Region: Carbon tax will lead to electricity prices increase

, SEE Energy News

Director of the Energy Community Secretariat Janez Kopac said that the countries of the Western Balkans are postponing the introduction of tariffs on carbon dioxide emissions for as long as possible, because they are afraid of social dissatisfaction that would occur due to rising electricity prices.

According to him, the European Union should put pressure by asking countries to join the EU Emissions Trading System, while on the other hand it would provide financial incentives to manage the social consequences of the gradual coal phase-out. He noted that electricity production in the countries of the Western Balkans is much cheaper than in the European Union.

Asked whether he expects carbon tax to be applied to countries in southeastern Europe that are members of the Energy Community, Kopac said that he hopes that those countries will have a special status, because they are participants in the EU single market. If they are treated as third countries in the same way as Russia, Turkey or Morocco, it could jeopardize the entire process of European integration that has taken place in the last 15 years. When asked why these countries are not part of the ETS, even though they are signatories to the Paris Agreement, he said that they are postponing it as long as possible. He added that Montenegro is the only one that has introduced a price for carbon emissions, but that it is a small country that has no more than five participants in the electricity market.

The application of carbon emission fees will definitely lead to an increase in electricity prices, and that is something that politicians are afraid of, since the prices of electricity for residential consumers in all these countries are well below the EU average. Kopac said that 16 coal-fired thermal power plants in the Western Balkans produce more harmful substances than 250 coal-fired thermal power plants located in the European Union, mostly due to their old age and non-compliance with environmental standards. However, these power plants produce cheap electricity that provides income to the governments, miners and the local population due to the complex system of subsidies.

When it comes to coal use, the biggest problem is Serbia, Kosovo and Bosnia and Herzegovina (BiH). Both Serbia and BiH rely 70 % on coal-based electricity generation, while in Kosovo the dependence is 95 %. However, all Western Balkans countries have signed the Sofia Declaration, which means that they have committed themselves to the gradual coal phase-out by 2050. Kopac also noted that Serbia is the only country in the region that is building its energy future on coal: it is currently building one new coal-fired power plant and is modernizing two existing ones.