Six years after the Western Balkans were required to meet new air pollution standards, coal power plants in the region continue to release harmful levels of pollutants, according to a new report by environmental watchdog CEE Bankwatch. 

The study reveals that sulphur dioxide (SO2) emissions from these plants increased in 2023 compared to the previous year, while dust and nitrogen oxides (NOx) emissions remained consistently high, according to the latest Comply or Close report from Bankwatch. 

In 2023, total SO2 emissions from plants included in the National Emissions Reduction Plans (NERPs) of Bosnia & Herzegovina, Kosovo, North Macedonia and Serbia were 5.7 times higher than allowed, exceeding the levels seen in 2022. 

"The situation remains appalling," says the report, "Comply or Close: Six years of deadly legal breaches by Western Balkan coal plants". It highlights that emissions have not significantly decreased since the compliance deadline passed in 2018.

In an interview with bne IntelliNews, Pippa Gallop, Southeast Europe energy policy officer at CEE Bankwatch, pointed to the lack of political will among governments in the region to take action to close old, highly polluting power plants or upgrade them to meet emissions reduction targets. 

“Unfortunately, we don't see political will to make sure coal power plants 'comply or close'. So far, to the best of our knowledge, not a single one of the energy companies has even been fined for breaching the pollution rules,” Gallop said.

Little progress made

Despite having implemented some pollution control measures, the region’s power plants have not made significant progress in reducing harmful emissions. Serbia’s coal plants were the highest SO2 emitters in absolute terms, with 296,011 tonnes, followed by Bosnia with 181,807 tonnes. 

Nor have efforts to install equipment to reduce emissions been successful.   The worst offender in absolute terms was the Ugljevik power plant in Bosnia, which released 97,189 tonnes of SO2 in 2023. Despite its operator, an Elektroprivreda Republike Srpska subsidiary, spending €85mn on a desulphurisation unit funded by a loan from the Japan International Cooperation Agency (JICA), the unit is not functioning correctly due to technical problems. The operator now admits it is not operational, calling it an "economic burden".

Similarly, Serbia’s Kostolac B, another repeat offender, saw its SO2 emissions increase nearly 5.8 times above the legal limit in 2023, reversing a brief period of improvement in 2021. The desulphurisation unit at this plant, financed by China Eximbank and installed by the China Machinery Engineering Corporation (CMEC), is either underused or underperforming.

"This … comes down to enforcement. Such units do use energy that could otherwise be sold, so there is no incentive for the companies to use them unless they are heavily penalised for not doing so. The fines have to be more expensive than continuing the breach. Yet none of the governments has issued any penalties at all that we are aware of,” said Gallop. 

Dust ceilings broken 

Dust emissions in the region only saw a slight decrease in 2023, at nearly 1.75 times the allowable levels, compared to 1.8 times in 2022. Kosovo, Bosnia and North Macedonia again exceeded their national dust ceilings. Kosova B2 in Kosovo was the highest absolute dust emitter, releasing 3,798 tonnes in 2023, which is 9.2 times the amount allowed under Kosovo’s NERP.

For NOx emissions, Kosovo and Bosnia exceeded their ceilings, joined by Serbia in 2023. The report attributes this to a lack of investment in NOx reduction and annually decreasing ceilings for NOx in the NERPs. Kosovo emitted 2.73 times its national ceiling of NOx.

The Energy Community Secretariat has taken steps in response to these breaches, initiating dispute settlement procedures against Bosnia, Kosovo, North Macedonia and Serbia. However, the case against Serbia has not yet been escalated due to ongoing investments in pollution control measures.

The end of 2023 marked the deadline for the closure of the smallest and oldest coal power plants under the ‘opt-out’ limited lifetime derogation. However, all three countries in the Western Balkans with plants subject to this rule — Bosnia, Montenegro and Serbia — are currently in breach, as all these plants are still operational.

Montenegro’s Pljevlja plant, along with several others operating under the opt-out provision, continues to breach pollution limits after its limited operational hours expired in 2020. In 2022, Bosnia's Tuzla 4 and Kakanj 5, along with Serbia’s Morava, also became in violation. Serbia’s Elektroprivreda Srbije (EPS) plans to continue running Morava until 2026, along with another opt-out plant, Kolubara A.

Despite legal obligations to close these plants, none have ceased operations, contributing significantly to the region's air pollution in 2023.

Lack of political will 

Far from being keen to close down coal power plants, according to Gallop, governments in the region would have liked to increase electricity generation from coal. This only didn’t happen, she told bne IntelliNews, because "they were largely unable to". 

“The electricity import price rises in late 2021 and 2022 contributed to a multi-faceted crisis in the region, as in parallel several coal power plants had technical problems and went offline for extended periods, especially in Serbia, North Macedonia and Kosovo. Serbia and North Macedonia also had trouble securing enough coal and had to import from the other countries,” explained Gallop. 

“This created a push to open completely new coal mines in the Republika Srpska part of Bosnia & Herzegovina, North Macedonia and Montenegro, but only in Republika Srpska has this actually happened so far.” 

According to Gallop, this “made the governments very nervous about energy security and they used it as an excuse to close the smallest, oldest plants that they had promised to close by 2023”. She warns that the situation was misused as an excuse by Montenegro and Bosnia, despite the two countries not experiencing electricity crises. 

“As for the long term, while some of the governments are trying to prolong the coal phase-out for as long as possible, there will be a limit to how much they are able to do this, due to the Carbon Border Adjustment Mechanism, which will make electricity from coal-heavy countries unattractive for trading with EU countries from the beginning of 2026, because the importers will have to pay high fees for it,” said Gallop. 

“Since domestic household consumers have very low, regulated prices, the utilities depend a lot on trading with neighbouring countries to cross-subsidise their businesses. With less demand from countries like Croatia, Italy, Greece, Bulgaria, and Hungary, coal plants will have increasing financial difficulties as they will not be able to pass all their costs on to domestic consumers.” 

“Governments and utilities are intent on squeezing every last kilowatt out of their aging coal power plants, regardless of the health costs. The countries’ national energy and climate plans (NECPs) must set out how and when coal will be phased out, but so far, most do not,” said Davor Pehchevski, Balkan energy coordinator at Bankwatch. 

“In North Macedonia, closures are being delayed with no action being taken to address pollution in the meantime. Utilities can’t have it both ways—coal plants must either close immediately or comply until they close.”

On September 16, the day before the report was released, North Macedonia's Minister of Environment and Spatial Planning Izet Mexhiti hinted that the country may postpone its coal phase-out deadline by 20 years, extending it to 2050. 

The report stresses the urgent need for the Western Balkans to honor commitments made under the Large Combustion Plants Directive and take concrete actions to curb air pollution. “The Western Balkan governments must finally start to govern and stop letting energy utilities endlessly extend their own deadlines,” it says.

Meanwhile, however, governments are still looking to build new coal power capacity. Kostolac B3 in Serbia started test operations in August. Plans for several other new coal power stations have been dropped, but according to Bankwatch Bosnia’s Republika Srpska  is also still planning two new plants: Ugljevik III and Gacko II.

“They are unlikely to go ahead due to a lack of available financing, among other reasons, but the ministry responsible for environment keeps issuing permits for Ugljevik III nevertheless,” said Gallop. 

As emissions limits decrease further in 2024, larger breaches are anticipated unless immediate action is taken to reduce pollution from coal power plants. The report calls for the European Union to exert more pressure and provide additional support to ensure a sustainable, renewable energy transition in the region.