Serbia has to drastically improve its energy policy, not only because of the EU accession negotiation process, but because of the quality of life of all of its citizens. The costs of neglecting the importance of energy policy is something we pay a huge price for, through subsidizing fossil fuel consumption, but through indirect costs as well, such as costs of environmental, social and health protection.
The EU is one of the largest energy consumers in the world, with a powerful energy sector that makes an impact on all aspects of society and economy. The transformation of energy sector is being done in accordance with the EU’s long term vision, involving drastic increase in using renewables and improving energy efficiency in order to ensure stability of supply and affordable prices, while also protecting the environment and reducing greenhouse gas emissions.
When it comes to EU accession process of Serbia, energy falls under the chapter 15 of EU legislation, involving legal provisions on oil reserves, electricity and gas market, regulatory bodies, nuclear safety and risk management. Improving energy efficiency, as well as introducing renewable energy sources, are also the integral part of the Chapter 15. The EU Strategy currently in place sets the goals for the year 2020(1). The integration of the Western Balkans into EU energy market is the process led by Energy Community(3), an international organization established in 2005, currently gathering 9 member states from Western Balkans and Black Sea Region. By signing the Treaty establishing Energy Community, member states obliged to adopt and implement EU energy acquis.
What does the EU say?
This year’s EU Commission Country Report for Serbia, the part related to Chapter 15 states that Serbia is moderately prepared. A certain progress has been achieved in comparison with the last Report, issued in 2016. When we translate these regulations into numbers, that would mean we got C – a certain, but not satisfying progress. A certain progress has been achieved in improving nuclear safety, as well as promoting investments in renewable energy and energy efficiency. The key recommendations are very similar to the ones given in 2016: carry out the reforms related to interconnections, unbundle transmission and trading in the gas sector, raise capacities and continue with promoting energy efficiency and renewable energy sources.
Two opening benchmarks stand on the way of opening this negotiation chapter. One of the benchmarks requires unbundling in the gas sector, in order to ensure full implementation of market regulations. What does this actually mean? Serbia is expected to unbundle sectors of transport and distribution and this create conditions of for functioning of gas market and ensure full access to the grid for all gas suppliers. Both the EU Commission Country Report and Energy Community Annual Implementation Report state that no progress has been made regarding this benchmark.
Unbundling in the gas sector is not a part of recently adopted Third Energy Package. Serbia should have implemented it a while ago, since it comes as a part of the previous, Second Energy Package. Since the Action Plan, for unbundling to be implemented no later than June 2016, hasn’t been implemented, sanctions against Serbia were considered ahead of the Ministerial Council of the Energy Community, held in Sarajevo in autumn that same year.
The new Action Plan, postponing the unbundling for May 2017, was adopted ahead of the Ministerial Council meeting. The Ministerial Council adopted the Decision addressing Serbia, calling for cooperation of Serbia with the Secretariat of Energy Community in implementing all necessary measures in order to ensure implementation of EU energy acquis. However, no progress has been achieved in these efforts, as stated in the Report.
Minimal oil reserves is the key benchmark in this negotiation chapter, which requires adoption of relevant EU legislation first(2). According to EU regulations, Serbia is obliged to ensure minimum stocks of crude oil and/or petroleum products of 90 days until 2023. The reserves in place at the beginning of 2018 were sufficient for 18 days of average consumption. That’s still quite far from what is required, although certain progress has been achieved, since reserves in 2016 amounted to 14 days of consumption.
When it comes to renewable energy sources, Serbia is expected to achieve the goal of 27% of energy consumption coming from renewable energy sources by 2020. According to the latest available data, 21,8% of final energy consumption in Serbia was coming from renewables. Despite plans for new wind turbines are in place, it won’t be enough to reach the goal of 27% coming from renewables.
The current ban on new employments in public sector has additionally increased the problem of insufficient capacities of governmental energy and nuclear safety agencies. Capacities of Energy Agency are not enough to meet the criteria presented in the Third Energy Package, since it is expected to raise the number of employees from 38 to 56 until 2020. The number of employees in Nuclear Safety Agency is also insufficient. The current number of 24 employees is not enough for functioning of the Agency. The additional problem are the finances, sine the budget in place is not enough to support all the activities, with additional inspection duties expected to be given to the Agency.
The Report also underlines insufficient capacities in the area of energy efficiency. Serbia has adopted it’s Third Energy Efficiency Action Plan in December 2016. The progress to date is mostly related to promoting investments in energy efficiency, with occasional efforts instead of systemic approach to the issue. Improving administrative capacities on all levels is another recommendation from the Report. Serbia lacks systemic financing solutions in order to ensure long-term implementation of energy efficiency measures.
To sum up the key findings of the Report, minimal progress has been achieved with a lot of work ahead, with most of the work coming once the Chapter is officialy open. The lack on all institutional levels is more than obvious. Serbia has to drastically improve its energy policy, not only because of the EU accession negotiation process, but because of the quality of life of all of its citizens. The costs of neglecting the importance of energy policy is something we pay a huge price for, through subsidizing fossil fuel consumption, but through indirect costs as well, such as costs of environmental, social and health protection.
Predrag Momčilović and Ognjan Pantić, Belgrade Open School
This text is published in the 37. Issue of the “Let’s speak about negotiations” Journal.
The EU 2020 Strategy sets out the following goals: increasing energy efficiency by 20%, increasing renewable energy sources usage by 20% and reducing CO2 emissions by 20% compared with 1990 emissions
(1)Find out more on EU 2020 Climate and Energy Package is available on this link: https://ec.europa.eu/clima/policies/strategies/2020_en
(2)Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products
(3)Find out more about Energy Community on the organisation's website: https://www.energy-community.org/
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