Citizens of the Western Balkans are endangered due to high air pollution, but are they aware of that? A panel discussion on air quality was held during the second day of Move.Link.Engage. conference organized by Belgrade Open School. We took the opportunity to talk about this and other topics with Peter Vajda, Senior Environmental Expert at the Energy Community Secretariat who was one of the panelists.

Peter Vajda is a Senior Environmental Expert at the Energy Community Secretariat, an international organization bringing together the European Union (EU) and neighboring countries with the aim of building an integrated pan-European energy market. The basic idea is to extend the principles and internal rules of the EU market to the countries of Southeast Europe, the Black Sea region and beyond. BOS spoke about the role of the environment in the Energy Community with Peter Vajda, a participant in this year's panel on air quality in the Western Balkans at Move.Link.Engage. conference.

BOS: The Treaty establishing the Energy Community was initiated in order to bring the EU energy market standards to the countries of South East Europe. However, beside energy acquis, one of the tasks of the Energy Community is to improve the environmental situation in relation to Network Energy, related energy efficiency and foster the use of renewable energy in the region. On the other hand, common misunderstanding about obligation arising from the Treaty is that they are imposed to the Contracting Parties. One of the examples is relation between development of the small hydro power plants and reaching the 27% of renewable energy 2020 target. How do you see the current role of environmental acquis within the Energy Community and how it brings benefits to the citizens of Serbia when it comes to the environmental protection?

Peter Vajda: The third pillar of the Energy Community (beside the energy market and the security of supply dimensions) is indeed the sustainability of energy systems. Therefore, environmental as well as climate- and sustainability-related issues were always there, maybe they were just not visible enough in the first couple of years of the organisation’s existence, as the other two dimensions were difficult enough to manage both for the Contracting Parties and for the Secretariat. This has, however, changed to a very large extent and we can now say that sustainability is at the forefront of our activities.

The existence of the environmental acquis brings clear benefits to citizens – whether we talk about emissions reduction by imposing stricter limits or combustion plants or on the sulphur content of industrial fuels or by more informed decision-making via the conduct of environmental assessments. This is the case in the Energy Community with the requirements to transpose and implement directives such as the one Large Combustion Plants, Industrial Emissions, Sulphur in Fuels, Environmental Impact Assessment and Strategic Environmental Assessment. All these measures lead to significant health and environmental benefits – the profiteers of which are citizens and society as a whole via longer and healthier lives, better health conditions, etc.

BOS: The environmental part of the Energy Community acquis evolved over time. From four documents back in 2005, when the Treaty was signed, currently it consists of eight pieces of the acquis. Taking into consideration the increasing level of pollution and challenges WB countries are facing in the EU integration process within Chapter 27, is there initiatives for incorporating new acquis, i.e. air quality? Do you see a potential for “Energy Community” to grow into “Energy and Environmental Community”?

Peter Vajda: Considering the mentioned evolvement of the Energy Community environmental acquis (in this context, it would also be worth mentioning that not only were new pieces of EU environmental law incorporated, but also several directives were amended to reflect the latest changes at EU level. I think we can conclude that the Energy Community has already grown into an Energy and Environmental Community in the past years. It is also clear that there is a steadily growing level of public attention and scrutiny to environmental and sustainability issues in the Contracting Parties.

In relation to the Air Quality Directive, the Energy Community High Level Reflection Group issued a report back in 2014 to reflect on the first 10 years of existence of the Energy Community and recommended the inclusion of this piece of EU law into our acquis. While this has not happened yet, I think we could possibly expect a proposal on this very important piece of EU environmental law from the incoming European Commission.

BOS: The implementation deadline for the LCP Directive within the Energy Community Contracting Parties was December 31, 2017, with Serbia being one of the countries that decided to adopt the National Emission Reduction Plan (NERP). However, 17 months on, the plan has not been officially adopted yet. In the meantime, the Strategic Environment Assessment procedure for the NERP was carried out without simultaneous public discussion procedure for the document itself. Taking this into account, how do you assess the current situation with the LCP Directive implementation in Serbia?

Peter Vajda: The Secretariat has called upon Serbia to adopt the NERP several times, both in its Implementation Reports as well as at institutional and bilateral meetings. The fact that Serbia carried out a strategic environmental assessment on the plan is of course welcome, but given its lack of adoption, the legal status of the NERP in Serbia is currently unclear and therefore it is questionable whether it could be enforced if there is a need to do so.

For the implementation of a NERP, one of the crucial elements is that the operators subject to it are informed of it and participate in its establishment. Given the fact that this was the case for the Serbian NERP and EPS has actively participated in drawing it up in a manner compliant with Energy Community law, there should be no problem with its official adoption.

BOS: As for NERP, beside procedural challenges, civil society organizations underlined their concerns regarding certain emission ceilings contained in the document, since they are not in line with emission data provided by the “Elektoprivreda Srbije” (EPS). Through this issue, the question of proper emission monitoring becomes even more relevant. What would be the role of the Energy Community Secretariat when it comes to monitoring of the NERPs?

Peter Vajda: The monitoring of the NERPs takes place in cooperation with the national authorities. From 1 January 2018 on, all plants above 100 MW are to be equipped with continuous monitoring devices. The national authorities have to report emissions of plants to the Secretariat via the European Environment Agency’s electronic reporting tool. The data for the first implementation year (2018) is coming in from the Contracting Parties as we speak.

BOS: Last heating season brought news of alarming levels of air pollution in the WB region, which is partially due to insufficient compliance with the LCP Directive. However, financial projections regarding full compliance with this directive underline huge costs for the Contracting Parties. Taking this into consideration, what are the benefits of full compliance with LCP Directive?

Peter Vajda: While LCPs are indeed major pollution sources, for the local air pollution issue I would like to bring another issue into the discussion – domestic heating. This is especially relevant when we talk about the pollutants that are most disturbing in this respect – particulate matter (dust) and nitrogen oxides (NOx). Data from EU Member States show that the relative share of this pollution source (which is actually the aggregate of thousands or sometimes millions of small point sources) is getting more and more dominant. This has of course only become possible because the emissions from LCPs have been rapidly declining in the EU from the early 1990s. It also answers the question on the benefits of compliance with the LCP Directive – there is first-hand experience from the EU showing that emission reductions go hand in hand with increased life expectancy, more time spent in good health, etc. In a 2013 study, the Secretariat estimated that these benefits outweigh the costs (which can indeed be high at times) more than 15 times on average. I think this is the dictionary definition of a good investment.

BOS comment: For more on what exactly is NERP, what are the commitments Serbia has made due to Large Combustion Plants Directive, and are we in compliance with its regulations - read HERE.

BOS: Deadline for implementation of 2014/52/EU Environmental Impact Assessment Directive (EIA) expired on January 1, 2019. In addition, latest European Commission Country Report for Serbia is recommending further alignment of the EIA legislation and strengthening of its implementation, in particular in the field of hydropower projects. On the other hand, proposal of the new EIA Law is still in the process of drafting in Serbia. What would be the next steps for the Secretariat in this regard?

Peter Vajda: The Secretariat is currently in the process of preparing the 2019 Implementation Report for the Ministerial Council. For the time being, I cannot comment on the assessment of the latest updates of the legislation, but if the Secretariat will find cases of non-compliance, the dispute settlement mechanism is the tool to address such shortcomings.

With regard to hydropower projects, the Secretariat has repeatedly underlined that such projects need to undergo both strategic and project-level environmental assessments in order to be compliant with Energy Community law. There is a major level of public scrutiny on these projects and the Secretariat has received complaints from Serbia, Georgia and Albania, alleging non-compliance with the Energy Community environmental acquis.

BOS: In case of non-compliance with Energy Community acquis, Energy Community Secretariat can initiate a case against the Contracting Parties in front of the Ministerial Council. One particular case on the environmental impact assessment of small hydro power plants at Stara Planina caught the attention of public in Serbia last November, after a popular TV show presenter called for action. In the field of environment, currently there are three more cases against Serbia: case concerning the environmental impact assessment for the expansion of the Drmno coal mine, environmental impact of hydroelectric power plants at Stara Planina and case concerning the amount of sulphur in fuels. Could you tell us more about the dispute settlement procedure mechanism? What is the role and who can approach Secretariat if recognize the non-compliance? How civil society organizations and citizens can contribute to this procedure? What is the role of the Ministerial Council at the end?

Peter Vajda: Under the Energy Community dispute settlement rules, a Party to the Treaty, the Regulatory Board and/or the Secretariat may bring a case of a Party’s non-compliance by with Energy Community law to the attention of the Ministerial Council.

A case is registered either upon complaint or by the Secretariat on its own motion. Civil society organizations and citizens come into the picture in the first category, as Article 90 of the Treaty stipulates that private bodies may approach the Secretariat with complaints. A case is opened with the sending of an Opening Letter. A case is closed when a Party complies with its obligations under the Energy Community Treaty either prior to sending of an Opening Letter or at any time after dispute settlement procedure has been initiated. A case under Article 91 of the Treaty is also closed with or without compliance with the adoption of a Decision by the Ministerial Council.

In case a breach identified by the Ministerial Council has not been rectified by the party to the case or there is a serious and persistent breach of Energy Community law, a Party, the Secretariat or the Regulatory Board may request a decision of the Ministerial Council under Article 92 of the Treaty and ultimately may apply for sanctions against the Contracting Party concerned.

The Ministerial Council has a formal and decisive role in the procedure, as every case is decided by its decision, both under Articles 91 and 92.

 BOS: Climate legislation is a new topic for the Energy Community. However, the energy sector has a crucial role in addressing the climate related challenges. In the EU, the Clean Energy Package is adopted. The latest European Commission Country Report for Serbia outlines development of National Energy and Climate Plans, which is in line with Energy Community recommendation to the Contracting Parties to start with preparation of national plans in 2018. On the other hand, Serbia is developing the Climate Change Strategy, while Energy Sector Development Strategy for the period by 2025 with projections by 2030 was adopted in 2016 without taking into consideration the new Clean Energy Package approach. Where do you see future challenges for Serbia in the process of harmonisation with the Energy Community environmental acquis and where to search for potential solutions?

Peter Vajda: As climate and energy policies are indeed the two sides of the same coin, it is therefore not possible that the Energy Community does not address the topic of climate. Currently, this is clearly one of the key focuses of our activities. Work in this domain already started in 2016, when the Recommendation on the implementation of the Monitoring Mechanism Regulation on greenhouse gas emissions was adopted. As a follow-up to the adoption of the Recommendation 2018/01/MC-EnC on preparing for the development of integrated National Energy and Climate Plans (NECPs) by the Ministerial Council of the Energy Community, it would be of utmost importance for Serbia to harmonize as much as possible the ongoing work on the Climate Change Strategy with the Energy Sector Development Strategy, ensuring consistency among objectives, preventing adverse incentives, and considering the five dimensions of the Energy Union.

The main challenge for Serbia (and for other Contracting Parties) remains the heavy reliance on coal-based energy production. With emission requirements tightening both at EU and Energy Community level and with carbon pricing getting closer, the real costs of this form of energy are starting to show up. Therefore, investments into these assets are way too likely to be stranded and, via the multiplication effects through the energy price, ultimately undermine competitiveness of the economies of the Contracting Parties.

2006 - 2016 - 2026 - ...

After all, it's only 2019 – what's the rush?!

The Energy Community, an international organization officially was established by entering into the force of the Treaty establishing Energy Community in 2006. It is interesting that, at the time of signing, Article 97 of the Treaty stipulated that the Treaty is concluded for a period of 10 years, which in practice means that the objectives envisaged should be met by 2016. During this period, many topics, but also reforms were indeed initiated and implemented with the support of this organization, not only in Serbia, but also in other Contracting Parties. However, the pace of commitments implementation by the Contracting Parties on the one hand, and progress in the field of energy and environment in the EU on the other, required an extension of the Treaty for another 10 years[1]. Although we cannot praise ourselves for a great game in the first half, the second half gives us the opportunity to improve, not due to fulfilling our commitments – but solely for ourselves and the generations to come. Unfortunately, considering what has been done in the energy sector in Serbia so far, it seems that even 2026 will not be enough for us to see the light at the end of the tunnel. After all, it's only 2019 – what's the rush?!

Varvara Aleksić, Belgrade Open School

Photo source: Belgrade Open School

* Contracting Parties to the Energy Community are: Albania, Bosnia and Herzegovina, Kosovo*, North Macedonia, Georgia, Moldova, Montenegro, Serbia and Ukraine.