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Western Balkan governments still complicit in deadly coal pollution – new report

Seven years since pollution control rules came into force under the Energy Community Treaty, in 2024 sulphur dioxide emissions from coal plants included in the National Emissions Reduction Plans (NERPs)(2) of Bosnia and Herzegovina, Kosovo, North Macedonia and Serbia were still collectively six times as high as allowed.

For the first time, Bosnia and Herzegovina’s NERP coal plants were the highest SO2 emitters, with 212,840 tonnes – an increase from the previous year and 11.3 times as high as allowed. Serbia followed, with 205,925 tonnes, or 4.6 times as high as allowed.

Region-wide, SO2 emissions have decreased only slightly since 2018. And the emissions limits were more stringent in 2024 than in previous years, leading to an even larger compliance gap.

For the fifth time since 2018, the biggest individual SO2 polluter in 2024 was Ugljevik in Bosnia and Herzegovina, with 112,943 tonnes – even more than the previous year. Its operator, an Elektroprivreda Republike Srpska subsidiary, has spent at least EUR 85 million, financed by a Japan International Cooperation Agency loan, on a desulphurisation unit, but has admitted it is not working, partly because it is an ‘economic burden’.

No fewer than six units across the region exceeded their individual ceilings for sulphur dioxide emissions by more than ten times – Ugljevik, Gacko, Tuzla 6 and Kakanj 7 in Bosnia and Herzegovina; Kostolac A2 in Serbia; and Bitola B 1 & 2 in North Macedonia.

Dust pollution from NERP coal plants in the region was nearly twice as high as allowed in 2024 (1.9 times the limit). Emissions dropped slightly from 2023 but remained similar to 2018 levels. 

The highest dust emitter was Gacko in Bosnia and Herzegovina. It emitted 3,339 tonnes – 13.7 times as much as allowed. After protests by local people, improvements were announced in autumn 2023, however the plant’s pollution in 2024 was even higher than the previous year.

Nitrogen oxides pollution also totalled 1.4 times as much as allowed in the countries’ NERPs in 2024, compared to 1.3 times in 2023. Bosnia and Herzegovina, Kosovo and Serbia all continued to breach their NOx limits, with Nikola Tesla B in Serbia emitting the most – 12,418 tonnes.

In addition to the NERP breaches, at the end of 2023, the deadline for closing the smallest and oldest plants under the ‘opt-out’ limited lifetime derogation expired. All three countries in the Western Balkans with coal power plants subject to this rule – Bosnia and Herzegovina, Montenegro and Serbia – are still breaching it, as none of the plants have closed.

Montenegro’s Pljevlja plant has been running illegally since late 2020, and in 2022 was joined by Tuzla 4 and Kakanj 5 in Bosnia and Herzegovina and Morava in Serbia. The Kolubara A plant, also in Serbia, also failed to stop operating at the end of 2023.

The Energy Community Secretariat has opened several infringement-type cases against the countries (3) but not a single government has imposed penalties on the coal plants in question. Nor do they have clear, updated and realistic plans for compliance and/or closure.

Davor Pehchevski, Balkan Energy Coordinator at Bankwatch – ‘In six months, the EU’s carbon border adjustment mechanism (CBAM) will finally limit exports of Western Balkan countries’ carbon-intensive electricity by imposing fees on imports to the EU. This will make their ageing, inefficient coal plants even less economic. But the Balkan governments and utilities seem oblivious, as if they have all the time in the world. Clear, workable plans are urgently needed.’

Pippa Gallop, Southeast Europe Energy Policy Officer at Bankwatch – ‘EU enlargement is back on the agenda, but the harsh reality is that Western Balkan governments are showing no interest in people’s health or the environment. Instead of a robust response to these chronic breaches, the European Commission recently prioritised the Jadar lithium mine in Serbia as ‘strategic’, rewarding the regime’s failure to uphold the rule of law. This has to change, and fast’.

Contacts:

Davor Pehchevski,

Balkan Energy Coordinator

davor.pehchevski@bankwatch.org  

Tel: +389 71 264 087

Pippa Gallop

Southeast Europe Energy Policy Officer

pippa.gallop@bankwatch.org

Tel: +395 99 755 9787

Ioana Ciută, Strategic Area Leader – Beyond Fossil Fuels

ioana.ciuta@bankwatch.org

Tel: +40 724 020 281

 

Notes for editors: 

(1) The report is available at ComplyOrClose.org

(2) As part of their obligations to comply with the Large Combustion Plants Directive under the Energy Community Treaty, four Western Balkan countries – Bosnia and Herzegovina, Kosovo, North Macedonia and Serbia – have drawn up National Emission Reduction Plans (NERPs) covering the period from 2018 to 2027. Instead of requiring each large combustion plant to comply with the emission limit values from the Large Combustion Plants Directive from 1 January 2018, these plans allow the countries to calculate national emissions ceilings for sulphur dioxide, nitrogen oxides and dust, and to gradually decrease their total emissions from selected pre-1992 large combustion plants until 2027. In 2027, all the plants included in the NERPs will individually need to be in compliance not only with the emission limit values from the Large Combustion Plants Directive, but also with Part 1 of Annex V to Directive 2010/75/EU on Industrial Emissions.

(3) Due to the breaches of the NERP pollution limits, in March 2021 the Energy Community Secretariat opened dispute settlement cases against BiH, Kosovo, North Macedonia and Serbia.

In July 2023, the Energy Community Secretariat took further steps against Bosnia and Herzegovina, Kosovo, and North Macedonia, making a reasoned request to the Energy Community Ministerial Council to make decisions on the cases, which it did in December 2023. The case against Serbia remains open but has not escalated due to ongoing desulphurisation investments.

Due to the breaches of the opt-out provisions, the Energy Community Secretariat also opened dispute settlement cases against Montenegro in April 2021, Bosnia and Herzegovina in October 2022, and Serbia in October 2023.

Landmark deal ends 28-year Bulgaria motorway dispute with agreement to protect Kresna Gorge

The agreement recognises both the importance of completing this remaining segment of the motorway and the ecological significance of the Kresna Gorge — part of two Natura 2000 sites and an area of exceptional biodiversity vital to the conservation of Europe’s nature. 

As a sign of good will, civil society members of the Save Kresna Gorge coalition have also withdrawn their legal appeals related to the construction of the final section of the motorway, leading to the closing of ongoing court cases. 

The agreement outlines each party’s commitments and marks tangible progress in permanently and fully redirecting transit traffic away from the Kresna Gorge. The existing I-1 (E79) road, which currently runs through the gorge, will be retained for local use only.

Struma motorway between Sofia and Thessaloniki is part of the core network of European roads under the TEN-T Regulation, which links major cities and nodes, and must be completed by 2030. 

Andrey Ralev, Biodiversity Campaigner at CEE Bankwatch Network – ‘By reaching this historic agreement, Bulgaria now has a clear path to meet the requirements of the TEN-T Regulation and ensure that the Struma motorway complies with the core network criteria. Keeping the motorway within the Kresna Gorge would have made such compliance impossible. Now it is up to the European Commission to support this solution, which aligns with both EU transport policy and the protection of biodiversity under Natura 2000.‘

Contacts:

Andrey Ralev, Biodiversity campaigner, CEE Bankwatch Network,  andrey.ralev@bankwatch.org 

Desislava Stoyanova, Economic justice campaigner at Environmental association Za Zemiata, Bulgaria – desislava@zazemiata.org 

Notes for editors:

The construction of this section of the Struma motorway has been closely monitored under the Council of Europe’s Convention on the Conservation of European Wildlife and Natural Habitats (Bern Convention) since 2001. At its 44th meeting in December 2024, with the support of the Convention’s Secretariat, a convergence of views was reached between the Bulgarian authorities and the complainants regarding the Kresna Gorge.

The Standing Committee recommended that the Bulgarian authorities prioritise technically feasible solutions that route the western lane of the Struma motorway — in the direction from Sofia towards Greece — outside the Gorge.

Following the Committee’s decision, the Bulgarian Council of Ministers adopted a formal roadmap for completing the Struma motorway (Decision No. 62/12.02.2025). As part of this roadmap, preparations are under way to commission a study identifying an alternative route outside the Kresna Gorge for the western lane, including requirements to avoid significant impacts on species and habitats within the Kresna and Kresna–Ilindentsi Natura 2000 sites.

The motorway received significant funding from the European Union. The ‘Operational Program Transport 2007-2013’ funded the construction of sections 1, 2, and 4, as well as the preparation of section 3 through Kresna Gorge.

Vulnerable households at risk: Central and eastern European countries struggle to finalise national social climate plans

Despite regional challenges, the Estonian and Polish governments are ahead of the curve, having already published their draft plans. The Estonian plan prioritises the housing sector, dedicating 76 per cent of its Social Climate Fund allocation to building renovations and social housing, with 21 per cent going to public and demand-based transport services. Poland’s draft plan dedicates up to 37 per cent of its allocation to direct income support, 39 per cent to housing measures, and 21 per cent to public transport. 

Governments in Romania and Latvia are showing signs of good practice through early stakeholder engagement and transparency. Romania’s plan is expected to include support for heat pumps, building insulation, and energy communities, while Latvia’s government is exploring, among other interventions, renovation of social housing, demand-based public transport, electric vehicle and bike leasing schemes. The Slovakian government is set to prioritise investments in energy efficiency and public transport, with the largest allocations going to family house renovations, social housing and crisis facility upgrades, and apartment renovations. 

But elsewhere, red flags are flying. The governments of Hungary and Bulgaria have fallen silent, with no draft plans, no structured public consultations, and unclear investment strategies. Likewise, the Italian government has yet to reveal any details on its plan, leaving civil society and municipalities in the dark.  

On the critical issues of energy communities and decentralised solutions, only the Romanian and Polish governments have shown strong commitment. Poland’s government is set to launch a pilot programme aimed at establishing around 80 municipal- and civil society-led energy communities. Encouragingly, the introduction of these measures – absent from the initial draft plan – is the direct result of recommendations by Polish civil society. 

Overall, however, the trend is for a lack of transparency and preparedness. This risks delaying support to the very people who need it most, with low-income families in parts of eastern Europe already spending up to 14 per cent of their income on energy alone. 

While there is no one-size-fits-all solution, a set of overarching recommendations can help guide Member State governments towards more effective and equitable national social climate plans – plans that safeguard vulnerable households, foster public trust, and unlock the significant potential of the clean energy transformation. In addition, governments must institutionalise structured and meaningful stakeholder engagement, increase local and regional capacities, and ensure that resources reach the right beneficiaries in line with the EU’s long-term climate, environmental, and social goals. 

Just as Member State governments are expected to finalise their plans, the transposition of the EU’s upcoming Emissions Trading System (ETS2) is set to begin, with emissions reporting starting in 2025. Yet countries like the Czech Republic, Slovakia, Bulgaria, Poland, and Estonia are openly pushing for postponement. But delaying the rollout of ETS2 without delivering robust national social climate plans will leave millions without a safety net and jeopardise Europe’s climate goals. Because ultimately ETS2 isn’t just about putting a price on carbon – it represents a commitment to leave no one behind. Only by aligning ETS2 with the Social Climate Fund can we turn this commitment into reality – ensuring that social protection keeps pace with Europe’s climate ambition. 

Anelia Stefanova, strategic area leader for energy transformation at CEE Bankwatch Network: ‘National social climate plans are the clearest indicator of governments’ intent to deliver on the promise of a just transition. Understanding who is involved in shaping the plans, how they are developed, and who ultimately benefits is key to determining whether the Social Climate Fund will bring justice, social security and well-being – or become a missed opportunity. While some governments are moving forward, others are treating the deadline as a distant suggestion. Meanwhile, vulnerable households – especially in central and eastern Europe – are already feeling the pressure of high energy prices. The EU’s climate ambition and its funding instruments must go hand in hand with social justice. We need action, clarity, and honesty. And we need it now.’ 

Maike Kirsch, policy advisor at E3G: ‘National social climate plans are a crucial new instrument to ensure that the benefits of Europe’s emerging clean power system reach those who need them most. Targeted and inclusive support is essential for the energy transition to help reduce existing inequalities and lack of public trust. By defining vulnerability more effectively, investing in structural solutions, and scaling proven measures, Member States can make the Social Climate Fund a game-changer. With the right focus and political will, the successful development of the plans is well within reach – cutting emissions, lowering bills, and strengthening support for a fair and competitive energy future.’ 

Read the full report ‘Climbing together: Is the Social Climate Fund working for those who need it most?’ 

Environmental groups once again call on KfW to stop funding biomass plants in Serbia

As shown in photographs taken and shared by the campaigners [2], the Novi Pazar plant burns roundwood, i.e. whole stems of trees taken directly from the forest. Furthermore, campaigners found no evidence of any control of wood dust, exposure to which is harmful to human health, nor did they see evidence of adequate fire prevention measures being implemented. Nonetheless, there are plans to further expand this plant, i.e. to increase the amount of wood it burns.

Natasa Kovacevic, from CEE Bankwatch Network, who took part in the visit during February 2025, states: “Burning large quantities of wood for a heat and power plant is never climate friendly or sustainable. It emits no less CO2 than burning coal does, and it emits large quantities of harmful small particulates and other air pollutants. However, seeing a KfW-funded plant burning whole stems of wood and operating without adequate health and safety protections is particularly shocking.”

Zoe Lujic from Earth Thrive & Balkan Centre for the Rights of Nature, who took part in the same visit to the plant, adds: “KfW’s funding for biomass energy is clearly linked to more logging of forests, in a country where illegal logging is already rampant. Cutting down trees and forests can never be part of a transition to true cleaner energy. Instead, it causes grave harm to the climate and to all the plant, animal, fungi and other living communities who live and depend on forest ecosystems and goes against their right to life.”

The joint letter reiterates previous calls expressed in an open letter from 2024, signed by 41 environmental groups,  [3] for KfW to stop this project at once and invest in energy efficiency and conservation, as well as wind, solar and geothermal energy in Serbia instead. 

Contacts:

  • Almuth Ernsting, Biofuelwatch, +44-7930-227525
  • Natasa Kovacevic, CEE Bankwatch Network, +38267030033
  • Zoe Lujic, Earth Thrive & Balkan Centre for the Rights of Nature, zoelujic@earth-thrive.org
  • Jana Ballenthien, ROBIN WOOD, +49-40-38089211, wald@robinwood.de

Notes:

[1] https://www.biofuelwatch.org.uk/2025/second-ngo-letter-to-kfw-serbia-biomass 

[2] Photos free to use with credits to Nataša Kovačević, drive.google.com/drive/folders/12C2C3QSqSt1LZSX46azP2UbX0BqBy6uq , 

[3] biofuelwatch.org.uk/wp-content/uploads/Open-Letter-to-KfW-English-version.pdf 

Joint NGO statement: New EU budget must ensure dedicated funds for environmental protection and just transition in the Western Balkans

68 civil society organisations have today issued a joint statement calling on the EU to ensure dedicated funds for environmental protection and just transition of coal-dependent regions in the Western Balkans in the post-2027 EU budget.

So far, there has been no dedicated EU funding for coal-dependent communities in the region, but funding for environmental protection and civil society has mostly been provided through the Instrument for Pre-Accession Assistance (IPA). Yet it now seems that the EU’s support for the Western Balkans in its 2028-2034 budget will no longer include IPA.

Instead, EU funding for the countries would rely almost entirely on a conditions-based system similar to the EU’s Recovery and Resilience Facility and the Western Balkans Reform and Growth Facility. These involve disbursing funds to the countries’ budgets based on the implementation of various reforms. In parallel, infrastructure projects proposed by the countries are funded through the Western Balkans Investment Framework (WBIF).

Davor Pehchevski, CEE Bankwatch Network – It’s welcome that the EU is exploring new ways to advance rule of law and environmental protection in the Western Balkans, but it’s too early to know whether the Reform and Growth approach works here. The evidence so far isn’t encouraging, as the countries’ Reform Agendas include very few environmental actions. It’s reasonable to continue testing this approach, but not for it to cover almost all EU funds.

Mirjana Jovanović, Belgrade Open School – Complying with EU environmental legislation is the most challenging part of accession, and just transition of coal regions is already late. So the EU needs to support these, along with civil society, irrespective of how well the Western Balkan governments are performing generally. Funding must be consistent, predictable, and bound to specific projects. It cannot wait for government reforms that may never materialise. 

The groups also emphasise the need for significant improvements in the Reform and Growth approach, including meaningful, timely and effective public consultation on the planned reforms and investments; the inclusion of more environmental reforms, including dissuasive penalties for legal breaches, and a focus on rule of law, environmental and social improvements rather than economic growth per se.

The Commission is expected to present the next financial framework in mid July 2025, ending months of speculation on its scope and structure.

Contacts

Pippa Gallop
Southeast Europe Policy Officer
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787

 

This activity is part of the “Green Agenda Navigator” project supported by the European Union. The project is implemented by the Belgrade Open School in cooperation with six regional partners: the Aarhus Centre Association, Eco-Team organization, Eco-Z organization, the Center for Environmental Research and Information Eko-svest, the Protection and Preservation of Natural Environment in Albania organization and CEE Bankwatch Network.

Central Asia: environmental groups and scientists call on international financial institutions to preserve key freshwater bodies and stop supporting destructive hydropower projects

On the International Day of Action for Rivers, the organisations stress that the rapid development of hydropower projects in the region threatens to fragment its unique river basins, disrupt critical natural habitats and lead to human rights abuses. Despite existing safeguards for UNESCO World Heritage sites and other protected areas, increasing international finance for large- and small-scale hydropower plants could severely damage the region’s rivers.

If all planned hydropower projects are implemented, the vast river basins of Central Asia will hardly retain any unfragmented natural river habitat.  

In December 2024, the World Bank and AIIB approved financing for the Rogun mega-dam project in Tajikistan – dubbed the ‘largest dam in the world’ – which would displace 60,000 people and affect the unique floodplain ecosystems of the Tigrovaya Balka Nature Reserve, a UNESCO World Heritage Site. Kyrgyzstan recently declared an ‘energy emergency’ to enable the construction of hydropower projects throughout the country, including within the Western Tien–Shan World Heritage Site. 

In 2025, a renewables auction scheme in Kazakhstan supported by the EBRD will be misused to support 500 MW of new hydropower projects. While the EBRD, ADB and IFC are supporting a strategic environmental and social assessment of renewable projects in Uzbekistan, a presidential decree plans for 21 new large hydropower plants. And state-owned company UzbekHydroEnergo has identified 250 prospective sites for small hydropower plants under public-private partnerships in a country with 85 per cent desert or semi-desert.  

A map of key freshwater bodies of Central Asia published this month highlights the most threatened rivers. They were identified during more than two years of research involving some of the region’s top biodiversity and hydrology experts. 

With more than 300 existing sizeable dams in the region and more than 200 new ones planned or under construction, there is an urgent need to protect the key rivers left untouched during the Soviet era. 

Andrey Ralev, Biodiversity Campaigner at CEE Bankwatch Network – ‘While the middle and lower stretches of Central Asia’s Amu Darya and Syr Darya rivers are seriously disrupted, leading to the Aral Sea crisis, their mountain tributaries still hold unique biodiversity. Development banks should endorse their protection, rather than financing destructive hydropower plants’, says Andrey Ralev, Biodiversity Campaigner at CEE Bankwatch.  

Evgeny Simonov, international coordinator of the environmental coalition Rivers without Boundaries – ‘Often in Central Asia, the construction of dams and reservoirs is presented as inevitable, a kind of forced measure to preserve water resources. However, global experience tells us that such an approach is extremely ineffective from an economic point of view and often has the most destructive consequences from an environmental point of view.’

Katharine Lu, senior manager at Friends of the Earth US – ‘Our research indicates an immense toll on riparian communities and ecosystems amidst the climate and biodiversity crisis. International banks therefore need to step away from blindly supporting hydropower build out and consider lower impact, decentralized energy options.’

Contacts:

Andrey Ralev, Biodiversity Campaigner | CEE Bankwatch Network
andrey.ralev@bankwatch.org

Eugene Simonov
International Coordinator |  Rivers Without Boundaries
simonov@riverswithoutboundaries.org

Katharine Lu
Senior Manager | Friends of the Earth US

Tanya L. Roberts-Davis
Senior Energy Campaign Manager (SEA Program) | International Rivers

Dustin Schaefer
Team Lead – Multilateral Financial Institutions | Urgewald e.V.

Notes for editors

More information about the need to protect Central Asian rivers: https://bankwatch.org/project/central-asian-rivers 

The map of key freshwater bodies in Central Asia can be found at: https://arcg.is/0fDfGP0

Rivers without Boundaries and CEE Bankwatch Network have also published a toolkit for activists entitled How to interact with development banks lending to hydropower projects in Central Asia.  This toolkit provides local NGOs and community leaders with detailed instructions and real-life examples on how to use accountability mechanisms of international finance institutions to defend their environmental rights and develop meaningful dialogue on infrastructure projects being considered for financing. The toolkit can be found in English or Russian.

Environmentalists hope that the GIS model they have developed – while not a substitute for individual biodiversity assessments – will be in demand not only by specialists, but will also be used by potential investors to select projects with the least impact on the environment.’