Western Balkans and Ukraine urged to scrutinise coal subsidies

Western Balkans and Ukraine urged to scrutinise coal subsidies
By Valentina Dimitrievska in Skopje January 19, 2021

The Energy Community secretariat has sent letters to the national state aid authorities of Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia and Ukraine, encouraging the further assessment of measures related to their compatibility with the EU state aid acquis, it said on January 19.

Last December, the secretariat published a new study on coal subsidies in these six countries for the period 2018-2019. The study pinpointed the direct and hidden subsidies channelled to the coal sector in the contracting parties to the Energy Community Treaty.

It revealed that the five Western Balkan countries plus Ukraine provided more than €2bn in coal subsidies in the five-year period from 2015 to 2019. This included over €900mn in coal subsidies in 2018 and 2019. The study also noted that subsidies were often provided to unprofitable and inefficient thermal power plants and coal mines.

“The sheer scale of the subsidies wasted on the most polluting source of energy is alarming. While the European Union is moving firmly towards a carbon neutral energy system, the report shows that the contracting parties continue to be stuck in the past,” Janez Kopac, director of the Energy Community’s secretariat, said on the release of the report in December. 

The secretariat noted that the contracting parties committed repeatedly to fully implement and enforce the state aid acquis with regard to coal-fired power plants, as expressed in the conclusions of the ministerial council of December 17.

"Under the Energy Community Treaty, the contracting parties must ensure that any public aid which distorts or threatens to distort competition by favouring certain undertakings or certain energy resources is prohibited. As state aid may distort competition and affect cross-border trade in energy, the control of aid granted from state resources is of key importance for the establishment of a regional energy market," the Energy Community said in the statement.

One of the conclusions of the December meeting is that the European Commission, in cooperation with the secretariat, will start preparatory works on developing a decarbonisation roadmap for the Energy Community until 2030 and beyond.

On December 10, the European Bank for Reconstruction and Development (EBRD) announced that it joined efforts to financially support the transition from coal and towards a low-carbon future in the Western Balkans countries and Ukraine.

The key objective of the Energy Community is to extend the EU internal energy market rules and principles to countries in South East Europe, the Black Sea region and beyond on the basis of a legally binding framework.