Serbia: Coal TPPs remain corner stone of Serbia electricity production 2030

29. July 2015. / News Serbia Energy

Awaiting the new regime of industrial gases emission control, energy strategies within SEE region still rely on a technology with no future: coal-fired thermal power plants.

As the Western media has been reporting these days, the great Paris “last chance” summit will be held there. The chance to stop the devastating climate changes and to introduce a firm and universally binding regime for controlling and radically reducing the emissions of industrial gasses in the atmosphere, of those gases that create the “glasshouse effect” and contribute to global warming.

Climate changes have been debated for more than half a century already, аnd it can already be felt everywhere that the climate is changing: there are more draughts, but also more floods, hurricanes are more frequent, oceans and seas are warmer, аnd there is less and less ice around the Earth’s poles. However, it seems that it is only now that the consensus is being formed about this being the result of the functioning of today’s civilization, in the foundations of which there are greed for profits and negligence towards the natural environment.

However, there are still doubting Thomases, so a religious leader – Pope Francis, who “has no divisions”, but he has great authority, not only among 1.2 billion Catholics, has had to meddle in science and politics.

In his comprehensive epistle of around 190 pages, he said that climate changes were real and that they were causing increasing problems, which were not only environmental, but also social, economic, political… “Should the existing trends continue, already in this century, we may witness tremendous climate changes and unprecedented ecosystem destruction, with serious consequences to everyone”, said the Pope.

On this occasion, to bring common people closer to the incoming disaster, articles have been published in the British media declaring that already the children born these days will live to see the end of the world as we know it.

The message from the science, represented by the (at times) controversial Intergovernmental Panel on Climate Change (founded in 1988), which issues announcements on scientific findings related to global warming under the auspices of the UN, is that, by all appearances, it is high time, аnd it might even be too late already, the average global temperature in this century was prevented from growing by two degrees with respect to the temperature average from the preindustrial era, after which the mentioned ecological disturbances ensued.

Only because of two degrees? It does not seem much, but, as scientists warn, it should be borne in mind that the temperature difference between the present and the last Ice Age – is only five degrees.

They also warn that, should the existing trends continue, global overheating will reach as much as around four degrees. Not much on the thermometer, but too much – even unbearable – for this planet and all its inhabitants, also including those most intelligent, who are the most responsible for such scenario.

“Decarbonization” Plan

So, this scenario is possible, hence the global mobilization to prevent it. The Parisian summit, a mammoth gathering of politicians, diplomats, bureaucrats, scientists, environmental activists, industrial lobbyists and journalists from 196 countries – it is expected that there will be around 50.000 participants in total –should be a turning point because of all this. Its results should not be only conclusions and declarations, but also particular, universally accepted obligations, as well as the mechanisms for their implementation and monitoring. At least for the period until 2030, аnd probably even after this.

The main objective is to reduce the emission of carbon-dioxide (CО2), which contributes to the greenhouse phenomenon with more than 50 percent. It is a byproduct of the use of fossil fuels (oil and its derivatives, coal…), so the so-called “decarbonization” of global economy is also on the agenda (carbon is the English word for the Latin Carbo).

Some obligations have already been undertaken in this respect: by 2030, the European Union as a whole will reduce its emission of “greenhouse gases” by as much as 40 percent with respect to the level from 1990, the USA by 26 tо 28 percent (compared to the emission from 2005), whereas China has announced that the growth of emission of its still racing industry will start declining as of 2030.

Other countries should also reveal their goals before Paris, regardless of the degree of economic development. Serbia was among the first from our region to announce the reduction in the emission of these gases by 9.8 percent by the target year 2030, on which it was congratulated immediately, but later it turned out that there was something questionable with the math in this document.

The same as the previous one, the Parisian environmental and energy summit, in which, as things stand now, Ministers will negotiate on behalf of their Heads of Governments, Presidents, Prime Ministers and Crowned Heads, will also face the elementary fact that it is very hard for any politician today to accept unpopular decisions – any reduction in the emission of gases has a direct economic price – the results of which will be felt only long after he has left power. This could be seen very plausibly at the climate summit in Copenhagen 2009, which had a very chaotic finale.

Solidarity and Responsibility

This means that, more or less, everything will have to be arranged before the Parisian climate bazaar (the ЕU reached its agreement in mid-June, at a meeting in Germany). Not only when it comes to the amount of emissions, but how it should be paid, too.

In this respect, the industrial countries from the group G-7 have already announced that they will provide a 30 billion dollar fund for helping poor countries to reduce their emissions, but they have announced that, as of 2020, the funds for this purpose should not be lower than 100 billion per year.

So, the principle of solidarity and – different responsibilities should be applied. On international climate forums, there are constant polemics about the disproportionate responsibility for the issue of global warming, whereat the main target is the industrial West, primarily America, which, accounting for five percent of the global population, consumes one quarter of global energy resources (and it has contributed to climate disturbances in the same percentage).

The populous developing countries, China and India before all, have insisted that they should also go along the same path: not to impose environmental costs on their industries while they are rising, because neither American nor European industries did this while they were developing, which is an argument which was hard to oppose.

This conflict of interest of the “first” and the (until yesterday) “third” world has not been overcome yet, although the formula of “common, but different responsibilities” has come out from it. So, we have not dirtied equally so as to split the costs of cleaning in even shares.

Smoke in the Balkans

This also refers to our region – to Serbia, BiH, Montenegro, Маcеdonia, Kosovo and Albania –the states which, according to estimates from various reports of the ЕU and nongovernmental organizations, at this moment, are too much behind with the harmonization of their energy policies related to the environment and climate changes.

In the article written for the portal “Еuroactiv”, Dragana Mileusnić, Energy Policy Officer for Southeast Europe at the European Secretariat of the Climate Action Network (CAN), says that this is “one of the most demanding chapters in the accession negotiations, considering that it includes one third of the total legislation which should be transposed into the national legal system”.

She also finds it to be “one of the most expensive, too”: “Conservative estimates indicate that Serbia alone should spend around 10.5 billion euros on achieving the standards in this field, which is almost one quarter of the domestic gross product”.

The main problem is energy infrastructure: Serbia satisfies two thirds of its electricity needs from the already worn out and technologically outdated thermal power plants using low-quality coal (lignite), which it plans to modernize, though – but also to build new ones, whereat the Loan agreement with China worth 600 million dollars for the construction of new plants in the Thermal Power Station “Коstolac” is mentioned most often.

In the Draft Energy Sector Development Strategy of Serbia for the period up to 2025 with projections to 2030, coal is not given up on, but it remains the primary energy resource for electricity generation, whereas, in the mentioned article, Dragana Mileusnić emphasizes that “coal has no future in our energy mix”.

Excessive reliance on coal also has a fiscal dimension: Serbia will have to justify both direct and hidden subsidies to energy sector (it is the guarantor of the Kostolac Loan, considering that the EPS is a public enterprise), whereas the revenues from electricity are a part of budget balance.

Our energy inefficiency is a separate problem: according to the report of the nongovernmental organization “Bankwatch Network”, which monitors the activities of international financial institutions in Central and Eastern Europe, in Serbia, energy consumption per capita is four times higher than in Germany (whereat the electricity transmission losses account for as much as one fifth of the final consumption).

According to the calculation of this NGO, if a “carbon fee” is introduced for the carbon-dioxide emitted within the national borders, electricity generation costs could rise by 130 to 770 million euros annually – depending on the unit amount of this fee.

Obviously, global overheating also results in domestic afterburning. So, we will experience electric shocks.

Two Paths to 2025

The document “Draft Energy Sector Development Strategy of Serbia for the period up to 2025 with projections to 2030” has entered Parliamentary procedure and it is expected to cause polemics, considering the global energy context and domestic energy options that it offers.

By the order of the Ministry of Energy, Development and Environmental Protection, the document had been prepared by the Faculty of Mining and Geology of the University of Belgrade, and it was finished in June 2013.

Of course, the Strategy considers the energy sector in the function of economic development, it analyses energy resources (coal, oil and natural gas, oil shale and renewable energy resources), and it offers strategic development priorities, taking into account the global environment, on one hand, and the domestic, social and economic needs and possibilities, on the other.

In the document, two scenarios are envisaged by 2025 i.e. by 2030: the first includes the continuation of the previous practice when it comes to electricity consumption, whereas the second includes “maximum promotion of energy efficiency measures in all phases of energy cycle”.

According to the first scenario, the indicators of energy consumption (the amount of energy per unit of generated GDP) in industry and agriculture remain the same as in the base year 2010. The forecast increase in the energy consumption in production sectors is linked to the envisaged economic growth.

The second option, the implementation of energy efficiency measures, contains the measures for reducing consumption in accordance with the obligations from the Treaty Establishing Energy Community, which means that the economic growth rate does not have to be accompanied by the energy consumption increase rate.

However, in both scenarios, electricity consumption increases by 2025/30.

In the analysis of the situation and possibilities of the Serbian energy sector, the high external energy dependence, the non-economic prices of energy and the disparity in the prices of energy and energy generating products, the poor degree of collection of consumed electricity and natural gas and, finally, the irrational use of energy are seen as internal weaknesses.

“The current crisis flows of energy generating products in the world and the possibilities of new energy shocks, the global disagreements about the climate change policy and the cleaner energy strategy”, as well as the deepening of the social and economic crisis, the growth of poverty, the over-indebtedness and the country’s slowed down economic development, the unfavorable demographic trends, but also the “political opportunism and unwillingness to depoliticize and professionalize the energy sector” are seen as threats to development.

The key starting point of the draft strategy is that the “Serbian energy sector will have to be both market-based and economically efficient, to the extent that it generates its own development, and also to represent a generator and a secure basis for the country’s development”.

Considering the current dynamics of the global energy sector and the possible new climate consensus, the adoption process will show what will have to be amended or changed in the draft strategy. , transmits

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