Price panic threatens to derail energy transition in the Western Balkans
In the first half of 2021, domestic electricity prices in the Western Balkans were relatively low, ranging from 0.0605 euro in Kosovo to 0.0980 per kWh in Serbia, well below the EU average of 0, 2192 euro per kWh.
Electricity generation in the Western Balkans relies mainly on coal-fired power plants. This fleet of obsolete and inefficient power plants is responsible for most of the greenhouse gas emissions in the energy sector, accounting for 75 percent of the region’s overall greenhouse gas emissions.
Moreover, these power plants do not even meet their own national pollution limits, emitting lethal amounts of toxic pollutants, such as SO.2, up to six times more than national limits ,.
Policymakers in the region are using the surge in energy prices hitting the EU to justify their continued commitment to the use of fossil fuels in the region, claiming that locally produced electricity from coal-fired power plants is the main reason why the energy crisis has not – yet – affected domestic prices.
While this may be true, to some extent it strays from the full story. Serbian President Aleksandar Vucic recently said that while wholesale electricity prices in the market are high, the cost of electricity for Serbian citizens is low, due to subsidies. This clearly indicates that the true cost of coal in Serbia and the Western Balkans is hidden.
While Vucic views coal subsidies as a protective measure, their cost has fallen directly on Serbian citizens for years. From 2015 to 2019, the total cost of direct subsidies to the coal sector in Serbia was € 388.11 million. Citizens across the region, except Albania, which has no coal in its energy mix, paid 662.91 million euros.
Another cost that Western Balkan leaders fail to factor into the true cost of trading coal is the cost to health.
A recent analysis shows that the estimated public health costs in 2020 of coal-fired power plants ranged from 6 billion to 12.1 billion euros. This cost is borne not only by the citizens of the Western Balkans, but also by the EU, due to the cross-border nature of the pollution from coal-fired power plants.