South eastern European countries must take climate action or face hefty bills, says new report

Prague, Belgrade, Kiev, Podgorica, Sarajevo, Banja Luka – Countries of the Energy Community [1] risk wasting hundreds of millions of Euros on outdated energy infrastructure if they do not adopt policies to tackle climate change, finds a new report released today by CEE Bankwatch Network and partners in four countries across the region.[2]

The report, commissioned by CEE Bankwatch Network and carried out by think-tank Change Partnership, is available at:
https://bankwatch.org/sites/default/files/EnCom-strategy-climate-action.pdf

The real costs of the planned increase of coal power generation, currently on the table in most Energy Community countries, will have significant impacts on their long term development, according to the study.

So far, none of these countries have adopted carbon pricing policies or taken them into account in their investment plans, but they will have to do so by the time of EU accession.

The new analysis shows that at current EU emission permit prices (Euro 5 per tonne of CO2), existing coal and gas power plants in the region will cost governments at least EUR 575 million each year.

And if materialised, the planned coal energy infrastructure would add additional EUR 133-317 million annually. If carbon prices rise to Euro 30 per tonne of CO2 – as expected to happen by 2025 as a result of a set of measures planned nowadays – these projects’ carbon price tag will soar to EUR 790 million – EUR 1.9 billion every year.

Right now Bosnia and Herzegovina, Macedonia, Kosovo, Montenegro, Serbia and Ukraine are planning to build a total of 14.82 GW of new coal power capacity, much of which would be additional to existing capacity.

By contrast, dropping the plans to build any new coal fired electricity capacity and replacing it with wind power generation, for example, would cost the region 25% less on average, by 2030. [see Figure 15 in the report]

Furthermore, the region is wasting a vast amount of electricity in transmission and distribution. According to the report, reduction of current electricity losses could bring financial benefits to all these countries worth approximately EUR 1.7 billion annually by 2030.

“The Energy Community needs to provide clear guidance on clean and cost effective energy investments in its contracting countries. Otherwise, the region would be put at an economic disadvantage, while the EU continues to decrease the use of fossil fuels in its electricity mix,” says Ioana Ciuta, energy coordinator with CEE Bankwatch Network. “There is no better time than now for these countries to shape inclusive, safe, clean and lower cost energy systems which the European Union itself is building at present, for millions of citizens.”

“The Energy Community needs to start taking climate issues much more seriously and deliver a 2030 vision which integrates the core EU social and environmental legislation into the region,” says Sanjeev Kumar of Change Partnership. “We expect the EU, which stands at the heart of the Energy Community to take immediate action in this regard.”

The findings in this report are of particular importance for those countries in the Balkan region and Ukraine that, in fact, plan much of their new-build electricity capacity for exports across the region and beyond. A dedicated comprehensive report, to be released by CEE Bankwatch on March 19, will outline the threat that such investments end up as stranded assets which are uneconomic to operate.

For more information contact:

Ioana Ciuta
Energy Coordinator, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
Tel.: +40 724 020 281

Notes for the editors:

1. Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, Serbia and Ukraine.

2. The National Ecological Centre of Ukraine, the Centre for Ecology and Sustainable Development (Serbia), Green Home (Montenegro), and the Center for Environment (Bosnia and Herzegovina)