Blog entry

The real cost of hydropower plants in Central Asia and the Caucasus

A new report by the Business and Human Rights Resource Centre once again confirms the concerns of civil society organisations and local communities from Central Asia and the Caucasus about the destructive environmental and social impacts and severe human rights violations caused by unsustainable hydropower development.

The research

studied 32 hydropower plants linked with 265 alleged human rights issues in Armenia, Georgia, Kyrgyzstan and Tajikistan.

Seventeen projects – more than half of the studied plants – have been funded by international financial institutions. Hydropower has received support from these institutions in the past decade because it has been promoted as an alternative to fossil fuels. Yet this support has been in the absence of human rights standards and environmental safeguards. The report demonstrates that the international financial institutions have disregarded the UN Special Rapporteurs’ recommendations and the instruments underlined in the United Nations’ Guiding Principles on Business and Human Rights.

The report draws attention to the negative effects hydropower projects have had on communities, including land and water grabbing, declining water quality and quantity in rivers, disruptions to ecosystems, biodiversity loss and deforestation. All of this leads to socio-economic harm for communities and creates food security concerns, as communities lose access to land, and face difficulties accessing water.

Due diligence as a ‘check box’ exercise

Most of the international financial institutions mentioned in the report (the Asian Development Bank, European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), Germany’s KfW and others) lack solid environmental safeguards and effective human rights and environmental due diligence for every project. As a result, projects fail to protect human rights and the environment, as well as to provide adequate remedy.

In the case of the Nenskra hydropower plant, the UN Working Group on Business and Human Rights raised concerns in April 2019 that ‘despite the additional measures taken to comply with the standards of international financial institutions… there was a perception that consultations with communities were conducted as a check box exercise’. These concerns were later confirmed.

After two years of investigation, both the EIB’s and EBRD’s independent recourse mechanisms confirmed that the Nenskra dam in Georgia, worth EUR 1 billion, was non-compliant with banks’ requirements in the following areas of human rights and environmental protection:

indigenous people’s rights,
the protection of cultural heritage,
gender issues,
assessment and management of environmental and social impacts,
information disclosure, and
engagement of local communities and other stakeholders.

The lack of stakeholder engagement, including with scientists and affected communities, often leads to defamation campaigns against human rights and environmental defenders and professionals, who provide their opinions about the risks of projects.

Some governments (Tajikistan, Georgia) even use reprisals, including police forces, against the affected communities and activists.

Environmental damage and human rights violations: not enough to discourage investments in harmful hydropower?

In light of this, the news that the European Commission has asked the EIB to become ‘the largest investor’ in the Rogun hydropower project in Tajikistan raises numerous concerns.

Construction of the USD 8 billion Rogun hydropower plant started in 2016. The project has been largely funded by Tajik government bonds and private loans coming from ‘a campaign of forced share-buying [in the Rogun project] among citizens in 2009-2010′. According to a study on the Rogun dam, ‘the majority of state employees, i.e. teachers, nurses, but also students were pressured to buy significant shares, sometimes to a value greater than an annual salary… The scheme caused such widespread debt among the population, that the World Bank warned it was significantly damaging the economy.’

The Rogun construction involved an involuntary resettlement of 42,000 people.

For many resettled families, the standard of living deteriorated as a result of land loss, lack of employment and poor access to essential services in new settlements. Local experts are also concerned about the ‘illegal trafficking’ of materials intended for the project and the alleged misappropriation of funds. According to the report by Business and Human Rights Centre, a crack in the dam was reported in 2019, which local experts attributed to the use of low-quality cement, steel and other building materials.

For these reasons, it is surprising to learn that an unnamed EU official “said a key reason for the EU to become a top investor in the hydropower dam was to make Tajikistan and its neighbours independent from Russian energy.’

The EU has vast tools and funds to support sustainable renewables investments in Tajikistan and all over Central Asia, rather than rush its investments into an environmentally unsustainable project that exacerbates human rights violations. Will the argument of gaining independence from Russian energy now excuse human rights violations and damage to the environment?

Narrow road ahead: the energy crisis in Kosovo in the context of Russia’s invasion of Ukraine

An overview of Kosovo’s energy sector

As Kosovo has entered its seventh month since the start of the energy crisis, there has been a lot of debate about what future pathways the young economy should follow. The country, home to 1.8 million people, is at a crossroads between a modernised and diverse energy sector and a highly centralised one. As the government drafts its energy strategy for the next decade, Kosovo is left with few possibilities in large part because of the effects of the energy crisis on its economy.

The energy sector of the Republic of Kosovo is composed of electricity generation, electricity transmission, electricity distribution and a few district heating plants) (ERO, 2021). Generation is mainly based on lignite power plants (Kosova A and Kosova B) and, to a lesser extent, the Ujmani hydropower plant, all of which are owned by the government of the Republic of Kosovo. In contrast, other hydropower plants and other renewables are privately owned (Ministry of Economy, 2017).

One of the wealthiest countries in the world in terms of lignite reserves, Kosovo’s power system is mainly designed to produce basic electricity based on lignite as a raw material (Ministry of Economy, 2017). Hence, due to the inflexibility of its power generation, Kosovo cannot achieve maximum load coverage, which usually reaches its peak during the winter months, and does not have balancing capacities (battery or pumped hydropower storage capacities) (Energy Regulatory Office, 2020).

Kosovo has installed generation capacities of 1,431 megawatts (MW), including renewable generation capacities. However, the operational capacity is considered to be 1,099 MW, of which lignite thermal power plants account for about 87.36 per cent, and the rest consists of the Ujmani hydropower plant with 2.91 per cent, the Kitka wind power plant with 2.95 per cent and other renewables (hydropower plants, solar panels and wind power plants) with 6.78 per cent (ERO, 2021).

Most of the time, these capacities would be sufficient to cover demand and export. Still, due to power plant ageing and insufficient flexibility, imports and exports are required to balance the system (ERO, 2021). Lignite also remains an environmental issue due to greenhouse gas emissions and other pollutants.

Energy crisis in Kosovo

In October 2021, the increase in the price of gas from Russia affected the energy prices in the European market. Due to the lack of new capacities being developed within the country, Kosovo’s consumption patterns, and the collapse of internal generating capacities, Kosovo faced an energy shortage as never before. During December, both power plants, Kosovo A and B, malfunctioned and were offline for some time: Kosovo Electricity Corporation returned Kosovo A and a unit of Kosovo B into operation within a day; however, Kosovo B2 was back in operation only on 23 January 2022 (Bota Sot, 2022). Due to the lack of internal capacities and the astronomical prices in the European energy market, Kosovo had to review its electricity prices.

In January 2022, Kosovo’s Energy Regulatory Office was forced to increase the price for households and businesses. The prices of the end consumption almost doubled from 6.5 cents per kilowatt hour (kWh) to 12.5 cents/kWh after subsidies for consumers who spent more than 800 kilowatts (kW). The government decided to subsidise the energy sector with a total of EUR 120 million to cover a portion of the price increase. The subsidies were given directly to the consumers through a deduction on their final electricity bill, making the increase unnoticeable for businesses and households who spent less than 800 kW per month (Energy Regulatory Office, 2022).

A timeline of the Kosovo energy crisis

7 July 2021: the Energy Efficiency Agency called for energy efficiency measures to soften the possible
upcoming energy crisis.
2 November 2021: the Ministry of Economy created a task force to analyse the possible scenarios
13-16 December 2021: the three remaining units of Kosovo A malfunctioned and were fixed within a day
15 December 2021: the two blocks of Kosovo B malfunctioned and went offline, causing Prishtina’s district heating, Termokos, to be out of operation
16 December 2021: Kosovo B1 restarted operations
24 December 2021: the government of Kosovo approved emergency measures for the energy supply
18 January 2022: the Energy Regulatory Office approves emergency tariffs for electricity, and the
government of Kosovo commits to cover a portion of the tariffs through subsidies
23 January 2022: Kosovo B2 returns to operation
9 April 2022: the Basic Court of Prishtina suspends the new tariffs
18 May 2022: the Court of Appeals verifies the decision of the Basic Court
7 June 2022: the Draft Energy Strategy 2022-2031 addressing security of supply is published for public
consultation

How will the Ukraine crisis affect the energy market in Kosovo?

Russia’s invasion of Ukraine has caused upheaval in the energy market and geopolitics of energy, driving oil and gas prices to their highest levels in nearly a decade and forcing many countries to reconsider their energy supply. According to the International Energy Agency, Russia is the world’s largest oil exporter to global markets. Its gas is one of the most significant resources used in the European economy. While Kosovo is not directly connected with the Russian or Ukrainian energy markets because it does not have gas infrastructure, the lack of reliable internal capacity has enabled the shock to also affect the young economy.

Due to the energy shortage, Kosovo bought electricity from the Hungarian Power Exchange (HupX) market, which was strongly affected by the energy crisis and Russia’s invasion of Ukraine.

Figure 1- HupX prices for April 2022

In April 2021, the average price per megawatt hour (MWh) on the HupX exceeded EUR 200 (figure 1), compared to EUR 55 from the same week last year (figure 2).

Figure 2- HupX prices for April 2021

With these higher prices on the European market, the young economy of Kosovo is left with few possibilities. The two existing power plants are currently in operation; however, there is no guarantee that the malfunctions will not be repeated during the winter of 2022. Furthermore, preplanned investments at the plants will leave Kosovo without a significant proportion of its internal generating capacities for a period of six months in 2023.

Kosovo is currently developing its energy strategy for 2022 to 2031. There are a few possible scenarios that the government of Kosovo can select, and none of them are ‘no-regret’ scenarios apart from investments in energy efficiency. During winter 2021-2022, a significant proportion of families switched from coal and wood heating sources to electric ones; this resulted in a considerable increase in energy demand, reaching an all-time high of 1,400 MW (Energy Regulatory Office, 2022).

Therefore, increasing energy efficiency and promoting near-zero energy buildings would help decrease energy demand during the winter peak and dependence on external power. To accomplish that, primary and secondary legislation, as well as establishing a Strategy for Energy Performance in Buildings and related plans, are required. Furthermore, in Kosovo, a system to assist the training and certification of Energy Performance Certifiers must be authorised as a first step toward near-zero energy buildings.

Moreover, the Energy Efficiency Fund should increase its capacity to expand its work to support households adopting such measures. Lastly, the newly amended legislation needs to address energy-poor households and support them throughout the transition, especially in implementing energy efficiency measures. Currently, the national legislation does not define ‘energy poor’ households, making it impossible to develop policies targeting them.

Furthermore, the rise of energy security as a priority due to the Ukraine crisis has underlined the need to invest in new generating capacities. The existing coal-powered power plants are unreliable; building a new one is not affordable, as the Kosova e Re saga showed, and with the likelihood that Kosovo will have to introduce a carbon tax or emissions trading scheme, the price per MWh would be unreasonable.

Therefore, in the face of such circumstances, Kosovo can use this opportunity to pave a greener and brighter future. By drafting policies that encourage renewable energy investments and launching renewable energy auctions to attract additional local and foreign investors, Kosovo can reduce its carbon emissions, create new jobs and support a green and sustainable recovery after the COVID-19 pandemic and Ukrainian war crises.

Studies from the World Bank have shown that Kosovo has enough technical capacity to transition towards renewable sources by utilising solar and wind technologies (World Bank, 2018). Furthermore, investing in new interconnection lines, integrating its market regionally and investing in secondary and tertiary reserves will allow for higher security. The draft Energy Strategy 2022-2031 shows that apart from auctions, some of the initiatives of the government include a EUR 227.3 million financing agreement with Millennium Challenge Corporation on battery storage and a EUR 64 million agreement with Germany’s KfW on solar heating and electricity generation, which aim to help the country move towards the energy transition (Ministry of Economy, 2022). Lastly, the strategy aims to reach 35 per cent of electricity generation from renewable energy sources.

When talking about renewable self-consumption, it’s vital to remember that this section isn’t recognised or valued as a significant renewable energy industry. The existing policy framework does not emphasise or even mention renewable self-consumption objectives. As a result, Kosovo should either pass a Renewable Energy Law or change its Energy Law to incorporate renewable energy self-consumption. Kosovo’s energy sector has no technical or technological limits when it comes to the installation of all forms of renewable technology by self-consumers who are linked to the grid via net metering. The only limitations stand in financing and bureaucratic procedures for gaining the necessary permits. The draft Energy Strategy 2022-2031 is the only strategic document that addresses prosumers as an essential target group and aims to further support their deployment. However, the strategy alone cannot support the deployment of prosumers; therefore, the government of Kosovo needs to take swift action in adopting the necessary legislation and developing support programmes to further enable a free and fair market, while promoting the renewable energy sector.

References
Bota Sot. (2022, January). Drejtori i KEK-ut tregon se kur pritet të kthehet në funksion blloku B2 i “Kosova B”. Prishtine, Kosovo.
Energy Regulatory Office. (2020). Annual Report 2020. Prishtine: GoK.
Energy Regulatory Office. (2022). Consultation Report Review of the Tariff Structure for Regulated Household Customers supplied by USS. Prishtine: ERO.
Energy Regulatory Office. (2022, March). https://www.ero-ks.org/zrre/sq/konsumatoret-shtepiak/energjia-elektrike/tarifat-e-energjise-elektrike. Retrieved from https://www.ero-ks.org: https://www.ero-ks.org/
ERO. (2021). ERO Annual Report 2021. Prishtine: GoK.
Ministry of Economy. (2017). Energy Strategy 2017-2026. Prishtine: GoK.
Ministry of Economy. (2022). Draft National Energy Strategy 2022-2031. Prishtina: Government of Kosovo.
World Bank. (2018). Energy in Kosovo. Prishtine: World Bank.

Romania’s decision to phase out coal by 2030: how will it serve a just and green energy transition?

The decarbonisation law, which has been in public consultation for 10 days, proposes the permanent closure of coal power plants and mines in Romania by 2030. The graphs below show how this new law would speed up the closure of coal assets, compared to the rate at which a Bankwatch analysis published last year predicted they would close.

This is because the law schedules an accelerated closure of several coal production units and mines especially in 2026 when Black Sea gas is expected to enter the market.

However, the law does not reflect the fact that some power plants have already been closed or non-functional for several years. Contrary to the government’s claims that 4,900 MW needs to be closed, Romania currently has only 2,895 MW of coal capacity connected to the grid, according to the system operator.

Public participation, State aid and safety nets

The coal phase-out will be managed by a Coal Commission with assistance from an Advisory Committee, composed of diverse stakeholders including representatives from unions, market players, experts, academia and civil society.

The closure of capacities will be supported with State aid. Each coal-fired power plant and mine included in the plan will receive State aid, and the European Commission will be subsequently notified of this. If the Commission does not approve the aid, the producers will be obliged to close the capacities anyway, with support from other resources. So far, there is no estimate of the costs involved in closing these assets.

The law provides safety nets for workers affected by closures. Thus, they will have priority in enrolling in reskilling courses and in the installation of their own photovoltaic panels (3 to 5 kilowatts) from non-reimbursable funds.

Bankwatch recommends that the relatives, including the spouses of the miners, should be considered for skilling or reskilling courses, which would give them the potential to increase the family income. Furthermore, young people are also an important resource and should be trained in areas related to the energy transition. The idea behind this is to help solve some of the inequalities in coal mining regions and get the community involved in the re-development process.

Still, the law does not consider compensation for the long-term negative effects of coal mining, which has affected the health of hundreds of locals in the area of open pits.

To be in line with the principles of just transition, the aid should be extended to them for the provision of safe drinking water, as well as ensuring access to private property and agricultural land.

Checks and balances

Contravention and criminal fines are being put in place for producers who do not comply with this law. Thus, for the construction of new coal production capacities and for breaching the decisions on coal capacities and mines closures, producers will receive contravention fines.

At the same time, the opening of new mines or exploitations without agreement will be punished as a criminal offence. This is very important, because frequently the producers continued to expand their coal pits and operate their thermal power plants even after court decisions demand they suspend their activity.

Fossil gas won’t save the day

After closing the coal assets, the energy previously produced from coal must be replaced by other sources. Therefore, a successful transition also requires plans for the development of the energy system. The closure of thermal power plants must be balanced with the opening of new ones, preferably producing renewable energy.

To achieve this, the renewables industry needs to be stimulated and have a stable regulatory framework. However, Romanian authorities are running late in fully transposing the Renewable Energy Directive and the Energy Efficiency Directive, as well as in passing the Offshore Wind Law. There is also the need for a legal framework for the creation of energy communities – groups of people who produce their own energy and exchange it with each other or share it with a larger network.

In any case, Romania should avoid replacing one fossil fuel with another.

Most coal replacement plans are linked to new gas-fired power plants and are largely based on new exploitations from the Black Sea. Fossil gas produces fugitive methane emissions throughout its entire supply chain. Methane is a fossil fuel 86 times stronger than carbon dioxide in the first 20 years of its life, so it has a huge potential to warm the atmosphere in the short term. Some studies show that if methane leaks in the entire system are 3 per cent of the total amount circulating, then gas is as polluting as coal.

Watershed moment for EIB’s climate ambitions as EU rushes to quit Russian fossil fuels

Photo: Magnus Manske

More than ever before, the European Investment Bank (EIB) has to step up its climate finance game.

With European determination to phase out the import of Russian gas, oil and coal, the EU’s financial arm is expected to play an important role, particularly under the European Commission’s REPowerEU initiative.

Skyrocketing energy prices have already proven oil and fossil gas, especially when imported from authoritarian regimes, are no reliable energy sources. Crucially, volatile fossil energy prices disproportionately affect the poor.

In the face of both war and a worsening climate crisis, EU public finance needs to be fully mobilized to help expedite the decarbonisation process.

In November 2020, the EIB adopted the ‘EU climate bank’ moniker, pledging to align all its operations with the Paris climate agreement. Now, as the global energy map is being redrawn, the Bank needs to help accelerate Europe’s shift away from fossil fuels.

In fact, the Commission has already announced it intends to work with the EIB to step up support for energy efficiency, renewables and electricity networks via grants, loans, technical support and other instruments.

When EU finance ministers meet on Friday (17 June), in their capacity as governors of the EIB, they need to ensure that the Bank’s transformation into ‘the EU’s climate bank’ has no strings attached. No asterisks and no exemptions.

In the name of so-called diversification of energy sources, political pressure is mounting to expand the EU’s fossil gas import infrastructure. But if the EIB is to live up to its commitment to no longer finance fossil fuels – in force since the beginning of 2022 – it needs to resist any attempts to use EIB money to enable any oil, gas or coal projects. There must be no turning back to fossil fuels.

There is reason for serious concern. A new analysis by Counter Balance and CEE Bankwatch Network released today finds that during 2020-2021 the EIB handed out €7.4 billion to companies operating in the fossil fuels industry such as EDF Group, TotalEnergies, Eni and Orlen even if in most cases for development of renewable energy and electricity transmission and distribution. Out of this, €2 billion went to companies heavily dependent on coal for electricity or heating. Even though the EIB will ask such borrowers to present decarbonisation plans, in reality they will not have to commit to any specific short-term actions nor coal phase out deadlines.

In addition, 20 percent of the EIB’s transport portfolio during that same period – €4.36 billion – went to carbon intensive projects, including highways, small roads, airport infrastructure and seaport expansions.

These investments, in both the energy and transport sectors – if they do not end up as colossal stranded assets as the EU ratchets up its climate and energy targets – could bog down Europe’s effort to cut greenhouse emissions.

Not least, these EIB-backed projects have effectively helped entrench Europe’s dependence on fossil fuels, including Russian fossil fuels, thus becoming a security liability which further complicates the EU’s departure from gas, oil and coal.

The upcoming midterm review of the EIB’s energy policy has to close all remaining loopholes that could allow for EIB money to support fossil gas projects.

Instead, the EIB should use its financial clout to drive the implementation of energy efficiency programmes, the deployment of heat pumps and the rapid expansion of renewables – with a focus on community-led and small-scale projects – across Europe and beyond.

In January 2021, EIB President Werner Hoyer told reporters that ‘gas is over.’ This bold statement, coming from the head of the world’s largest international public lender, was symbolic for the fight against continued fossil fuel financing. It is essential that EU finance ministers, as governors of ‘the EU’s climate bank,’ restate this commitment and instruct the Bank to redouble its effort to put Europe on a new, sustainable energy path.

EU investments: voice of the public must be heard!

Several civil society organisations recently voiced concern over the growing tendency of governments to make decisions concerning EU funds behind closed doors, resulting in declining levels of civic participation, transparency and accountability. With further EU investment decisions on the horizon, more of the same secrecy seems likely.

The planning and implementation of recovery plans, for example, were unique and unprecedented not only in terms of the amount of money, but also the speed with which spending plans were decided.

In just a matter of months, most – although not all – EU Member States had drafted and submitted their recovery plans, which collectively totalled almost EUR 700 billion, to help economies recover from the COVID-19 pandemic crisis and make economies and societies more sustainable and resilient.

The investment decisions made during this time will have long-term and far-reaching consequences. Unfortunately, such decisions were made by a select group of people, almost entirely excluding the public and civil society from having a say in where and how this money should be spent.

Public consultations on the plans, for example, were in most cases only opened for a period of one or two weeks yet required participants to monitor and scrutinise hundreds of pages of detailed information. Similarly, additional projects were secretly snuck into plans after consultations were officially closed to avoid public scrutiny, as was the case for wind farms in state forests in Latvia.

The preparation of recovery plans, however, showed that the Member States which involved the public in the planning process developed the most ambitious recovery plans, and made the most progress towards realising the EU Green Deal.

As this extraordinary amount of funds is now being disbursed, and consequently projects are starting to be implemented, things have not improved. One year on, the full details of what specifically will be financed are still unknown. Moreover, civil society organisations and social partners are not associated with the roll-out of money. As our mapping shows (see table below), few Member States have managed to set up a genuine monitoring mechanism or process where decisions are deliberated publicly and collectively. In many cases, the establishment of such committees has been delayed, even though the recovery plans were approved months ago – a clear sign that governments have no intention to involve civil society organisations in monitoring the implementation of the reforms and investments. This has resulted in weakened participatory democracy, lack of transparency and citizens’ lack of trust in public institutions.

New legislation, same problems

On 18 May, the European Commission unveiled REPowerEU, an action plan to rapidly diversify and increase the deployment of renewable energy, in light of the Russian invasion of Ukraine.

One of the ways the Commission proposes to finance these additional investments is by giving Member States the option to transfer Cohesion Policy funds, which are typically not fully spent at the end of budgetary cycles, to the budgets for the recovery plans, which will now include an additional REPowerEU chapter. While the efforts to increase renewable energy deployment are thoroughly welcome both in terms of energy independence and decarbonisation, the issue of public participation once again is almost entirely absent.

Cohesion Policy funds work via a ‘shared management’ process, whereby the disbursement and management of the funds are done in cooperation between the Commission and the Member States. As part of this fund’s design, Member States are required to set up monitoring committees, formal platforms where stakeholders, including civil society, can scrutinise the process and ask questions where necessary. However, the Recovery and Resilience Facility (RRF) has no such requirement. They do not work under the process of shared management. For information on the state of play on monitoring committees under the RRF, see the mapping prepared by CEE Bankwatch Network and our national partners.

Therefore, transferring funds away from the Cohesion Policy programmes, which require public participation and consultation, to the recovery plans, which don’t have this requirement, effectively gives Member States ‘free rein’ to make investment decisions, and allows them to avoid opening up to public input and scrutiny. At the same time, there is a question about who will decide how much will be transferred away from Cohesion Policy funds to finance REPowerEU objectives, as well as what these funds will actually finance.

It is possible that these funds could be reallocated for new investments in renewable energy. We would welcome this, unless it means removing Cohesion Policy programmes that would have important benefits for the environment and nature. Bankwatch’s assessment of available operational programmes has revealed that national authorities have earmarked funding for positive and urgent areas, such as biodiversity conservation measures. Will these positive programmes be removed in order to generate additional funds to finance REPowerEU objectives?

There is further concern that the REPowerEU chapters that will be added to the recovery plans will need to be prepared on a very tight timeline, preventing public scrutiny. Although there is no fixed deadline for when they must be submitted, the RRF will run until 2026, with loans being committed by the end of 2023. As a result, this highly short time span will not allow for proper, meaningful public consultations.

The Commission has already conceded that the level of public consultation and involvement during the initial recovery planning process was unsatisfactory, stating that: ‘the extent of consultations in the preparation of the initial RRPs varied’. This was further shared by the European Parliament’s report on the mid-term review of the RRF implementation.

Another issue is that REPowerEU removes the requirement to conduct environmental impact assessments (EIAs) when mapping where renewable energy projects should be placed. Not only are EIAs a critical part of assessing the potential environmental harm at the project level, but they are also crucial for ensuring meaningful public participation in decision-making and thereby better aligning investments with needs, as well as strengthening the quality of decisions. This stands in stark contrast to treaties like the Aarhus Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, to which each EU Member State is a party. Such treaties require public participation for any plan, programme or policy related to the environment, including financial and budgetary plans, so that should also apply to the recovery and resilience plans.

Removing this step is yet another example of the continued and growing trend towards decision-making behind closed doors and reducing public participation to a mere formality. A state of urgency doesn’t justify the exclusion of civic engagement in decision-making. Opening the processes, on the contrary, is a sign of good governance and the foundation for the green and just transformation of economies and societies, as reflected in the European Green Deal.

How can REPowerEU benefit from greater public participation?

Better public consultation and participation is not a bureaucratic exercise designed to slow decisions down. On the contrary, it has proven to reflect regional and local needs better by allowing stakeholders to demand more accountability, transparency and public ownership. This was the case for the Bulgarian recovery plan, in which the delayed process allowed for increased input and proposals from civil society to be included, therefore improving the overall quality and ambition of the plan. The challenge will now be to make sure sufficient scrutiny will be possible during the implementation, so that those efforts will not be wasted. The energy transition has both high social costs and needs a more holistic approach for addressing the multiple crisis we are facing. Therefore, civil society can prove a vital asset, not a burden, in sharing knowledge and expertise on what should and should not receive financing through REPowerEU.

During initial recovery fund planning, many concerns and positive proposals for reforms and investments were simply not taken into account. Ahead of the amending of the RRF regulation, we call on the European Parliament and the Council of the EU to improve the regulation to include provisions for ensuring sufficient civic participation in REPowerEU.

CBAM’s coming, it’s time to put a price on carbon!

The Council of EU Environment Ministers is expected to vote on this at the end of June, in the final decision for the Proposal for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism, or the Carbon Border Adjustment Mechanism (CBAM) file.

This mechanism is an important step in levelling the playing field in the European energy market, considering the high price EU citizens, alongside Western Balkan ones, pay for air pollution in health and environmental impacts.

Between 2018 and 2020, the EU imported around 8 per cent of the electricity produced by Western Balkan coal plants, which is artificially cheap because the countries do not apply carbon pricing – with the dubious exception of Montenegro – and their coal plants exceed the legal limits for air pollution.

Paradoxically, even though the EU benefits from this cheap imported electricity, it also pays a high price. During the same period, coal power plants in the Western Balkans caused an estimated 19,000 deaths, with almost 12,000 of these due to non-compliance with power plant emissions limits. Over half of these were in the EU.

How will CBAM work and is there a way that Western Balkan countries can avoid it?

CBAM would embed a CO2 price into the cost of electricity the EU imports from the Western Balkans, synced with the EU price for one tonne of CO2. This price would be updated on a weekly basis.

If we assume a conservative price of EUR 50 / tonne of CO2, then the average annual revenue from the Western Balkans electricity sold would be approximately EUR 534 million /year. This revenue will go to the EU budget, which would return, under different schemes, as support for climate action.

But the Western Balkan countries can avoid applying the CBAM by introducing their own carbon pricing systems and using the revenues to fund decarbonisation and just transition themselves. However, such a carbon pricing system would need to happen by 2024 or 2025, something that will be clarified in the votes by the EU Council and Parliament later this month.

The governments of the Western Balkan countries have a narrow window of opportunity to design, plan and start implementing carbon pricing and accelerate the transition that the rest of Europe is already on board with. The Energy Community Decarbonisation Roadmap is a good place to start.

*Electricity is one of the five areas to which CBAM will apply. The rest are: iron and steel, cement, fertilisers and aluminium.

**CBAM applies to any country outside the EU, except those that are participating in or are linked to the EU Emissions Trading System (ETS) and also countries with comparable carbon prices.

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