and the submission of petitions to the regional administrative court in Friuli Venezia Giulia and to the Italian government. The court recently rejected an appeal filed by the municipality of Cavazzo Carnico requesting the annulment of the authorisation for the construction and operation of the cogeneration plants. Despite this, Legambiente, supported by local communities and activists, is set to file a new appeal on different grounds.

On 24 March 2023, the current Italian Minister for the Environment and Energy Security, Gilberto Pichetto Fratin, issued a statement, claiming SIOT’s plans are ‘consistent with energy-saving objectives and with no detrimental effects from an environmental point of view, being also necessary and strategic in view of the critical situation caused by the Russia–Ukraine conflict’.

Recovery funds must not be used to undermine climate action

Overall, there is a high risk that the project will undermine the climate commitments of both the Czech Republic and Italy. Using public money to back a private consortium made up of some of the biggest oil companies in Europe is not acceptable. Recovery and resilience funds must not be allocated for this project.

The Czech recovery plan lacks a concrete strategy for the decarbonisation of the transport sector. This project will not contribute to reducing oil consumption but do the opposite. EU money must not be spent on projects that go against Green Deal objectives.

The European Commission, which is responsible for assessing whether the initiatives proposed under the Czech and Italian recovery and resilience plans achieve the objectives of green transition, must not allow recovery funds to be used for these projects.

Nuclear ambitions risk hindering Estonia’s energy transition

Until now, nuclear energy has been a remote prospect for Estonian citizens. For over a century, the small Baltic country, with an average electricity demand of about 1,000 megawatts, has heavily relied on oil shale – a carbon-intensive fossil fuel – for its electricity production. Fortunately, more stringent environmental regulations and recent climate policies mean Estonia is now strictly obliged to phase out oil shale and execute a just transition for workers in mining regions.

However, the recent surge of panic over security of supply has opened the door to an increasingly blatant nuclear lobby, whose actions pay no heed to a recent analysis – conducted by the consultancy firm Trinomics in cooperation with the Tallinn branch of the Stockholm Environmental Institute (SEI) – which found that nuclear energy is the least favourable path Estonia could take towards climate neutrality.

More worryingly, Estonia’s Ministry of Economic Affairs and Communications, which commissioned the analysis, has turned a blind eye and seems determined to welcome nuclear investment that would nedlessly complicate its energy system. As a result, Estonia risks missing out on a golden opportunity to ensure a resilient, fully renewable and decentralised energy infrastructure.

No justification for nuclear in the Estonian context

As debates around green transition accelerate, recent studies demonstrate that Estonia has great potential to ramp up the pace by unlocking its massively underutilised wind and solar potential.

And according to the Trinomics/SEI analysis, the use of as-yet-unproven small modular reactors (SMRs) in driving the transition to a climate-neutral electricity system in Estonia is the least recommended of eight different scenarios.

The analysis highlights multiple limitations and threats related to nuclear pathways, including regulation issues, technological delays and citizen opposition to nuclear development. The preliminary evidence warns of:

(1) overreliance on a technology that is still underdeveloped with no history of use in Estonia;

(2) cost overruns (nuclear energy is far more expensive than sustainable alternatives like wind and solar for which Estonia has huge untapped potential);

(3) hold-ups with the deployment of SMRs (climate neutrality could be achieved faster on its current trajectory);

(4) safety risks; and

(5) the unresolved issue of permanent waste disposal.

As a non-renewable source, nuclear power also relies on imports of uranium and other rare materials, often from non-democratic countries, thus supporting exploitation and exacerbating existing inequalities.

Based on the assessment of Trinomics/SEI, a nuclear pathway is ‘not recommended’ and considered the ‘riskiest scenario’. The most recommended scenario is a combination of renewable energy sources (RES) and storage, followed by scenarios involving ‘all technologies’ (excluding nuclear) and ‘renewable gas’. We should also recall that Estonia recently set an ambitious target to cover its annual electricity consumption with 100 per cent renewable electricity from 2030 onwards, and that several reforms are currently being designed to accelerate procedures that would facilitate renewable energy. In this context, a non-nuclear pathway can only be viewed as the most logical, efficient and cost-effective way forward.

But should Estonia proceed with a costly, time-consuming and politically vulnerable SMR project, the ambition of its energy transition planning is likely to be negatively impacted and, in the worst case, severely delayed.

Ministry ignores its own report

In 2024, Estonia’s parliament will decide on whether to pursue a nuclear pathway once the findings of a dedicated working group are assessed. However, the Ministry for Economic Affairs and Communications appears to be already designing its energy policy with a bias towards nuclear energy.

Bafflingly, the ‘consultant assessment’ in the Trinomics/SEI analysis is accompanied by an ‘alternative ranking criteria’ that rates nuclear as the most preferred pathway (pages 10 and 28). The need for this alternative ranking is briefly justified on the grounds that selection of the pathway is ultimately a ‘political’ choice (page 9). Of course, this completely contradicts the very concept of an independent assessment and fails to explain why these alternative criteria were included.

The current draft of the Estonian Energy Sector Development Plan until 2035, which has so far only been shared with internal working groups, states that if fossil fuels are to be completely phased out from the energy system, the only alternative for meeting baseload demand is a nuclear power plant – a false assumption that contradicts a host of scientific studies on the potential of renewable energy sources.

Even more concerningly, the draft of the plan already provides for the establishment of a nuclear energy regulatory body, another alarming example of how preparations are being rushed ahead of informed decisions. This could create a self-fulfilling prophecy: once the conditions are created for nuclear energy development, it has a higher chance of being backed by parliament.

Who wins in the nuclear rush?

The race to act before crucial decisions are made raises the question of who will benefit. The answer is clear – Fermi Energia, a controversial nuclear company established in 2019. Currently, Fermi Energia is raising international funds to experiment with novel SMR technologies in Estonia. The company claims that by 2031, its power plant will be fully operational, even though the most optimistic estimate from the government’s side is 2035.

The state recently granted Fermi Energia EUR 180 000 to conduct geological studies in a location of its choosing (Letipea) to investigate the feasibility of constructing a nuclear power station. Residents of Letipea have already collectively made it very clear that they do not want a nuclear power plant in or near their village. In assessing the suitability of the site, the company has completely avoided local consultation and shown no desire to publicly reveal the risks of such an investment. Instead of honestly discussing the social costs and risk scenarios with the local community, the company’s external communication has so far been limited to an evidence-free promise of unlimited cheap energy.

Counteraction must not be delayed

Environmental organisations want the state’s decision on the future of the energy system to be based on evidence, not on the SMR nuclear lobby’s unfounded claims. Instead of rashly signing up for nuclear dependence, Estonia must turn the tide. Until now, the country has taken remarkable steps to break away from fossil fuels and ensure its energy independence. The pursuit of nuclear power must not thwart the goal of an energy system that is fully renewable, resilient and sustainable.

Stara Zagora: caught between its brown coal past and a bright green future

The involvement of our organisation at these meetings and at similar events hosted by other civil society organisations is a core element of our information campaign aimed at raising awareness in coal regions on just energy transition, Territorial Just Transition Plans (TJTPs) and opportunities for the development of these areas. 

But we believe the task of relaying information on these important issues should not rest on the shoulders of the civil society sector. Promoting public awareness of energy transformation is in fact one of the Bulgarian government’s core obligations in relation to the Just Transition Mechanism.

Unfortunately, we have seen a complete dereliction of this duty at the government level. Instead, the political establishment has shown far more interest in competing for people’s votes in yet another snap general election set for this April, the fifth in two years.

Ultimately, the general scarcity of information available to the public and the lack of transparency on how decisions affecting coal regions are made are failures of government. After all, a successful energy transition cannot be achieved if people are unaware of what the process entails or how it will impact them. Crucially, there is no information about the potential for positive change. All that is heard is scaremongering in the media, whether it be the threats of representatives from the mines and thermal power plants or the warnings from syndicates and politicians that transitioning from coal will leave people jobless and without prospects. 

At the meetings, we noted a very different sentiment from what is commonly presented in the media as ‘public opinion’. When made aware of the facts, participants told us they were open to change. They also recognised the potential for alternative solutions, including the development of other industries. In contrast to alarmist predictions of unemployment and homelessness, representatives from the local non-governmental organisation the Employers’ Club, Trakia University, the Bulgarian Construction Chamber (BCC), and various enterprises active in the area all reported an issue with finding staff. In short, the jobs are there but the workforce has been absorbed by the mines. But blocking investment in the wider industrial zone means there is no potential for it to develop, attract more businesses and create new job opportunities. 

At the meetings, we presented the guidelines for the draft TJTP for Stara Zagora and the wider region along with highlights from the Just Transition Fund. Most of the attendees had no previous knowledge of these schemes.

For two years, politicians have neglected to gauge the views, suggestions and wishes of people in the region. The decision to ignore local and professional expertise as well as the needs of the region in developing the TJTPs represents a huge loss of public potential. 

Even though there is a historical attachment to the coal industry, the region has far more to recommend it. People are fiercely proud of their cultural and historical heritage, which they’re keen to promote. The fertile lands of Stara Zagora are ripe for development, but other industries have been neglected at the expense of the coal mines. 

At our meeting in Galabovo, one of the towns in Stara Zagora most affected by coal pollution, people were adamant that no government representatives had come to inform them of the territorial plans or ask their opinions. There was confusion among the participants on the respective roles of non-governmental organisations and government, and a real desire to hold those responsible for the lack of transparency accountable. Local citizens refuted the claims of politicians and trade unions that a majority want the mines and the notorious Brikel thermal power plant to continue operating. On the contrary, everyone we heard from expressed their opposition, particularly to the coal-fired Brikel plant, which has been marred by several controversies. These include repeated pollution violations as well as instances of corruption and cover-ups by the plant’s operators. Ever since the plant was established in 1962, toxic coal fumes have been poisoning Galobovo’s residents, most of whom have spent their whole lives working in the mines. As such, any politician that visits Galabovo and promises to preserve jobs at Brikel coal plant is also complicit in polluting the air of the immediate and surrounding areas, where levels of sulphur dioxide and nitrogen dioxide far exceed permissible standards. 

Bulgaria’s loss of EUR 98 million in EU funds at the end of 2022 – a direct result of the country’s failure to submit its Territorial Just Transition Plans on time – has prompted no corrective action to date. By failing to include the reforms needed to decarbonise the energy sector, the lack of any coherent renewable energy strategy beyond the upcoming elections has been clearly exposed. Green funding that could have unlocked the vast untapped potential of the renewable energy market in Bulgaria has been sacrificed for the sake of party interests that preserve the status quo and promote unsustainable energy megaprojects.

It is the duty of Bulgaria’s politicians (who, lest we forget, are employed to serve its citizens) to transparently present the opportunities that energy transition offers. If the government is not prepared to draw up and submit well-designed TJTPs to the European Commission, Bulgarian citizens will miss out on EU funds critical to a just energy transition, and economic coercion will see the coal mines and power plants shut down without compensating those employed in the coal industry. 

It is high time that those in power take responsibility for damaging the prospect of a low-carbon economy. Future renegotiation of Bulgaria’s National Recovery and Resilience Plan must guarantee concrete measures and reforms. Failure to do so risks delaying the implementation of Bulgaria’s energy efficiency programme for multi-family residential buildings and its programme for individual renewable energy sources such as battery storage, which are designed to increase capacity, reduce the bills paid by households and businesses and limit dependence on foreign suppliers of fossil fuels. 

If there is to be any hope of a smooth and just energy transition, Bulgaria’s politicians must ditch the populist rhetoric and prioritise the involvement of civil society in the redrafting of the TJTPs. Otherwise, the futures of both mine workers and the residents of these polluted regions will remain bleak.

Kosovo becomes the first Western Balkan country to stop promoting new hydropower

Earlier this month, the Kosovo parliament approved a new Energy Strategy up to 2031. Given how painfully outdated the previous strategy was, the new one is a crucial step in defining Kosovo’s energy plans.

Among others, it plans 1320 MW of new renewable energy generation until 2031, to add to 297 MW of existing capacity. The new additions should consist of around 600 MW wind, 600 MW of solar photovoltaics, 20 MW of biomass and at least 100 MW of prosumer capacity. It does not clarify the type of biomass, but caution will need to be exercised even for 20 MW, as Kosovo has reportedly already lost 7600 hectares of forest in the last 20 years.

No new hydropower planned

After years of conflicts over hydropower e.g. in Deçan and Shtërpcë/Strpče, the Strategy clarifies that ‘Due to environmental aspects, the Energy Strategy does not promote the construction of hydropower plants.’

This makes Kosovo the first country in the region to stop promoting new hydropower plants – a welcome statement that paves the way for the government to focus on speeding up solar and wind development and intensify its energy saving efforts.

This is important, as – in addition to the notorious Kosova e Re coal power plant – previous governments lost more than a decade promoting hydropower plans that were both damaging and to a large extent unrealistic, given Kosovo’s limited hydropower potential.

In 2009 the country had only 45.8 MW of installed hydropower, but in 2013 the then government planned a totally unrealistic additional 240 MW of hydropower below 10 MW and 305 MW of large hydropower by 2020.

Despite strong support from a feed-in tariff scheme that favoured hydropower over solar and wind, by the end of 2021, Kosovo had 132 MW of installed hydropower capacity. The plants generated less than five per cent of its electricity – and that in a relatively good hydrological year. They have also caused widespread damage including dry riverbeds, excessive logging and polluted drinking water. After this experience, it’s reassuring to see that the government has learnt this lesson and is ready to move on.

Energy crisis mars coal phase-out ambitions

The government’s plans for solar and wind are ambitious compared to Kosovo’s past progress – though quicker action is still needed. The Strategy pledges to reach carbon neutrality by 2050, but uses the same date for coal phase-out. But in reality, the country’s notoriously polluting lignite power units will have to close much earlier, due to their age.

Despite positive plans to phase in carbon pricing starting from 2025 and to use the proceeds to start a Just Transition Fund, the Strategy hesitates to commit to clear closure dates for the oldest units.

No doubt stung by Kosovo’s recent energy crisis, it plans modernisation works at both units of Kosova B, as well as at one or two of Kosova A’s three functional units: ‘One of the Kosovo A units will be refurbished by the end of 2024, while the decision to refurbish or phase out the second unit will be made in 2024 at the latest’. The Kosova A unit or units would then be used as a strategic reserve after that. The only concrete closure date mentioned is that one unit of Kosova A would be closed in 2026, after the other two have been modernised.

In 2021, 93 per cent of Kosovo’s electricity still came from lignite, so upgrades to Kosova B are inevitable for now. But Kosova A’s remaining units came online in 1970, 1971 and 1975 respectively, making them 53, 52 and 48 years old.

In addition to Kosova A’s age, there are three potential problems with this plan. First, the estimated cost of the required investment at Kosova A is EUR 120 million per unit, and that’s in addition to nearly EUR 97 million each needed for the two units of Kosova B. It’s not clear where Kosovo will be able to find these funds.

Second, it is already March 2023, so there is almost no chance of the first Kosova A retrofit being completed by the end of 2024. Yet the annex to the Strategy shows that this would be crucial to the feasibility of the works. With the introduction of carbon pricing, the utilisation rate of both the lignite power plants decreases significantly from around 85 per cent in 2026 to around 19 per cent in 2031, so the later the modernisation is done, the less power they will actually be able to sell.

Given the EU’s intention to introduce Carbon Border Adjustment Mechanism (CBAM) payments in the power sector from January 2026, there is no real option for Kosovo to delay carbon pricing either, so it is unlikely that renovating any of the Kosova A units will be feasible in reality.

The third issue is the strategic reserve. Presumably the idea would be to pay the Kosova A units to be ready for action when needed. However, from 1 July 2025 it will no longer be allowed to have coal units as part of such capacity mechanisms in Energy Community Treaty countries, including Kosovo, due to the recent adoption of the EU’s internal energy market regulation. It’s unclear whether this has been considered in the Strategy.

Double gas dependence

The Strategy includes the option of buying a share in gas power projects in neighbouring countries to avoid the cost and time delay of building a gas import pipeline to Kosovo. It assumes two plants, with Kosovo’s participation costing EUR 100 million each. According to the Strategy’s annex, Kosovo would buy gas via long-term power purchase agreements.

While these plans do indeed sound modest compared to the megalomaniac proposals from a recent EU-funded Kosovo gasification study, they still risk distracting Kosovo with high-cost and unreliable fossil fuel projects, instead of concentrating on decarbonisation and energy savings.

Russia’s brutal invasion of Ukraine has once again underlined that increasing reliance on imported fuels — especially from corrupt and authoritarian regimes like Azerbaijan’s — makes no sense. But an arrangement to build plants jointly with neighbouring countries brings additional dependence, as it relies on that country’s competence in permitting, financing, building and operating the plant – which can’t be taken for granted.

The mention of power purchase agreements also rings alarm bells, as it was exactly such an arrangement that ultimately caused the demise of the Kosova e Re coal power plant project. There is a very high risk that such an agreement would be illegal under Energy Community state aid rules, and that it would lock Kosovo into buying power that it could have got cheaper from somewhere else.

The upcoming National Energy and Climate Plan can address these issues

Kosovo deserves recognition for updating its energy policy goals, as its peers Bosnia and Herzegovina, Montenegro, and Serbia have yet to do so. Still, outstanding issues such as the coal phase-out and gas plans, as well as a lack of clarity about district heating investments, need to be addressed.

Luckily, there is another opportunity for this, as by June this year, Kosovo – like other Energy Community countries – has to submit a National Energy and Climate Plan (NECP) to the Energy Community Secretariat, detailing how it will meet its 2030 greenhouse gas reduction, energy savings and renewable energy targets. There is no time to lose in moving forward with no-regret actions such as adopting a new renewable energy law, but the NECP represents a second chance to tackle the remaining issues.

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