Blog entry

Albania’s draft renewables law must support small producers and end incentives for hydropower

After years of providing renewables incentives only for hydropower, in 2017 Albania changed its legislation to introduce an auctions and premiums system and widen support to other technologies. It’s now updating its legislation and recently held a public consultation on a new draft law on renewable energy.

The draft contains some welcome features, such as a target for solar water heaters, but leaves too many details unclear, particularly on technology choice and the role of households and small businesses in the energy transition.

Time to stop supporting climate-vulnerable hydropower

It’s understandable that the draft law intends to leave flexibility for adjusting the scheme but it would be appropriate already at this stage to clearly exclude hydropower from receiving renewable energy incentives.

Albania is far too dependent on climate-vulnerable hydropower, which generates almost 100 per cent of domestically produced electricity, but most years still leaves the country dependent on imports. Despite adding more than 600 MW in large hydropower plants in the last decade, average generation between 2010 and 2020 barely increased due to increasingly unpredictable rainfall.

Graph showing Albania's electricity mix — Source: International Energy Agency

For years, Albania’s support scheme only supported yet more hydropower, at huge cost. According to data from the Energy Regulatory Authority (p.123), in 2021 Albanian electricity consumers paid out more than EUR 118 million to small hydropower producers and EUR 19 million more under a power purchase agreement for the large Ashta hydropower plant. This might seem like peanuts compared to Western European incentives schemes, but it’s a massive sum for a cash-strapped country and by far the highest cost in the region.

It is therefore time to redress the balance and prevent even more public money being spent on propping up climate-vulnerable hydropower while solar, wind, housing insulation and heat pumps continue to lag behind.

Do small plants need to compete in auctions?

Since 2014, EU State aid guidelines for the energy and environment sectors have stipulated the need to move to a more competitive and cost-effective incentives system for renewables, based on auctions to establish the lowest possible support prices. Electricity is then sold on the market and when the price gained doesn’t reach the bidding price, the producer receives a payment from the renewable energy operator to make up the difference. Only the very smallest plants are exempt from this approach, as it’s unrealistic for them to bid competitively in auctions, so they may continue to benefit from feed-in tariff schemes where the renewable energy operator purchases all their electricity at a price fixed in advance for a set time period (12-15 years in the Western Balkans).

As a signatory of the Energy Community Treaty, Albania too has to abide by these rules. However, its draft law on renewables doesn’t seem to differentiate between small and large plants. It doesn’t state whether plants under a certain capacity are exempt from participating in a competitive process.

In the EU the threshold is 1 MW according to the Climate, Energy and Environment State Aid Guidelines (CEEAG), except for those owned by small and medium enterprises. But it’s not clear whether Albania is planning to exempt plants below this threshold from participating in auctions or set up special auctions for them or what. If no special auctions are planned, it’s not clear what measures will be taken to ensure that small producers can benefit from support schemes at all. Or perhaps they are expected only to become prosumers with net billing, and not receive any price support at all?

The feed-in tariff phase-out needs to be clearer

In order for a premium system to work properly, a functional day-ahead electricity market is needed. Albania does not yet have this, so is taking an interim step of maintaining feed-in tariffs even for larger plants until the day-ahead market is established, but with the important difference that the price to be paid to producers will be established via auctions. The idea is that once the day-ahead market becomes functional, the power purchase agreements will be converted to Contracts for Difference and the feed-in tariff scheme will become a premium scheme.

This might be acceptable for now, but the draft law doesn’t clearly differentiate between the interim scheme and the future scheme. Unlike the EU’s CEEAG, it doesn’t prohibit feed-in contracts for plants over a certain capacity, even once the day-ahead market is functional. According to paragraph 123 and footnote 70 of the CEEAG, the threshold is now 400 kW, decreasing to 250 kW by 2026, so plants larger than this should not be allowed to receive feed-in tariffs once the day-ahead market is up and running.

The approach of continuing with competitively set feed-in tariffs even for larger plants and then converting them to Contracts for Difference may be acceptable in the short term, but only if clear deadlines are set. If a functional day-ahead market is not in place in a year or two, this new scheme needs to be reviewed anyway to check on its cost and effectiveness.

There also needs to be a clear obligation to establish the feed-in tariff price via a competitive process, at least for plants above the threshold – and even then, the question remains whether plants below the threshold can get feed-in tariffs at all and if so, how?

Heading the wrong way on bioenergy?

The draft law obliges fuel suppliers to ensure that Albania meets a target for renewable energy in transport. However, while biofuels in transport were part of the EU’s 2020 targets, this policy has turned out to be counterproductive. Increased demand for food-based biofuels requires more agricultural land. Since most agricultural land is already being used globally, new areas have to be found, which leads to deforestation, releasing tonnes of greenhouse gases. In some cases, these emissions are so high that some biofuels lead to higher greenhouse gas emissions than the fossil fuel they replace, when taking into account the whole life cycle of the crop. This is the case for biodiesel made from vegetable oils such as rapeseed, palm oil, soy and sunﬂower.

The EU’s 2018 renewable energy Directive therefore limits crop-based biofuels to the levels used by each EU member state in 2020 — a de facto freeze. The EU will also phase out high-deforestation-risk biofuels by 2030. The EU’s renewable energy Directive is currently again under revision, therefore the situation is also likely to further change.

Instead of repeating the EU’s mistakes, Albania should therefore pursue electriﬁcation of transport as well as improvement of its public transport, which would help decrease demand from individual vehicles. Pursuing biofuels as an alternative to oil products for transport is not advisable at the moment.

Likewise the draft law is unclear on the role of biomass. At minimum, Albania is obliged to follow the bioenergy sustainability criteria from the 2018 Renewable Energy Directive. However, these are widely criticised for not being stringent enough, so Albania should draw on its own experiences to set more effective criteria.

Support for heat pumps and rooftop solar needed

Given the widespread use of electricity for heating in Albania, installing efficient heat pumps would make much better use of the electricity already generated and avoid an expensive and climate-damaging gas lock-in. Combining these with rooftop solar in this extremely sunny country would help Albania leapfrog straight to a future-proof renewable energy system. Yet the draft law is unclear on the role heat pumps and rooftop solar are expected to play and whether there will be any support mechanisms for their installation. As well as the draft target for solar water heating, the law would do well to set targets for heat pumps and prosumers.

The Save the Blue Heart of Europe campaign aims to protect the most valuable rivers in the Balkans from building hydropower plants. The campaign is coordinated by the NGOs Riverwatch and EuroNatur, and is being run jointly with partner organisations from the Balkans.

100 per cent renewable electricity is a realistic and necessary target for Estonia and Europe

On 12 October, Estonia’s parliament voted to amend a law on the energy sector which increases the country’s current target for renewable electricity production. Until now, the target had been that the production of renewable energy would constitute 40 per cent of final electricity consumption by 2030. According to the new target, it will be 100 per cent. This does not mean that only electricity from renewable sources will be allowed in the grid, but that Estonia will produce at least as much renewable electricity as its annual average electricity consumption. The target for renewable energy in the final energy consumption, which also includes heating and transport fuel, will rise accordingly from 42 to 65 per cent.

Critics have questioned the rationale behind this amendment, since only one number in the law has been changed. Still, the number is crucial for renewable energy developers, as it signals that their business is in line with the country’s long-term direction and that their endeavours are welcome. It is especially important given that no new wind farms have been erected in Estonia for 10 years, and not because of a lack of interest from developers. The amendment to the law obliges both the current and future governments to quickly eliminate the barriers to the development of renewable energy. Creating additional grid connection opportunities, establishing a wind energy benefit scheme for local governments and residents, and speeding up the planning process are examples of positive steps that have already been taken or are currently being prepared.

The future is wind and solar

Currently, the share of renewable electricity in Estonia is 27 per cent of the final electricity consumption. The existing capacity of wind farms is 320 megawatts (MW) and the capacity of solar photovoltaics is 340 MW, but their potential is many times greater. The missing 73 per cent needed by 2030 should come largely from additional wind and solar power plants. The development of onshore wind farms has stalled in Estonia over the past decade, but if even a quarter of the onshore wind farms currently under development are completed, there could be 1,000 MW of wind energy production capacity in the grid by the end of the decade.

There are no offshore wind farms in Estonia yet, but they are also being developed vigorously, and by the end of the decade their total capacity could be 1,000 to 3,000 MW. Construction of solar parks has also gained momentum in recent years and will likely continue until the end of the decade, when their total capacity could be 1,000 to 1,500 MW. Altogether, this would be more than enough to cover Estonia’s own consumption, as well as export and storage.

A decisive step towards a green energy transition despite skepticism

Critics have argued that there is no point in fooling the Estonian people by saying that solar and wind farms could produce all our power. They say that in addition to wind and solar power plants, which produce electricity only when wind or the sun is available, we also need dispatchable generation capacity, which can produce electricity on demand whenever it is needed. The existing options in Estonia right now are oil shale, biomass and gas-fired power plants, and nuclear power is being considered as a long-term alternative. None of these solutions are sustainable and could lock us in fuels that are harmful for the climate and the environment. However, recent studies such as the energy roadmap for Estonia made by TaITech and Green Tiger, and the energy system model for Estonia prepared by researchers at Aalborg University in Denmark show that there is no need for fossil fuels or nuclear for dispatchable generation.

The studies used complex models to calculate how to balance electricity production and consumption in all 8,760 hours of the year. The results show that within 20 to 30 years, it will be technically possible and economically reasonable to transition to 100 per cent renewable energy not only in electricity production and consumption, but also in heating, transport and industry, and to maintain dispatchable generation capacity. In the future, these would include local biomass or biogas-fired combined heat and power (CHP) plants, pumped-storage hydroelectric plants, hydrogen fuel cells, district heating storage tanks and consumer (electric vehicle) batteries. Hence, there is no scientific basis for the belief that the possibility to produce power on demand will disappear and our energy security will be threatened by the transition to renewable energy.

The whole EU powered 100 per cent by renewables

Similar conclusions hold not only for Estonia, but also for the rest of EU Member States. Indeed, the researchers at Aalborg University have shown that all 27 EU countries can become fully decarbonised by 2050 just by using 100 per cent renewable energy. This transition would rely on an extensive roll-out of wind and solar energy, while the consumption of biomass would remain limited and based on strict sustainability criteria. Besides wind and solar, one of the most important sectors of growth will be district heating, as almost half of EU’s future heat demand (47 per cent) would be supplied by district heating (and the remaining half covered by individual heat pumps). Excess heat and low-temperature heat sources such as industrial waste heat, geothermal, solar thermal, large-scale heat pumps and electrolysis could supply 60 per cent of district heating, and the remaining 40 per cent would be supplied by CHP, waste incineration and boilers.

The study also provides an answer to the question of whether renewable energy can provide an alternative to fossil fuels and nuclear energy in sectors that are most difficult to decarbonise, such as manufacturing or transport. The answer is ‘yes’. Sixty-six per cent of the manufacturing industry’s energy consumption can be electrified and the rest can be replaced with green hydrogen, biomass or biogas. Electrification is easiest in lower temperature sub-sectors such as engineering and the food industry, whereas the need for hydrogen and biofuels is greatest in the chemical, metal and pulp industries. As for transport, the majority of passenger vehicles can be exchanged for battery-powered electric vehicles, and hydrogen or hydrogen-based synthetic fuels can provide an alternative for heavy-duty road transport, aviation and shipping. Of course, there is no need to replace the consumption of fossil fuels one-for-one in the transport sector, since the future urban space should allow for convenient movement on foot or by bike, and the possibility of remote work will reduce the need for unnecessary trips.

New solutions will bring large energy savings

At the same time, the transition to renewable energy will lead to significant energy savings as inefficient fuel burning is abandoned. According to the studies, the full transition to renewables in Europe would lead to a 40 per cent reduction in final energy demand within a couple of decades. The greatest potential for savings is in the transport sector, where energy consumption can be reduced by 50 per cent. The building sector follows, as the deep renovation of the existing building stock would lead to a 40 per cent reduction in the energy consumption of buildings. It is also possible to cut energy consumption in the manufacturing sector by more than 35 per cent with technological changes alone. As a result, people’s living conditions and health will improve, many new high-paying jobs will be created and electricity will become cheaper.

Member states need to prioritise green investments

On top of this paradigm ship, the transition will of course require unprecedented level of investments. The authors calculate a need to invest around EUR 2.2 trillion in energy efficiency in buildings; EUR 1.8 trillion in wind and solar power; EUR 1.3 trillion in electric vehicles; EUR 488 billion in electrolysers, hydrogen storage and electrofuel production; and EUR 209 billion in energy efficiency in industry. However, annual energy system costs will remain similar to today, and costs for repairing environmental damage and providing healthcare will decrease significantly. For example, healthcare costs related to air pollution would be reduced by 77 per cent.

The EU funds such as the Cohesion Fund, the European Regional Development Fund, the Modernisation Fund, the Recovery and Resilience Facility and the Just Transition Fund will provide an invaluable opportunity to accelerate investments in these areas. We urge the stakeholders in all Member States to treat these investments as a priority.

Biodiversity on the brink: what’s holding back financing for nature?

Nature in Europe is in crisis: 81 per cent of habitats are now in a poor state. Biodiversity loss is happening at an alarming pace, and we need swift and urgent action to address this. Yet although more funds, especially from the EU budget, are available to Member States, the countries are not seizing this opportunity to protect and restore Europe’s biodiversity.

The EU Biodiversity Strategy for 2030 sets several targets for biodiversity financing. These include the need to earmark EUR 20 billion annually across the EU, as well as 7.5 per cent of the EU budget to go to biodiversity related activities by 2024 and 10 per cent by 2026. Yet estimates show a total funding gap of EUR 187 billion across the period from 2021 to 2030 needed to deliver on the strategy’s targets.

Bankwatch and EuroNatur, together with four national organisations, recently organised a series of roundtable discussions with a variety of nature conservation organisations in order to better identify some of the common challenges impeding EU biodiversity funding. These are some of the key problems holding back progress in financing biodiversity nationally that they identified.

Lack of public funds

Our discussions on bottlenecks in financing biodiversity show that Member States fail to provide systemic funding in the field of biodiversity restoration and conservation. For example, in Slovenia, the Ministry of the Environment and Spatial Planning receives four times fewer funds than other ministries. What’s more, environmental, nature and landscape organisations in Slovenia receive only 1.18 per cent of these limited funds. This financial shortfall makes it impossible to finance urgent nature conservation activities, such as regular and mandatory monitoring of protected areas. These activities require stable, long-term funding in order to lead to meaningful and impactful results.

In Croatia, national and local sources of funding for biodiversity projects have been drastically reduced over the last decade, which officials justify by citing the availability of EU funds to replace other sources. This has impacted smaller local organisations that do not have the capacity to write and implement EU projects. The lack of systematic rules for national co-financing of EU supported projects can also force such organisations to join bigger projects with public institutions. This in turn hampers their ability to publicly criticise any damaging practices in such projects.

Furthermore, even when funding for biodiversity is available, Member States do not seize the opportunity to finance nature. For example, the EU’s EUR 672 billion Recovery and Resilience Facility offered at least 37 per cent of its funds for environmental objectives, including biodiversity. Yet Member States failed to use this to finance restoration or conservation measures.

Lack of capacity, expertise and experience

Another common issue is the lack of expertise in the field of nature conservation, especially within the institutions responsible for managing these funds.

For example, in Croatia, the nature protection sector is understaffed. This, in combination with an over-centralised system, often does not allow for the full use of available funds. Additionally, there is a lack of capacity and expertise within the responsible ministry in charge of the disbursement of funds and public institutions working in this field.

Similarly, in Latvia there is a significant lack of capacity among both civil society organisations and competent authorities. Organisations lack the capacity to conduct advocacy work and public communication, follow the latest scientific research and ensure public participation in decision-making. They also depend on funding and often lack the core financial support necessary for their work. On the other hand, the competent authorities often do not have enough nature conservation and financial experts among their staff, and the existing capacity is not used efficiently.

In Slovenia, state institutions, responsible for obtaining funds, have insufficient knowledge of nature protection issues. Within these institutions, there is frequent staff turnover due to political timelines, meaning that there is often a lack of long-term expertise and knowledge. Responsible public bodies are understaffed, which is reflected by the shortfall in the transfer of knowledge to younger staff and as a general lack of ambition for long-term conservation actions. Organisations struggle with obtaining funding, as bureaucratic requirements often make application and reporting conditions too demanding.

Competition with other sectors

We have also observed conflicts of interest and lack of coordination between ministries, especially the ministries responsible for the environment and for agriculture. In Bulgaria, there is no monitoring of the results of agricultural measures which also include biodiversity objectives, originally included to ‘green’ the agricultural policy. Civil society organisations do not have the capacity to monitor the effects of the Common Agricultural Policy (CAP) on biodiversity, and currently there are no other actors who can take up this task.

What’s more, there is a lack of awareness of biodiversity issues in other sectors that should also incorporate biodiversity measures into their activities (and finance them). This has been especially visible in the agricultural sector. The competences for managing certain components of nature in this sector are often not clearly defined or are overlapping, which is a source of constant friction with nature protection authorities. An additional problem related to other sectors is greenwashing, in which projects that are not beneficial to nature are promoted as ‘green’ investments, often in order to formally satisfy the requirements of a fund to have a certain percentage dedicated to nature and biodiversity.

In Slovenia, conflicts with other politically and financially stronger sectors, especially agriculture, forestry and energy, pose a major challenge to obtaining sufficient funds for nature conservation. Strong lobbying from these opposing sectors prevents changes in the percentage of allocated funds in favour of biodiversity and consequently an increase in the share of investments in nature conservation.

Lack of political will

To secure sufficient public funds for nature protection and restoration, there must be political will. Yet national decision makers fail to understand the underlying issues and drivers behind this and prioritise addressing them.

Another serious issue is the focus on absorption of funds rather than efficiency and spending the funds on what is really needed. There are also serious transparency issues, namely providing information on implemented projects for environmental programmes financed under the EU’s cohesion policy funds.

In Slovenia, the key legislative and financial conditions required to participate in most funding applications narrow the circle of applicants to a select handful. Tenders and project implementation are too bureaucratically demanding, and the project objectives are too general.

In Latvia, there is not enough funding in the allocated state budget, which is mostly aimed at administrative tasks, for habitat restoration and compensation to landowners for the restrictions imposed by the state.

Financing of harmful activities

Even when the quantity of biodiversity funds is increased, it does not offset or mitigate the harmful effects of other financed activities. Although it is more cost effective to preserve than to restore nature, funding continues to be directed into biodiversity-damaging areas. Potential negative impacts across sectors are not factored into decision-making, in part due to low awareness but also due to difficulties in tools to track spending. In biodiversity rich countries, such as Bulgaria, the real challenge is to preserve existing nature in the face of economic pressures, including those coming from EU-funded subsidies and projects. A key priority must therefore be to prevent financing key drivers of biodiversity loss in the first place, rather than just its restoration after the damage has already been done.

In some countries, like Slovenia, the lack of tenders for biodiversity restoration or conservation projects also leads to the creation of ‘dumping’ offers, which consequently encourage the financing of activities that are not essential for long-term biodiversity protection. An additional challenge in choosing to apply for funds is the requirements and administrative management of EU-funded projects (LIFE, cohesion policy) that lead to the implementation of short-term ‘instant’ activities that have a visible effect over the life of the project rather than in the long term.

Proposed solutions for increasing funds for biodiversity:

The competent ministries and regional and local authorities must recognise that on top of EU funds there is also a need for national/regional/local sources of financing (and co-financing), especially for small to medium-size projects.
The nature protection sector should position itself more strongly in relation to other sectors and use the European Commission’s support for ‘mainstreaming’ biodiversity into other sectors as leverage.
Mechanisms for funding activities which address the biggest threats for biodiversity should be developed.
Transparency of the results of EU-funded projects should be a priority, including transparency of monitoring and control chains.
The use of funding coming from the Common Agricultural Policy (CAP) should be made less dependent on local political decisions. In order to make use of this funding source for the implementation of the EU’s Nature Restoration Law, a more centralised approach that elaborates concrete criteria should be taken by the European Commission.
Tax reform in favour of biodiversity support is needed. New tax reductions should be introduced based on voluntary investments and donations for biodiversity.

This article has been compiled from the results of roundtable discussions with environmental groups organised by Rolands Ratfelders, Green Liberty (Latvia); Katerina Rakovska, Balkani (Bulgaria); Hrvoje Radovanovic, Green action (Croatia); and Pia Hofferle, DOPPS (Slovenia), coordinated by CEE Bankwatch Network and EuroNatur. The activity was carried out in the frame of an ongoing project aimed at better understanding barriers to EU biodiversity financing, funded by the German Ministry for the Environment under the EURENI programme.

It’s time for the European Commission to act and protect the Kresna Gorge biodiversity sanctuary

Kresna Gorge, with the Struma River passing through it, is an area in southwest Bulgaria where, for centuries, nature has made its path through a narrow pass between two mountains and two climate zones: the Mediterranean and the continental. These unique conditions have created a biodiversity hotspot within the gorge, which is not only extremely rich with numerous endemic species, but also represents an important migration corridor. Two Natura 2000 sites and five national protected areas have been designated within this 17 kilometre-long area.

This natural corridor also forms a transport route between west Bulgaria and Greece and is part of the Trans-European Orient/East–Med transport corridor. As such, after a request from the Bulgarian government, the Struma motorway between Sofia and the Greek border received EU funding on the condition that Kresna Gorge would be protected and the project would comply with EU environmental legislation. The history of the Struma motorway project over the past 20 years shows that the Bulgarian authorities have made repeated attempts to carve a road through Kresna Gorge using EU money, while also breaching EU legislation and biodiversity requirements. Many of those attempts were prevented by the European Commission, but the latest one is gaining serious momentum.

In 2008, the environmental impact assessment (EIA) for the project concluded that the only possible option was a 15 kilometre-long tunnel bypassing the gorge itself. On this basis, in 2013, the European Commission issued a decision to finance the motorway (using cohesion funds) with the explicit condition that the route would ‘avoid the environmentally sensitive Kresna Gorge’. During the negotiation, the relevant Bulgarian ministers issued an undersigned commitment to implement the project ‘in full compliance with the 2008 EIA decision’.

At that time, the European Commission (DG REGIO) made its first mistake by agreeing to divide the Struma motorway into two major projects. This resulted in immediate financing (2007-2013) for the ‘easiest’ 68 kilometre-long part of the Struma motorway – (lots 1, 2 and 4) and postponing the 63 kilometre-long lot 3 – which included the Kresna tunnel – for the programming period from 2014 to 2020.

In 2015, after receiving nearly EUR 343 million in EU funds, the Bulgarian authorities renounced their official commitment and started to work again on a motorway route that would go through Kresna. In 2017, a new EIA was conducted only for the Kresna Gorge part of the project.

The European Commission’s second mistake was to provide the funding for lots 1, 2 and 4, even though the second part of the agreement about lot 3 being built outside Kresna Gorge was not respected. The commission also agreed to divide lot 3 into three parts – lots 3.1, 3.2 (Kresna Gorge) and 3.3 – and approved the financing for lots 3.1 and 3.3 again, thereby accepting that the Kresna Gorge section would be postponed. This is how DG REGIO intentionally lost its leverage to convince the Bulgarian authorities to fulfil what they promised in a timely manner and to safeguard EU funds from misuse by causing damage to Europe’s biodiverse habitats.

At the end of 2018, the Bulgarian government requested EU financing for lot 3.2 with a new route through the gorge. The firm answer from the European Commission was that the project did not comply with the requirements of the Habitats Directive, among other important deficiencies that were identified in the new 2017 environmental permit.

From 2019 to the present day, the European Commission and the Bern Convention on biodiversity have made systematic efforts to help the Bulgarian authorities get the project back on the ‘right track’.

However, it seems that after the rejection of the planned motorway in the gorge, Bulgarian construction companies and authorities have lost their appetite for the project. Indeed, in the final version of the Transport operational programme for 2021 to 2027, the allocated funds for the completion of lot 3.2 in Kresna Gorge amount to EUR 150 million – nearly five times less than predicted by all the financial assessments. Most of the funds (EUR 455 million) have now been shifted to two other road construction projects.

This is yet another example of breach of trust in public action in the long history of misuse of EU funds by the Bulgarian authorities. Several obligations regarding this project still need to be fulfilled:

The European Commission’s commitment for priority completion of the TEN-T corridors by 2030;
Bulgaria’s commitment to complete the Struma motorway according to the Commission’s decision from 2013 for the financing of the entire motorway;
An unfulfilled commitment from the Transport operational programme from 2014-2020, specifically the ‘removal of the bottlenecks along the TEN-T network’;
Both national and European Commission commitments to approve the project given that it fulfils the requirements of the EU’s biodiversity legislation;
The obligation of the Bulgarian government to prevent the deterioration of protected habitats and species, while also ensuring the safety of the people living in the town of Kresna, who today are exposed to international traffic that is four times heavier than before construction on the Struma motorway had started.

As the new operational programmes for Bulgaria are being finalised, our request is that the responsible institutions – the European Commission and the managing authorities of the Transport operational programme – need to resolve the issue by redistributing funds to provide maximum institutional and financial assurance that the project ‘avoid[ing] the environmentally sensitive Kresna Gorge’ will be implemented during the current period (by 2030). Otherwise, the project is unlikely to be completed in time, and traffic through the gorge will continue to affect both the area’s biodiversity and local population, probably resulting in an infringement procedure against Bulgaria.

Watch Za Zemiata’s video about the history of the Struma motorway through Kresna Gorge here.

Red flags over plans to swap coal for biomass and waste incineration in Tuzla

Intended to convert one of the coal-fired to burning willows and waste, it could not just harm climate, recycling and air quality objectives, but hinder the development of a number of more sustainable energy sources, which is why the project should be the subject of a comprehensive public dialogue.

The coal-fired unit 3 at the Tuzla power plant, which has been powering the district heating network serving the cities of Tuzla and Lukavac, is slated to close by end of 2023.

Now, it turns out that Bosnia and Herzegovina’s power utility Elektroprivreda BiH (EPBiH) is actively looking to convert this unit so it can run on locally grown biomass and waste incineration as a base load. But such a project would be anything but sustainable – it will not help shrink Bosnia and Herzegovina’s climate impact as much as it could, it would require much more land area than the company currently projects, and it could also end up triggering waste imports from abroad.

The European Bank for Reconstruction and Development (EBRD) is currently studying the feasibility of the project, which would determine whether the Bank would consider supporting it. But the information Bankwatch has obtained in recent months is sufficient to conclude that any investor, and certainly the EBRD, should stay away. Anyone looking into the mathematics of biomass and waste capacities needed to cover the full heat demand of Tuzla would realise that this project could be one dangerous adventure in terms of finances, air quality and climate goals.

According to EPBiH’s plans, the Tuzla 3 unit will run mostly on biomass, primarily fast-growing willows that would be grown nearby. The company is considering turning a total of 1,075 hectares at the Kreka, Breza and Đurđevik mines into willow fields. But, according to Bankwatch’s analysis*, energy crops in quantities necessary for the planned capacity would require 5.6 times more land area, or a total of 6,042 hectares.

In addition, developing waste incineration capacity would also circumvent the efforts to step up recycling in the country. The government had set a goal to recycle 20 per cent of its waste, but data from the European Environment Agency shows that in 2019 the figure stood at zero.

Beyond preventing more waste from being recycled rather than burned, the Tuzla 3 project also risks catalysing waste imports to Bosnia and Herzegovina, as the amount of non-hazardous waste produced in the entire Tuzla canton/region is insufficient for supplying the local heating network at its current extent, let alone if it is to be expanded.

The prospects of importing waste to meet the demand for waste fuel is particularly concerning given that Bosnia and Herzegovina’s capacities for the enforcement of waste management regulations have already proven especially limited.

Lastly, the greenhouse gas emissions that burning waste and biomass would produce would undermine the effort to stem the unfolding climate crisis. In fact, Bosnia and Herzegovina is seriously behind in curbing emissions, as the government keeps procrastinating on the transition from dirty fossil fuels, chiefly coal, to sustainable energy sources such as wind and solar.

And that’s perhaps the main issue with EPBiH’s Tuzla 3 ideas. These plans appear especially dubious given the far more sustainable alternatives for providing heating in the region. According to the World Bank’s Global Solar Atlas, Tuzla has a solar potential of 1,100 kilowatt hours per metres squared per year. For comparison, the town of Ludwigsburg, Germany, has the same solar potential as Tuzla and for over two years has been home to the country’s largest solar thermal plant that supplies the local district heating system.

The city of Tuzla could also prioritise the use of solar and other sustainable energy resources. It could tap geothermal sources and wind energy and could develop energy storage as it was proved and modelled in the Bankwatch analyse on district heating clean alternatives from 2021.

Waste incineration and biomass as a baseload for the heating would put the country’s energy transition on the wrong track. EPBiH and Bosnian policymakers can ensure homes in Tuzla and nearby Lukavac are warm with much lower emissions and without having to import trash from abroad. They just need to seriously invest in renewables technologies that have already proven themselves.

* The calculation was made on the basis of projections from several scientific papers and projects with support of the Partnership for Policy Integrity:

1. The Willow project at SUNY ESF, Willow biomass trials in Central New York State,

2. Borman, G.L. and K.W. Ragland. Combustion Engineering. McGraw-Hill. 1998. 613 pp,

3. Maker, T.M. Wood-Chip Heating Systems: A Guide for Institutional and Commercial Biomass Installations. 1994 (revised 2004 by Biomass Energy Resource Center),

4. American Pulpwood Association, Southern Division Office. The Forester’s Wood Energy Handbook. 1980.

Will EU cohesion money support energy communities in central and eastern Europe?

The idea of a decentralised, renewable-based energy system in Europe has been gradually receiving more and more attention, leading to official legal recognition of energy communities at the EU level. The Clean Energy Package, adopted in 2019, for the first time acknowledged the important role of citizens in the energy transition by introducing the concept of energy communities into legislation. More recently, the REPowerEU plan and more specifically the Solar Strategy have further confirmed the relevance of these collective initiatives around renewables, which could help speed up the deployment of solar energy in Europe and allow the EU to reach its 2030 and 2050 climate targets.

Having recognised the growing potential and importance of such initiatives, CEE Bankwatch Network has joined forces with REScoop.eu (the European Federation of Citizen Energy Cooperatives). The goal of this collaboration, which has already resulted in several joint activities, is to strengthen the support from EU funds for energy communities and raise awareness on the topic.

EU funds fail to support energy communities

One of the most important aspects of our cooperation is the continuous monitoring of EU funds. We’ve looked at allocations for energy communities in the cohesion policy and the Recovery and Resilience Facility, but for the moment, as the preparation of the operational programmes is ongoing, we’re concentrating our efforts exclusively on the cohesion policy.

During our analysis, we examined whether and to what extent operational programmes in eight different countries envisage support for the development of energy communities. The situation varies, but across the board there’s little being done to develop the energy community movement in the region, since there is no real legislative framework in place and support structures are lacking.

Based on our analysis, we categorised Member States into three categories according to how well their operational programmes support energy communities.

1. Lack of any support for or mention of energy communities in the operational programmes

Romania, Estonia and Bulgaria have shown the least support for energy communities in their programming for cohesion policy; energy communities were not even mentioned in any of their national operational programmes.

Recommendations: Remove administrative and legal barriers to the development of energy cooperatives. In the operational programmes, include a strategy for network development through things like one-stop shops, raising awareness, training programmes and capacity-building activities.

2.Sparse funding available

Czech authorities neglected the role of energy communities in the Environment operational programme and only briefly mentioned them in the operational programme for Technologies and Applications for Competitiveness.

Latvia recognised the role of energy communities in its operational programme, yet the proper understanding of the concept is still lacking. The main concern is the fact that the support is planned for renewable energy sources of capacity minimum 1MW, which is an industrial, profit–generating level.

In Poland, the ambition varies according to the operational programme. While most of the 16 regional operational programmes plan to support energy communities, the national programmes are still lagging behind, to the point that the initial draft of the operational programme entitled European Funds for Infrastructure, Climate and Environment (FEnIKS) removed details about energy communities (which were initially included) from the version of the programme adopted by the government and submitted to the European Commission.

Recommendations: Recognise the role of energy communities through their inclusion in operational programmes that omit any support for such initiatives. Pass necessary legislation at the national level that would enable the development of energy communities in the Czech Republic and Poland. Improve the definition of energy communities and especially its purpose so it could be dedicated to social and environmental benefits, rather than financial profits.

3. Support planned, but with limited strategy for the development of energy communities

In Hungary, energy communities are mentioned in three operational programmes, but there is no budget specifically earmarked for these initiatives. There are still risks concerning the flexibility of access to funding, and the scope of eligible activities is neither broad enough, nor does it cover sectors such as energy efficiency services, e-mobility or energy poverty.

In Slovakia, the national operational programme mentions communities generating renewable energy and includes a strategic approach for regional decarbonisation capacities, although a concrete strategy for their development is still lacking.

Recommendations: Remove legislative and administrative barriers for energy communities and establish a strategy for network development through things like one-stop shops, raising awareness, training programmes and capacity-building activities. Expand the eligible scope of activities to include energy efficiency services, e-mobility or energy poverty.

For more detailed information on the operational programmes in all of the aforementioned countries, see our recent assessments.

All eyes on the managing authorities

In an attempt to address some of the problems in regard to energy communities observed in the operational programmes, such as the need to improve their funding, CEE Bankwatch Network and REScoop.eu published a brief explainer for authorities responsible for the management and implementation of operational programmes. It explains the concept of energy communities and their wide range of benefits, as well as providing insight into how their development can be supported at both national and local levels.

As a follow-up to this publication, we also organised an online workshop for managing authorities. This focused on financing programmes and a guidance on how to use already existing schemes to support the development of energy communities with a special emphasis on the cohesion policy.

This webinar aimed to introduce the definition of energy communities and the potential forms they might take, as well as to encourage support for their financing. It was also an opportunity for participants to share the state of play of cohesion programming in their country, as well to discuss the key drivers for the development of energy communities and the barriers they face.

The keynote speaker, Mathieu Fichter from DG REGIO, emphasised the importance of using existing technical assistance like the EU’s Energy Communities Repository, which offers various forms of support adjusted to the different needs of applicants. He also underlined the great potential for the use of territorial cooperation programmes (Interreg) for cross-border energy communities.

The lack of transposition of EU directives at the national level was often mentioned as one of the prevailing issues in the region. This creates a huge legislative and administrative barrier for energy communities to overcome.

Furthermore, participants underlined that people are reluctant and even afraid to be the pioneers of such projects in countries without any energy communities. There is also a lack of awareness of how energy communities work, how they can be established, and what their benefits are. On top of that, the lack of practical capacity and a dearth of real experts hinders the development of such initiatives.

Missed chances to provide government support for energy communities

The real potential of energy communities remains mainly in the hands of national authorities; the future of this movement depends on how the directives are transposed and implemented at the national level. Unfortunately, most of the Member States in central and eastern Europe have missed the deadline for the transposition, failed to build a legal framework and neglected to provide the necessary governmental support for the development of energy communities.

A clear picture of these omissions is explained in detail in the transposition tracker maintained by REScoop.eu.

Improving the predictability of the legal environment and providing support for pilot community energy projects are among the most important recommendations on how to improve the transposition of the EU directives. To find out more about what Member States should do to develop the Europe-wide potential of citizen-owned energy projects, see the results from the workshop organised in June 2022 in Budapest by MTVSZ-Friends of the Earth Hungary, CAN Europe and Centre for Transport and Energy Czechia.

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