Serbia: High costs of Power utility EPS TPPs for EU environment modernization

3. August 2015. / News Serbia Energy

Is the “green industry” lobbyists forcing eco-standards in energy sector or is Europe turning a blind eye to Serbia so as to get cheaper electricity?

Now we know that three things are inevitable: death, tax and climate changes, a scientist has recently said, eliminating further discussion with those who believe that the claim that man has caused the rampage of climate by excessive pollution is either naïve credulity or ruthless machination. He has forgotten another inevitable thing – conspiracy theories. Whatever politics you defer to, you are going to believe in one. Here is what it looks like in the Serbian case, in the example of climate changes and the attempt to mitigate them by introducing environmental standards in the energy sector.

The rightists suspect that the European Union will use the obligation of the member and candidate states to reduce the quantity of harmful gases emitted into the atmosphere as another excuse for pressuring Serbia and postponing its admission to its club. The whole story about climate changes, they complain, already serves primarily to force the domestic coal-fired thermal power plants to buy “clean technology” from foreign companies. Environmentalists, on the contrary, fear that the EU is not forcing us quickly enough to adjust the plants of the “Electric Power Industry of Serbia” to the environmental standards, perhaps because we would have to cover these costs by raising the electricity price, so it would also be costlier for Europe to purchase it from us.

Not all scientists believe that the climate is raging because of the emissions of coal fumes and other gases created by burning fossil fuels, but they are certainly harmful at least to human health. If, in the hue and outcry about coal, there are still voices paid by the “green industry”, the conspiracy is certainly not directed against Serbia only. The capacity of thermal power plants in France has been halved under the EU pressure, аnd in other member states, even in the eternally rebellious Great Britain, it has been significantly reduced. The thermal power plant in the Bulgarian Varna was closed in January, аnd the similar thing awaits Croatia, too. Judging from media reports, as of the following year, the plants with the total capacity of 30 gigawatts will no longer operate in the EU, which is almost eight times more than the production capacity of the EPS. Obviously, Europe takes this seriously, and Serbia is so small that it cannot count upon a blind eye being turned to it when so much more has already been sacrificed.

The environmental conspiracy counter-theory is not immaculately concocted either. Perhaps, for activists’ taste, the European bureaucrats are lazy when it comes to organizing the Serbian thermal power sector according to eco-standards, but they are hardly such because they are hoping for a large import of cheap electricity from our dirty plants. Serbian electricity export does not exceed several percent of the annual production. True, studies show that, with new plants announced in Serbia and Bosnia and Herzegovina, the export potential of the region could rise to 50 percent by 2024. But, until then, as Dragana Mileusnić from the Climate Action Network Europe notes, the ЕU will also make more of its own capacities аnd Serbia will also join the Union, presumably, so its thermal power sector norms will also apply to us and we will not even be able to produce cheap electricity at the expense of environmental norms anymore.

Running after these eco-standards will be expensive. The plants emitting harmful gases will be included in the carbon-dioxide permits trading system – carbon dioxide being the primary cause of the greenhouse effect, i.e. of climate changes – a compound that primarily comes from the energy sector. Every emitted ton of carbon-dioxide will have to be paid, and this at an increasing price, because there will be less and less permits for its emission. The lowest price that the permits have so far reached is five euros, but it is expected to go up to 30 euros soon. 130 plants have been included in the preliminary list of companies from Serbia that will have to buy permits. Depending on the permit price, their overall costs could be even higher than 900 million euros annually, as estimated in the study which Serbia has done for the EU pre-accession funds.

By 2015, a whole decade after being faced with this obligation, energy facilities, 32 of them, were supposed to obtain the so-called integrated permit, too. In simple terms, it certifies that they do not pollute the environment above the permitted values. Of 196 companies in Serbia, the potential big polluters, only 17 have earned this permit and among them, as they say in the Ministry of Environment, there is not one energy company. The deadline for obtaining permits has been postponed until 2020, just as requested by the industry, because it has no money to pay the environmental enhancements of its technology.

According to the estimates from five years ago, for harmonizing the industrial emissions with the European standards, also including noise reduction, as they say in the Ministry, Serbia will need around 1.5 billion euros. In the Ministry, they would rather not forecast our country’s overall costs for combating the factors which increase the speed of climate changes. Of course, they are counting upon the ЕU assistance, but we will certainly have to draw a lot from our already empty pockets. By 2020, Serbia should also rely on the “clean energy” sources two times more than today. Аnd the exploitation of renewable energy resources is fraught with so many difficulties and costs that the West itself cannot afford to completely renounce fossil fuels, at least in the immediate future.

If it is any comfort, as they claim in the Ministry of Environment, the previous analyses do not indicate that the prices of electricity and heating will have to be significantly increased. Hopefully, these estimates can be trusted.

“Guardian” оn Serbian “Climate Fraud”

The Serbian proposal to reduce its emissions of harmful gases by 9.8 percent by 2030 with respect to the level from 1990, which was taken as the “cut-off” year, has been greeted by the European Commission as an exemplary step towards the accession to the Union. However, the interviewees of the British newspaper “Guardian”, the unofficial sources from the Commission and the environmental activists from the region, were not impressed. In their opinion, the emissions reduction in the amount of 9.8 percent in fact represents an increase of 15 percent. Because, as stated in the “Guardian”, Serbia claims that, already now, it emits as much as 25 percent less gases then in 1990 due to the collapse of industry, so that our proposal leaves room for polluting the atmosphere even more than today. Especially as the presented balance of emissions for that year allegedly also included those from the thermal power plants in Kosovo, which, as noted by the “Guardian”, “almost certainly will not be included in the statistics for 2030” when it will be measured if we have fulfilled what we promised.

In the Ministry of Environment, they have not replied if this is really true and if Serbia is pressured to eliminate the Kosovo data from its balances. Dragana Mileusnić does not claim anything either, but she notes that, on the basis of the presentation of the Ministry and the Summary Report of Serbia on the UN Framework Convention on Climate Change, it can be said that the balance for 1990 includes the Kosovo emissions, unlike the statistics for the current year.

– The claim of the Ministry that the emissions are by 25 percent lower with respect to 1990 was also the main reason for suspicion that the Kosovo emissions had simply been deducted, because the structure of energy production in Serbia has not changed essentially. It is also unclear whether the proposed reduction of 9.8 percent refers only to the energy sector or to the entire economy. In any case, the proposal is not sufficiently ambitious – Мileusnić believes.

Precedent in Holland

An unusual thing and a precedent from the aspect of legal practice has just happened in Holland, where a domestic court, by its judgment in a lawsuit filed by a group of around 900 environmental activists, has obliged the government to reduce the emissions of gases that contribute to global warming by at least 25 percent by 2020.

The judgment is legally binding. The Government can appeal against it to a higher court, though, but the most interesting thing in it is the explanation. Namely, the court has concluded that the state is legally obliged to protect its citizens from the damage inflicted on them by climate changes.

At this, it referred to the so-called tort law, the legal code on compensation which has its roots in the Roman law and which has been developed in the English law, according to which no one has the right to cause damage to others, intentionally or unintentionally.

So the court has accepted the prosecutor’s arguments that the Dutch Government is legally obliged to care about its citizens and to enhance the environment, as the BBC has reported.

For the Government in Amsterdam, if it accepts the judgment, this will practically mean that it should speed up its measures for reducing emissions: the existing plan has envisaged that the reduction by 2020 should amount to 17 percent with respect to the level from the reference year 1990.

The judgment has been greeted whole-heartedly by the activists of the environmental organization “Greenpeace”, who emphasize that it will be a landmark in the overall debate on climate changes, but it will also affect similar court cases initiated in Belgium and in the Philippines. “This will start a wave of climate litigation”, the activist Jasper Teulings said.

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