The Western Balkans’ shift towards green energy is hindered by heavy reliance on coal, outdated energy infrastructure, and a general lack of initiative. More support from the EU and international financial institutions is crucial for the region to meet its climate goals.

Pledge for Carbon Neutrality In October 2020, leaders of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia committed to the EU’s 2050 carbon-neutral target at a summit in Sofia, Bulgaria. The Western Balkans, aspiring to join the EU, have since joined efforts to combat climate change, including implementing carbon pricing, transitioning from coal to renewable energy, and developing green infrastructure.

Potential Benefits Aligning with the EU’s green agenda offers the Western Balkans strategic and economic benefits. The region could enhance its energy security by utilizing local solar, wind, and geothermal resources, attracting foreign direct investment, and transforming key sectors such as energy and transportation. Successful examples from nearby regions, like battery production in Hungary and Poland, suggest potential economic growth through similar investments.

Challenges Despite commitments, the region’s energy systems remain outdated and reliant on coal, accounting for 60-95% of electricity generation. Unlike neighboring Greece and Romania, which have set coal phaseout targets, the Western Balkans lack binding timelines and sufficient financial support for transitioning to renewable energy. The gap between the financial aid received by the Western Balkans and their EU neighbors is widening.

EU’s Role The EU aims to promote its green agenda in the Western Balkans, focusing on phasing out coal and adopting renewable energy. However, implementation has been slow due to significant obstacles, despite regulatory alignment. The region’s outdated energy systems, chronic mismanagement, and underinvestment impede progress.

Energy Security Strategy Throughout the 2010s, the EU aimed to improve energy supply security in the Western Balkans to reduce dependence on Russian gas. This involved enhancing gas grid interconnectivity, developing new pipelines, and investing in liquefied natural gas capacity. Additionally, the EU has sought to liberalize the region’s gas and electricity sectors in line with EU law, promoting competition and market integration.

Energy Community The Energy Community, an organization comprising Western Balkan countries, Georgia, Moldova, Ukraine, and the EU, aims to create a unified market based on EU regulations. Since the mid-2000s, it has facilitated the adoption of EU directives and regulations by non-EU members. The organization has also set ambitious climate targets, including reducing greenhouse gas emissions by over 60% by 2030 compared to 1990 levels.

Implementation Challenges Despite alignment with EU goals, the Western Balkans struggle with implementing carbon pricing and phasing out coal. Only Montenegro has introduced a national cap-and-trade scheme, and North Macedonia plans to implement carbon pricing by 2025. Meanwhile, coal-generated electricity remains cheap and dominant, with no significant closures of coal power plants.

Coal Dependency Coal remains the backbone of the region’s energy systems, with Kosovo, Serbia, and Bosnia and Herzegovina among the world’s top coal-dependent countries. Coal accounts for a significant share of employment, making its phaseout politically challenging. Despite high pollution levels and associated health risks, the political will to implement radical changes is lacking.

Renewable Energy Prospects The region has substantial potential for renewable energy, particularly hydropower, solar, and wind. However, progress has been slow, and investment in infrastructure and grid capacity is needed. The EU’s financial support is crucial, but the Western Balkans also need to attract private investment to expand renewable energy projects.

Future Scenarios The EU’s upcoming Carbon Border Adjustment Mechanism, set to take effect in 2026, could impose significant costs on the Western Balkans. To avoid destabilizing the energy sector, the region may seek a transition period to implement EU environmental and competition rules. This could pave the way for an emissions trading scheme by 2030, generating substantial revenue for green energy projects. However, achieving this ideal scenario requires overcoming significant political and economic challenges.

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