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One year on: Most social climate plans still missing despite EU legal deadline

Exactly one year after the June 2025 deadline, only Sweden and Lithuania have formally adopted their social climate plans, making them the only EU Member States currently eligible to receive disbursements from the Social Climate Fund. These early payments are essential for preparing administrations, launching investment programmes, and alleviating the socio-economic pressures caused by rising energy and transport costs for the most vulnerable households and transport users.  

To mark this missed milestone, CEE Bankwatch Network has joined a coalition of civil society organisations in urging national decision makers to act without further delay. The signatories include Carbon Market Watch, the European Environmental Bureau, Climate Action Network Europe, REScoop.eu, the Cool Heating Coalition, FEANTSA, and the LIFE Effect project. 

The need for immediate action is clear. Nearly EUR 87 billion intended to support vulnerable households, transport users and microenterprises remains inaccessible. Despite this urgency, only a handful of Member States have submitted draft social climate plans to the European Commission for approval: Slovenia, the Netherlands, Malta, Latvia, Greece and Croatia. The remaining Member States have yet to submit their plans, leaving millions of citizens unprotected. Without upfront funding, governments cannot begin the long-term structural investments needed before the launch of the EU Emissions Trading System (ETS2) in 2028, including building renovations, heat pump deployment and clean mobility support. 

Households in eastern Europe spend more than twice as much of their income on energy as those in western Europe. The combination of ageing, energy-inefficient housing stock – much of which dates to the Soviet era – and outdated or inadequate public transport infrastructure places countries closer to the EU’s eastern border under particular strain, underlining the importance of long-term investment. Nevertheless, all Member States urgently need structural investments that improve access to clean, affordable energy and sustainable mobility. 

CEE Bankwatch Network has been closely monitoring the development of social climate plans across central and eastern Europe, tracking both the pace and quality of national preparations. Last June, we published an analysis of the state of play across the region, highlighting early warning signs, including limited transparency, insufficient civil society inclusion, significant data gaps and slow administrative progress. Unfortunately,these concerns have since proved well founded. In many capitals, the preparation of social climate plans remains opaque, under‑resourced or politically deprioritised.

‘Latvia’s submission is a step forward, but the process has fallen short of genuine civil society involvement. Consultations were rushed and poorly publicised. This undermines the credibility of the plan and risks overlooking the needs of the most vulnerable households. We also consider support for hybrid heating systems deeply problematic. These technologies lock households into further fossil fuel dependence and contradict the long‑term objectives of the Social Climate Fund. Latvia should prioritise fully renewable heating solutions instead of prolonging the life of gas‑based systems,’ says Maksis Apinis from Green Liberty Latvia. 

In a recent episode of The Bankwatch Podcast, Krzysztof Mrozek from the Polish Green Network warned that if Poland fails to transpose ETS2 and submit its social climate plan, the consequences will be severe. Polish households would face rising fuel and heating costs without any compensatory support from the Social Climate Fund. At the same time, Poland would forfeit billions of euros in EU financing for building renovation, clean heating and sustainable transport. This would leave the country more exposed to energy poverty, deepen regional inequalities and undermine public trust in the transition. ‘Delaying action is not a strategy; it’s a direct threat to social stability,’ Mrozek concludes. 

‘Implementation of the Social Climate Fund should already be under way. But what exactly can governments implement if there’s no plan to guide investments, define beneficiaries or tailor support measures? The absence of social climate plans is only part of the problem. Far greater investment is needed to reduce social inequalities both between and within Member States. The plans should therefore function as strategic reference points for directing further socially oriented investment from other funding sources, including the next EU budget, additional ETS1 and ETS2 revenues, and fossil fuel taxes. It’s imperative that Member States finalise credible, socially ambitious plans as soon as possible,’ says Maris Pedaja, Policy Officer at CEE Bankwatch Network. 

The fact remains that many governments have failed to conduct meaningful public consultations, despite the legal requirement for social climate plans to be inclusive and evidence‑based. Some have even called for ETS2 to be postponed altogether. However, postponing the mechanism would undermine both climate progress and social cohesion. Instead of delaying action, policymakers should ensure that robust support frameworks are properly in place. As Europe moves closer to 2028, the window for delivering a socially just transition is rapidly closing.

 

Contacts:

Maris Pedaja
Just Transition Policy Officer
/
Dora Crnčević
Communications Officer
Tel: +385913735091

Western Balkan governments must finally penalise illegal coal pollution – new report

Eight years since pollution control standards entered force under the Energy Community Treaty, in 2025 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 6.6. times as high as allowed.

Bosnia and Herzegovina’s NERP coal plants were the highest SO2 emitters, with 196,940 tonnes, or 12.7 times as high as their limit. Serbia followed, with 177,756 tonnes, or 5.1 times as high as allowed.

Region-wide, SO2 emissions have decreased only modestly since 2018. And the emissions limits were more stringent in 2025 than in previous years, leading to even larger breaches.

The highest SO2 polluter in absolute terms continued to be Ugljevik in Bosnia and Herzegovina, despite it having de-sulphurisation equipment. Its 2025 emissions of 115,079 tonnes were at their highest since the pollution control rules kicked in in 2018.

Five coal units exceeded their SO2 emissions ceilings by more than ten times in 2025 – Bitola B1 & 2 and B3 in North Macedonia; and Ugljevik, Gacko and Kakanj 6 in Bosnia and Herzegovina.

Dust pollution was 2.9 times as much as allowed in 2025, reaching the highest absolute and relative level since the rules entered force in 2018. 

This was driven mainly by a massive increase at the Bitola plant in North Macedonia, which doubled its emissions compared to 2024 and single-handedly emitted more than the 7,094 tonnes allowed for the entire region.

Gacko in Bosnia and Herzegovina was once again the highest relative dust emitter. Despite a small decrease compared to 2024, it emitted 15.1 times as much as allowed.

As in 2024, total emissions of nitrogen oxides from the NERP coal plants in 2025 amounted to 1.4 times as much as allowed. Kosovo, Bosnia and Herzegovina and Serbia once again exceeded their legal limits, with Nikola Tesla B in Serbia emitting the most – 11,247 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’ 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.

Montenegro’s Pljevlja plant has undergone a retrofit in recent years and spent much of 2025 offline, however no evidence is available that it complies with pollution standards that would enable it to continue operating. Tuzla 4 and Kakanj 5 in Bosnia and Herzegovina, and Morava and Kolubara A in Serbia, are also still operating, more than two years after the final closure deadline.

The Energy Community Secretariat has opened several infringement-type cases against the countries (3) confirming the illegal operation of their coal power plants. However, 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.

Meanwhile, the EU’s Carbon Border Adjustment Mechanism’s (CBAM) definitive regime started in January 2026, increasing electricity export costs and further challenging coal plants’ profitability in the region. And in recent years Bosnia and Herzegovina, North Macedonia and Serbia have all seen a decline in coal-fired electricity generation, despite the lack of plant closures.

Davor Pehchevski, Balkan Energy Coordinator at Bankwatch – ‘In some Western Balkan countries we now have the worst of both worlds: a decline in coal-fired electricity generation without a clear plan to mitigate the socio-economic fallout, combined with high – and in some cases even worsening – pollution levels. Instead of enforcing pollution control safeguards, governments are turning a blind eye. This goes far beyond human health and the environment, right to the heart of fundamental principles such as equality before the law.’

Ioana Ciută, Strategic Area Leader – Beyond Fossil Fuels at Bankwatch – ‘Although the Western Balkan governments clearly bear the main responsibility, the EU institutions need to step up as well, conditioning EU financing and accession progress on compliance; sending clear, public messages; and securing financing for a just transition of coal regions and a switch to sustainable heating. Stronger enforcement tools are also needed in the Energy Community Treaty, to protect human health and the environment, including dissuasive penalties for breaches.’

Contacts:

Davor Pehchevski
Balkan Energy Coordinator
davor.pehchevski@bankwatch.org
Tel: +389 71 264 087

Ioana Ciută
Strategic Area Leader – Beyond Fossil Fuels
ioana.ciuta@bankwatch.org
Tel: +40 724 020 281

Pippa Gallop
Southeast Europe Energy Policy Officer
pippa.gallop@bankwatch.org
Tel: +395 99 755 9787

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 did not escalate for some time due to ongoing desulphurisation investments, but in view of continued breaches of its NERP limits, in 2025 the Secretariat issued a ‘reasoned opinion’.

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.

Europe risks failing to meet its Nature Restoration Regulation targets without adequate funding

The report – Unlocking nature financing: National cost estimates for effective nature restoration – provides a systematic assessment of restoration costs in Croatia, Estonia, Hungary, Latvia and Poland to support these countries in their national restoration planning. Covering the period 2024–2032, it analyses four major terrestrial ecosystem types: coastal and inland wetlands; rivers, lakes and alluvial habitats; grasslands; and forests and woodlands.    

As the 1 September deadline for submitting national restoration plans approaches, few plans are well advanced, with many still lacking sufficiently detailed, science-based targets and clarity on financing. While several Member States have raised concerns about the availability of funding for restoration, the forthcoming national and regional partnership plans within the 2028–2034 Multiannual Financial Framework (MFF) offer a crucial opportunity to embed dedicated EU funding for biodiversity within national MFF envelopes and reverse the decline of the EU’s natural habitats, 81% of which are in poor or bad condition. 

‘Our findings show that without proper financing, national restoration plans risk being simply declarative and insufficiently ambitious to improve the status of species and habitats, which is the main aim of the Nature Restoration Regulation,’ says Tess Hartmann-Hergott, EU Policy Officer for Biodiversity Finance at EuroNatur. ‘Across all five countries we assessed, several barriers stand out: EU funding is insufficient at a time where many Member States rely on it and restoration efforts must accelerate; outdated habitat data makes reliable planning impossible; and uneven administrative capacity threatens to fragment implementation across the Union. Unless these gaps are urgently addressed, the EU will not meet its restoration targets.”
  
To close these gaps, EuroNatur and Bankwatch have outlined the following actionable recommendations, among others: 

  • Integrate nature restoration obligations into EU budget planning to create stronger synergies between restoration planning and EU budget programming.
  • Prioritise scientifically sound restoration rather than focusing solely on cost-efficiency.
  • Invest in administrative capacity to enable local and regional authorities to conduct the necessary assessments, implement the Nature Restoration Regulation, and monitor changes in habitat conditions.
  • Allocate at least 10% of the MFF to biodiversity to ensure sufficient and predictable funding for restoration projects across all Member States.
  • Maintain and strengthen the LIFE programme as the EU’s dedicated instrument for nature, including support for cross-border projects and the exchange of best practices. 

‘Europe’s restoration targets are more than just policy goals; they’re a lifeline for our shared future,’ says Valters Kinna, Biodiversity Campaigner at CEE Bankwatch Network. ‘Restoring nature is an investment in people’s well-being, health, and economic security. Healthy ecosystems provide clean water, fertile soils, pollination, climate resilience, and protection from floods and droughts, while supporting sustainable livelihoods and reducing the long-term costs of environmental degradation. Public funding is not optional, and negotiations on the MFF present a unique window of opportunity for Member States to secure sufficient EU funding for restoration. It is a prerequisite for the EU to meet its restoration targets and safeguard the natural systems on which our societies depend.’ 

Contacts:

Notes for editors: 

  • The Nature Restoration Regulation, adopted in 2024, is a first-of-its-kind piece of legislation that aims to restore Europe’s natural heritage through binding restoration targets for specific habitats and species, with the goal of restoring all ecosystems in need of restoration by 2050.   
  • In parallel, the EU is negotiating the next Multiannual Financial Framework (2028–2034). Under the new structure proposed by the European Commission, part of this budget will be allocated based on Member States’ national and regional partnership plans. These negotiations – alongside development of the national restoration plans and the national and regional partnership plans – present a vital opportunity to prioritise nature and ensure that budget planning aligns with nature restoration objectives and financing needs. 

Ahead of Dubrovnik 3SI Summit, 47 civil society organisations warn against Western Balkan gas addiction

In a joint statement, the groups warn that far from merely replacing Russian gas, the plans would massively increase the region’s gas consumption and its dependence on imported fossil fuels. 

For several years, the United States has been pushing projects like the Greece to North Macedonia interconnector, liquid gas (LNG) terminals in Montenegro and Albania, and the southern gas interconnection between Croatia and Bosnia and Herzegovina.

At this week’s Three Seas Initiative Summit in Dubrovnik, an inter-governmental agreement is planned on the latter, while a planned US-Montenegro agreement has already met with strong resistance from civil society and people living near the planned LNG terminal in Bar.

Compared to the EU, the Western Balkan countries have low or no gas dependence. Despite a reduction in consumption, in 2024, gas comprised over 20% of available energy in the EU. But in the Western Balkans, the most gas-dependent countries were Serbia (14%) and North Macedonia (12%). In Bosnia and Herzegovina gas makes up less than 3% of energy, with Albania, Montenegro and Kosovo not connected to international gas infrastructure.

But instead of seeing this as an advantage to capitalise on, most Western Balkan governments are actively planning gas pipelines, power plants and LNG terminals that could collectively triple their 2023 gas consumption. These would, according to the joint statement, either entrap the countries in costly import dependence, or end up as stranded assets. 

Pippa Gallop, CEE Bankwatch Network: ‘In the midst of yet another fossil fuel crisis, it’s unbelievable that governments are still planning new gas pipelines and power plants. They would cost billions, even before the costs of gas are included, and would likely end up as stranded assets, or be heavily subsidised by taxpayers. Planning and construction could easily take a decade in most cases – too late to replace Russian gas – and the region does not have money or time to waste on such expensive mistakes.’

The groups are calling on the region’s governments to focus on appropriately-sited solar and wind generation – supported by existing hydropower and strong grid connections – for electricity generation, and heat pumps, geothermal, and ambient or leftover heat for heating and cooling. They also call for more action on energy efficiency and electrification of the heat and transport sectors.

Contacts:

Pippa Gallop, Southeast Europe energy policy officer, CEE Bankwatch Network

pippa.gallop@bankwatch.org

Gligor Radečić, Gas campaign leader, CEE Bankwatch Network

gligor.radecic@bankwatch.org

Notes for editors:

The joint statement, which includes links to the sources of information, is available at link.

For further information on the Western Balkan countries’ gas plans as of September 2025, see here.

Changing the dealer, but keeping the addiction

Environmental organizations today condemned the new joint statement between US and 12 central and eastern European countries promoting increased imports of U.S. liquefied fossil gas (LNG) to Europe, warning that it repeats the very mistakes that triggered Europe’s energy crisis. 

Eliot Garnier-Karcenti from Food and Water Action Europe: ‘Framing fossil gas expansion as ‘energy security’ ignores a simple reality: dependence on imported gas, whether from Russia or the United States, exposes Europe to volatile global prices, geopolitical shocks, and long-term infrastructure lock-in.’  

Before Russia’s full-scale invasion of Ukraine in February 2022, the EU was 44% dependent on Russia for its gas supplies. Four years later, the United States is well on track to become Europe’s largest gas supplier, overtaking Norway. 

Diana Maciaga from Polish Green Network: ‘Diversification of fossil fuels is not diversification of energy. ‘Replacing one dealer with another does not solve the structural problem. It prolongs it. 

It is also politically risky. Building long-term European infrastructure around U.S. LNG assumes a stable partner for decades, an assumption the U.S. regime’s authoritarian turn has repeatedly challenged in the last year.’ 

Denis Žiško from the Aarhus Center in Bosnia and Herzegovina added: ‘The current administration in the United States has been very direct about dismantling the EU legal order in multiple areas, from supporting far right politicians, dismantling civil society, weaking EU environmental safeguards and attacking digital regulations.’ 

Gligor Radečić from CEE Bankwatch Network: ‘The statement’s commitment to mobilizing export credit agencies and multilateral financial institutions for gas infrastructure is particularly alarming. Public money should be building renewables, grids, storage and efficiency in the EU and neighbouring countries — technologies that cannot be weaponized or manipulated, which lower bills for both households and industry.’ 

Contacts 

Gligor Radečić, CEE Bankwatch Network, gligor.radecic@bankwatch.org,  

Eliot Garnier-Karcenti, Food & Water Action Europe, egarnierkarcenti@fweurope.org  

Denis Žiško, Aarhus Center in Bosnia and Herzegovina, denis.z@bih.net.ba  

Diana Maciaga, Polish Green Network, diana.maciaga@bankwatch.org  

EU climate fund commits over half a billion to fossil gas expansion

The largest share of the EUR 1.8 billion approved was allocated to much-needed investments in electricity grids, renewable energy, batteries, and the decarbonisation of transport. Yet, some funding has once again been directed towards fossil fuel projects, namely, combined heat and power (CHP) gas plants in Bulgaria and Czechia. Although limited in this round, these projects are expected to receive more than EUR 630 million from the Fund in the coming years.  

The Modernisation Fund, a flagship EU climate finance instrument, is designed to convert carbon market revenues into investments for the energy transition in 13 lower-income member states. However, by the end of 2024, the fund had already channelled over EUR 4 billion into unsustainable energy – of which more than half went to gas pipelines and gas-fired power plants, according to a Bankwatch report released in May. 

In Bulgaria, EU decarbonisation money is supposed to enable a full or partial conversion of CHP plants from coal to fossil gas by 2030. These investments are labelled ‘hydrogen ready’. For this purpose, the Bulgarian authorities have now received EUR 15 million via the Modernisation Fund and are expected to receive an additional EUR 65 million. 

In Czechia, support from the Modernisation Fund is meant to help build the Trmice gas plant project. With an initial investment of EUR 5 million, out of nearly EUR 183 million in total that will be requested from the Fund, this plant will have a capacity of 100 megawatts (MW) in heating and up to 150 MW of electricity. 

An additional EUR 5 million in fresh EU climate cash is destined for another new gas power station in place of the EME-1 lignite-fired plant. This large-scale project includes 300 MW in heating capacity and 500 MW in electric capacity, as well as a hot water accumulator and energy storage. The total investment via the Modernisation Fund is expected to reach more than EUR 360 million. 

Bankwatch and other civil society groups have been calling on national authorities and the Modernisation Fund’s governing bodies to end support for dirty energy. Several gas pipelines and waste incineration projects proposed by national authorities for financing from the Fund ahead of this disbursement round were not approved. 

Nevertheless, and despite international momentum for phasing out fossil fuels buildout, national authorities in six Member States are still seeking over EUR 3 billion in EU climate money for anything from waste incinerators to fossil gas pipelines to small nuclear reactors, a recent Bankwatch analysis has shown. 

Gligor Radečić, gas campaign lead with CEE Bankwatch Network: 

‘Once again, climate money is being used to create new emissions and lock the EU deeper into fossil fuel import dependency. Czechia has already shown how not to use the Modernisation Fund funding to decarbonise heating and industry, and is doing it again. Now Bulgaria is following suit, betting on so-called hydrogen-ready gas plants that will never realistically run on renewable hydrogen. It’s evident that for a transformation of our energy system we can’t rely solely on the Member States’ ambition without changes to the Fund’s eligibility rules.’ 

To learn more about the Modernisation Fund’s misguided investments see here: https://bankwatch.org/modernisation-fund 

For more information, please contact: 

Gligor Radečić
Gas campaign lead, CEE Bankwatch Network
gligor.radecic@bankwatch.org