In contrast to most EU countries, governments across southeast Europe plan new lignite power plants during the next few years. These plans starkly conflict with the Paris Agreement’s aim of limiting climate change to 1.5 degrees Celsius. All the projects have serious economic, environmental and legal weaknesses, which would burden electricity consumers and taxpayers for years to come.
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Country and project details
With the exception of Stanari in Bosnia and Herzegovina, which has started operations, all the plants are seriously delayed. Our aim is to support local groups in making sure that no more coal plants are built and that southeast Europe finally speeds up the path to an energy efficient, renewables-based energy system.
Dirty energy plans
All the Western Balkans countries have committed to increase their share of renewable energy by 2020 to reach between 25 and 40 percent of their energy mix, as part of their obligations under the Energy Community Treaty. Yet this is far from obvious when examining their investment plans for new power generation capacity.
Governments are actively planning to build 2800 MW of new coal plants with construction cost of at least EUR 4.5 billion. In contrast, these countries are only planning to build around 1166 MW of wind power plants, at an estimated cost of EUR 1.89 billion.
At the same time, Western Balkan countries have ambitious plans to increase their electricity generation. But it is unclear if there will be demand for all the available electricity.
Read more: In contrast to the EU, Western Balkans’ coal investments still heavily outweigh wind – but for how long? Blog post | May 27, 2016 Western Balkans electricity plans: where will all that power go? Blog post | March 23, 2015 By the numbers: where will energy come from in the western Balkans? Blog post | March 19, 2015
Plans for coal bring serious economic risks for Western Balkan countries. Contrary to popular belief, coal is not cheap.
Stricter environmental and subsidies rules
Under the Energy Community Treaty, signed by all Western Balkans countries, Ukraine and Moldova, all new coal plants have to be in line with EU environmental standards and countries must follow EU state aid rules, meaning they are not allowed to continue subsidising the coal industry as they have done so far. In most cases, these new standards will make coal plants more expensive. But the few feasibility assessments that are publicly available often do not include these costs.
EUR 3.8 billion
Conservative estimate of the cost of the planned Western Balkans coal plants. Money that would be better spent on energy efficiency and developing sustainable renewable energy.
Read more: Planned coal power in the Balkans will breach new EU pollution standards – analysis Press release | June 14, 2017 Balkan governments unprepared for new EU pollution rules Blog post | 17 August, 2017 Risks for coal and electricity investments in the Western Balkans, Ukraine and Moldova due to state-aid rules Study & press briefing | June 8, 2015
CO2 prices not taken into account
EU market rules also apply to the Western Balkans electricity sector via the Energy Community Treaty. The EU Emissions Trading Scheme (ETS) has not yet been adopted by the Energy Community, but Accession Countries – and that includes most Western Balkans countries – need to apply it as soon as they enter the EU. However, most coal projects fail to take the effects of CO2 prices into account. They risk becoming uncompetitive in the future, with taxpayers footing the bill.
Read more: Carbon costs for planned coal power plants in the Western Balkans and the risk of stranded assets Briefing | March 29, 2017 Western Balkans are massively expanding coal power – but the new plants may have to be closed again soon Blog post | March 29, 2017
Sostanj lignite plant: A mistake not to be repeated
The TES6 lignite unit in Slovenia is a showcase of the risks for coal projects in the Western Balkans. It cost more than double the estimated amount and brings annual losses of tens of millions of euros for the country. It only created a fraction of the number of jobs promised.
Alarming levels of air pollution
Every winter, towns across the Balkans face the same problem of heavily polluted air, and residents are increasingly concerned about the health implications. Ageing coal power plants and open-cast lignite mines play an important role in aggravating the situation. Yet, air quality data is either unavailable or unreliable. Metering stations are placed in irrelevant locations and often certain pollutants are simply not monitored.
Independent dust monitoring
In 2016/17, Bankwatch and our partner organisations from the region conducted independent dust monitoring in four selected locations in Western Balkan countries, plus two more in Bulgaria and Romania. In all cases we have found worrying levels of particulate matter, dust so small it enters deep into our lungs and blood streams causing irreversible damage and respiratory and cardiovascular diseases.
Read more: Peak pollution Multimedia briefing on monitoring results and video interviews with locals | June 26, 2017 Up in smoke – Why urgent action is needed on air quality in the Western Balkans Multimedia briefing on protests | February 29, 2016 Western Balkans holds breath for better air quality Blog post | June 26, 2017
Exaggerated job promises in the coal sector
Hardly any coal operations across the region are economically viable, and as a result many coal workers, especially in the mines, are set to lose their jobs, even if the plans for countless new power plants materialise. Governments, coal workers and their wider communities need to work together towards a just transition.
Read more: Labour productivity in mines in the Balkans and other regions Infographic | November 14, 2017 Deceptive promises of new jobs in the coal sector don’t help workers, communities or the climate A closer look at some of the mines and pointers to alternatives for a more just transition. Blog post | November 14, 2016 Overblown job promises in southeast Europe’s coal sector show the need for a just transition Press release | November 14, 2016
A new breed of investors
In 2013 the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank virtually halted lending for new coal power plants. Therefore most planned plants are due to be financed by Chinese state banks – the ExIm Bank and the China Development Bank (CDB).
Read more: Balkan energy projects with Chinese involvement – state of play June 2017 (pdf) Briefing | June 1, 2017 The Balkans may become the achilles heel of EU-China climate leadership Blog post | June 1, 2017 Guest post: China stokes global coal growth Blog post | June 26, 2017
Corruption in the Balkan energy sector
South-eastern Europe has high potential for energy efficiency and sustainable renewable energy investments. Yet, as a Bankwatch study illustrates with a number of examples, countries have shown little ability to absorb investments at a large scale without systemic corruption and patronage. See summary of the examples in the map here or more details in the full study.