This is the fourth European Commission Report, where Serbia is graded as moderately prepared for the EU membership, if the energy sector is concerned. As many would say: good – three. Although many would also say that three is a decent grade, taking into consideration several key topics, there is no place for optimism. When the Energy Law was adopted in 2014, Serbia was among the best pupils, since it was the first Energy Community Contracting Party adopting provisions of the Third Energy Package, at that point current EU standards in the field of energy. What happened to the good pupil in the meantime?

The European Commission (EC) in 2015 renamed the "Progress Report for Serbia" to "Serbia Report". If we take a look at Chapter 15, which deals with energy, this adjustment came at the right moment. Otherwise, according to the previous name, someone would assume that there was some progress in the areas covered by Chapter 15. However, if we leave aside policy and focus on the technical part of the European Union (EU) acquis, whose transposition improves the quality of life in Serbia and harmonizes the standards of living with those in the EU, the impression is that real progress is missing out for already some time.

Following the entry into force of the current Energy Law (2014), this is the fourth EC Report, where Serbia is assessed with "moderate preparedness" for EU membership in the field of energy. As many would say, good – three. Although many would also say that three is a decent grade, taking into consideration several key topics, there is no place for optimism.  In addition, this year, for the first time, there is grade three minus, namely "limited progress", which indicates that we were barely good last year. It is important to remember that at the time of adoption of the mentioned Energy Law, Serbia was among the best pupils as the first Energy Community Contracting Party which adopted the provisions of the Third Energy Package, at that point current EU standards in the field of energy.

What happened to a good pupil in the meantime?

Preconditions and recommendations

If we analyze Chapter 15 (Energy), already after screening procedure in 2015, the EU confirmed that Serbia is not ready enough to open this Chapter. For this reason, the Screening Report envisaged benchmarks or preconditions, which should be completed before opening the Chapter on Energy.

Establishing competition in the gas market is one of these preconditions. In practice, this means "fully unbundle Srbijagas and Yugorosgaz, implement the conditions required by the Energy Community Secretariat on the exemptions of Gastrans, increase liquidity on the gas market, and ensure third-party access to parts of the new capacity."[1]

This is one of the recommendations that has being repeated in each EC Report during the last four years.

Why is this important for all citizens of Serbia, both for those who have and for those who do not have gas? Not only because they all bear the costs of public companies operation, but also because the lack of competition directly affects gas prices. Because of this recommendation, everything that was done during the past year - such as the adoption of a long-term plan to establish and maintain emergency oil stock or the adoption of secondary legislation in the field of energy efficiency - remains in the background. At least until we fulfill this preconditions.

Implementation of the Connectivity Agenda has being one of the main recommendations repeated since 2015. This brings funding for regional investment projects in the Western Balkans. Two projects are currently in the preparation phase, the Trans-Balkan Corridor electricity corridor and gas interconnector with Bulgaria. Through this aspect of regional cooperation, the security of supply is also increasing, as well as the capacity of the network for connecting new consumers, such as large industrial plants, and new producers, such as large wind farms for example. By connecting national markets, these projects also contribute to the reduction of the energy prices.

Promote investments in energy efficiency through a sustainable financing system, as well as initiate reforms to introduce cost-reflective electricity tariffs, which will take into account external costs of impacts on health, environment and climate change, is another EC recommendation that is repeating year after year.

Small hydropower plants and silencing the Report

From the Report, it is certain that Serbia will not achieve the target of 27% final energy consumption from renewable energy sources (RES) by 2020. In order to avoid the same situation in the next cycle by 2030, evaluation of objectives and challenges is necessary. Accordingly, a revision of related regulations and public policies should be carried out, together with concrete solutions for 2030.

As for the challenges with small hydropower plants (SHPP), which are in the loop in Serbia in recent years, the fulfillment of the above-mentioned goal was often misused as crucial argument in order to justify already initiated projects.

However, setting an energy mix i.e. the energy balance[2], is a national matter, both for the EU Member States and for the candidate countries, as long as the commitments are respected. It is important to recall that by signing the Energy Community Treaty in 2005, Serbia confirmed its direction towards the adoption of the EU acquis in the field of energy and in the field of RES, which was also confirmed in the Stabilization and Association Agreement. Thus, in 2012, Serbia committed to the target of 27% final energy consumption from RES by 2020. Therefore, it is up to the state, in accordance with its national priorities, to plan how it will reach the target and which renewable sources will be included in the energy mix.

However, during debates, as well as during the implementation of individual SHPP projects, there is a lack of something which was emphasized in every EC report for several years now, which is that "any further development of hydropower should be in line with EU environmental legislation."

What does it mean? It refers to the implementation of environmental impact assessment, public participation, public hearings, compliance with water management and nature protection legislation. The Energy Community has the same standing when it highlights three main principles that need to be taken into account when hydropower is used as a natural resource - transparency, legal certainty and accountability.

The EU sets even more ambitious goals

While Serbia is still struggling with the challenges of the Third Package implementation, the adoption of new Clean Energy Package sets even more ambitious goals in the field of renewable energy sources, energy efficiency, and reduction of greenhouse gases for the EU. In order to fulfill these goals, the key to success is putting energy efficiency at the first place and consumers into the center of the energy transition. This requires the coordination of energy and climate policies.

There is a recommendation of the Energy Community that Serbia should start drafting integrated energy and climate plans, which is also highlighted in this year's EC Report. The precondition is the improvement of inter-institutional cooperation, which in practice means a close cooperation between the ministry responsible for energy and the ministry responsible for environmental protection, as well as all other relevant institutions; in order to move together in the same direction – towards cleaner energy.

Do we know where we are going?

Heating, transport, industrial production, lighting, limited resources and/or renewable resources, energy efficiency or wastage, impact on human health and environment; public discussion about all these topics is required within society, because the answers to these questions affect the lives of all citizens. Nevertheless, the impression is that the EU integration process is the only driver of reforms in the energy sector, while the general public is not sufficiently familiar with these topics and the challenges that await us.

Finally, the question arises: is the capacity issue of public administration, whose strenghtening is also recommended in each report in the last four years, one of the reasons for the limited progress in the energy sector?

Or, as a society, we do not know where we are going, so we cannot find the energy to get there?

Photo: canva.com

Varvara Aleksić, Belgrade Open School