Task Forces

28.09.2014.

Greening Serbia

Dusan Vasiljevic, International environmental policy, renewable energy, energy efficiency and sustainable development expert, former Head of Economic and Environmental Department, OSCE, MS, member of East West BridgeEnvironmental issues in context of Serbian EU integration processes and contemporary development policies with improved political competitiveness

Environmental issues in context of Serbian EU integration processes and contemporary development policies with improved political competitiveness

Global trends 

Today’s perception and understanding of environmental issues is considerably different from the approach of just a few decades ago. What were once perceived or even dismissed as naïve calls to preserve the virginity of landscape, green pastures, clear streams, clean air and blue skies, today are being taken increasingly seriously, with alacrity and in some quarters now even with despair. There is no doubt that the contemporary human society has no capacity even to freeze-up the (irreversible) damage which mankind made to the sensitive natural equilibrium. Expanding population and constantly increasing demand for food and resources are producing multi-faceted shortages and social tensions. At the same time, solid waste and waste emissions produced by billions of people daily restrict manoeuvring space for managing the pollution.

Manmade impact on the global climate is as vast as Nature’s reaction to it is sudden, brutal and unprecedented in history, illustrated by floods, monsoons, draughts, unexpected extensive snow or lack of it, heat and cold, massive winds….

As the most recent stark illustration close to home, Mother Nature gave very rude wake-up calls to Croatia, BiH and Serbia this year, with floods causing multibillion euro damages of the size never recorded in modern history in these countries..   

Nature, simply put, cannot bear the burden of the pollution pressure and cannot absorb or process the overgrowing man-made junk.

To compound to the problem, water and energy, or lack thereof, are already making the biggest impacts on medium-term or long-term development policies, international relations, global economic and energy interests, security and overall stability.

Global political and economic repositioning and gradual but steady dismantling of the short-lived unipolar world with emerging BRICS interests are causing tectonic shifts on world stability with much more to come. No matter what is the current explanation or excuse for the apparently unstoppable spread of extreme violence in the Middle East, growing tensions in the Caucasus and the far East, like war on terror, Arab Spring, Arab Winter, religious hatred, or just a fight for spheres of influence, all these are in fact nothing else but conflicts over who will control energy and water in those regions.

Taking this into account, there is a dire need to have an environmental approach deeply integrated into political agenda and to merge it with economic and social issues in order to cope with outstanding security requirements and sustainable development goals, in the broadest sense.

State of Play in Serbia (or the lack of any…) 

In accordance with EU report on Serbia for 2013, “…Little progress has been made in the areas of environment and climate change. Significant additional efforts are needed to further align with EU policies in areas such as water, waste management, air quality and nature protection. Implementation of the existing legislation needs to be improved and related capacity maintained.

Efforts under way to strengthen inspection and enforcement need to be accompanied by removing inconsistencies and incompleteness in legislation that prevent effective enforcement. Public participation and consultation in the decision-making processes need to be strengthened. Considerable efforts are required to adopt a more strategic approach for the country, align with and implement the EU climate acquis, and to strengthen administrative capacity and inter-institutional cooperation and awareness-raising. An investment pipeline linked to strategic priorities needs to be developed…” In other words, not enough has been achieved.

Unfortunately, there are insufficient interest and capacity to deal with these prompt issues. Reforms started as early as in 2001, when, with support from the international community, Serbia launched initiatives to set up the proper system in environmental area, striving for deeper and more intense “greening” of economy and social issues. Weight has been put on institutional building and framework legislation, covering a wide range of topics (environmental protection and development, care for natural resources, renewable energy and energy efficiency, corporate social responsibility, environmental financing tools/environmental fund, legislative system of fines and subsidies, inspection, monitoring, international cooperation, etc.). Environment has been even used to launch the process of cooperation and reconciliation in the region. With former Yugoslav republics B&H, Croatia and Slovenia and under the auspices of the Organization for Security and Cooperation in Europe (OSCE), Sava River initiative started in Belgrade in 2001, and this endeavor finally resulted with Sava River Commission, while also opened the door for much harder and more difficult processes of post conflict cooperation.

However, the enthusiasm melted down after 2008, when current legal uncertainty, lack or inconsistency of strategic goals and/or capacity to implement almost any policy, made Serbia unable to follow the global trends and to respond to internal and external needs. Economic recession has a devastating effect to environment. Rehabilitation projects are lagging behind, very few modern technologies have been implemented and huge immediate demands in (municipal and industrial) waste management and, particularly in water management (both drinking and waste water) cannot be met. Difficult delivery of renewable energy regulations several years ago, initially boosted interest for versatile project and investments, whether for small hydroelectric power plants or for more substantial wind farms. However, exhausting and long-lasting procedures for obtaining necessary documentation, permits and licenses and lack of firm guarantees for securing investments tend to discourage investors and to virtually block a number of promising and important ventures. Overall lack of knowledge, skills and capacities to cope with formal and technical requirements, are holding Serbia down on lists of desirable places for investing and living. In addition, climate changes and latest natural disasters hardened efforts to find the solution.

Current distribution of political power and responsibilities provides very little integrity and independency to lower levels of governance. Even the state administration is often impotent to resolve burning issues such as timely development of secondary legislation (by laws) and ability to support their implementation. Followed by financial weakness, administration is facing difficulties to maintain sustainable development concept, particularly if this is to be (and it should be) in line with the requirements of the EU integration processes and harmonization with acquis. Furthermore, poverty rate in Serbia now is close to 25% which is the worst in Europe and destitution makes public respond weaker than needed for energetic support to a necessary action.

Finally, the level of corruption is still considerably high and is a huge obstacle for proper and efficient policy-making as well as for doing normal and fair businesses.

Facts and Figures

Serbia is currently producing twice as much CO2 per GDP than the rest of the Europe. Serbia is spending 3-5 times more energy per GDP than the rest of the developed world. 

According to the EU estimations, Serbia would need between 10 to 11 billion EUR for investments in next 10 years in environmental rehabilitation, waste water, drinking water, landfills and overall pollution control systems in order to achieve EU standards. Apart from that, estimated annual turnover at the waste market in Serbia could easily cap at 1 billion EUR a year. The recycling industry is, depending on the product, processing less than 20% of the available waste due to unorganized collection scheme and lack of capacities, while junk is even imported to serve local industry. As an illustration, only for environmental (recycling) taxes, administration collected about 87 million EUR last year (2013) and at the same time it was supposed to disburse some 16 million EUR for incentives. The missing parts are specific and hazardous waste treatments as well as secondary industry which would use crude materials and by-products from recycling. There are no composting sites for municipal bio-waste treatment... These opportunities can easily produce 20.000 new jobs and would enable substantial investments.

Green energy is an open field for investors. Potentials in wind in Serbia are estimated at 2GW (none still operational); biomass could produce some 32 TWh which can be compared with the production capacity of 3GW (just few small installations are currently running); small hydroelectric power plants could feed the system with up to 0,5GW, where not more than 35% has been either finished or are under construction; solar power can provide at least 1,5GW (solar radiation in Serbia is between 480-580 W/m2) whereas only below 2MW are currently running  and geothermal energy, which is almost neglected in the energy production, could match the needs with not less than 1,8 GW (over 160 hot springs are available in Serbia with temperature of the water up to 90oC at the mouth). With the most conservative calculations, only investments in renewable energy could double the energy capacity of Serbia where overall investment potential is close to 20 billion EUR. Even fraction if this would be an outstanding and the most attractive opportunity. However, the fossil fuel and coal lobbies in Serbia are still powerful enough to block any green energy initiatives.

Finally, being an energy profligate, Serbia can spare from 30 to 40% of its energy expenditures through energy saving and energy efficiency projects. Yearly consumption in Serbia is about 45 million KWh. With state of industrial technology, insulation in buildings, losses in distribution systems and consumer habits, an average investment cost for savings as 35-40% of energy consumption might be expected at the level of 0.07 EUR/Kwh. This leaves an area of approximately 3 billion EUR for very profitable, easy managed and highly bankable projects, preferably through ESCO (Energy Service Company) model.

Recommendations 

In order to bridge the gap between demands and actual capacities, the following steps must be taken into consideration:

Primary goal should be institutional consolidation, revision of the legislation and numerous strategies and their harmonization with EU standards, thus to create appropriate institutional setup and enable distribution of respective competencies and responsibilities. This approach should be part of the planning process that is aiming to reach strategic and operational goals from the developing policies. The immediate implication is installation of institutions that would deal specifically with environmental issues, fully integrated into the social and economic sectors in order to achieve planned and expected standards. Ongoing screening/negotiating process over Chapter 27 as well as on other Chapters, would most likely promote such approach.

The system is leaning on three pillars: 1) Administrative/Political – Ministry/Local Government, 2) Operational – Agency, CSO and 3) Supporting - Financial Institutions/Budget/Fund. Only such kind of structure could cope with neglected environmental problems and can secure sustainable development goals. On the other hand, basic presumption for successful political concept that is aiming for social welfare must have tangible economic ground. Therefore, overall promotion of the Green Economy and incentives for introduction contemporary, clean, environmentally friendly and energy efficient sound technologies is a key for safe, secure and successful implementation of the Serbian EU integration policy. In addition, fair pricing of energy and water, heavier fines for offenders, financial stimulus for efficient use of energy and water, stricter and better enforcement of the environmental and respective legislation would support energy and water security which is of the outmost and strategic importance for the economic and social stability, in general. Weak energy sector is particularly vulnerable to market uncertainty and to exposure to, so called, energy terrorism – abuse of energy for political purposes.

To gain proposed goals, it is necessary:

  • To establish a separate, special and accountable Institution (Ministry) responsible for environmental and green energy issues;
  • To strengthen the role of the Environmental Agency and equip it with capacity to create and implement projects of strategic importance. The Agency should also be more ready to apply for and participate in the programmes that are financed by accession funds and bilateral donors;
  • To establish separate, accountable and independent financial institution (Green Fund) that will be able to deliver financial support to investments, environmental, renewable energy and green industry projects and to provide implementation of the governmental incentives’ policy. The Institution should act as a revolving/investment fund and might be of mixed ownership where each of the stakeholders would go and care for efficient and transparent use of funds;
  • To introduce controlled/regulated market of natural resources, including especially municipal and industrial waste. This would shrink black market, decrease corruption and increase tax revenues from turnovers and transactions;
  • To promote and introduce the highest standards for energy efficiency, organic agriculture and clean technologies in industry. Special focus should be on SMEs which represent a vital part of Serbian economy. These measures are to be coupled with appropriate supporting tools (incentives, tax relaxations, education, mentoring, clustering, etc.) in order to provide comparative advantage of a still small and weak Serbian industry; 
  • To introduce environmental issues into other areas and make them integrated into the basic tissue of everyday life (education, health system, economy/industry, culture…). Involve civil society, academia and media in this broad social endeavour. Such approach shall provide sustainability of the environmental perception that will continue to bring fruits even after initial efforts;
  • To promote renewable energy and energy/water efficiency. 
  • To provide adequate capacity for administration (on all levels) to monitor law implementation and to enforce regulations with punitive measures and encouragements. The capacity of administration might be gained by education and skill share and through fare salary policy.
  • To take active part in international initiatives, forums, multilateral and bilateral organizations and frameworks as well as in cross-border projects and cooperation. “Greening” foreign relations might release certain manoeuvre space for Serbia to find a way to launch international initiatives and for its international repositioning. Serbia’s presidency of the OSCE in 2015, could provide such an opportunity, particularly in the Economic and Environmental dimension where recognizing the close connection between environmental issues and security, the OSCE assists participating States with the sustainable use and sound management of natural resources. It supports projects to improve water management, deal with soil degradation and dispose safely of toxic and radioactive waste. It works to raise environmental awareness and promote public participation in environmental decision-making.

Conclusion

Greening Serbia, thus fostering promotion of the Green Industry, linking economy with broad environmental issues and striving for new development opportunities, could unbind a niche in local economy and can provide certain political and economic competitiveness in international relations. Serbia can easily be a regional leader in initiatives that copes with climate change, water and energy issues. Putting weight on indisputable values of new technologies, green jobs, renewable energy and organic food might provide boost to economy where quantities of goods are not the only advantage, but where quality also matters. This would result in improved social welfare and shall contribute to higher security, socio-economic and political stability and better international position of Serbia.

 

Dusan Vasiljevic,

International environmental policy, renewable energy, energy efficiency and sustainable development expert, former Head of Economic and Environmental Department, OSCE, MS, member of East West Bridge


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