An energy crisis threatens in the Western Balkans. As EU leaders work to maintain energy supplies for next winter, at least two Western Balkan states – North Macedonia and Kosovo – will declare an energy emergency in August, in anticipation of shortages during the coldest months.
The covid-19 pandemic has caused a significant economic shock in the Western Balkans. According to the World Bank, the GDP of countries in the region contracted by 3.2 percent in 2020, before rebounding to 7.4 percent growth in 2021. However, the global surge in energy prices threatens the region d a new series of economic challenges. This means that policy makers working on the European Commission project Green Agenda for the Western Balkans It will be necessary to reconcile rising prices and energy security with the objective of environmental protection. This will require strong and coordinated action from governments in the region, as well as significant support from the European Union.
Russia’s war against Ukraine has weakened the already fragile energy security of the Western Balkans. The region has long experienced periodic outages in winter. With the exception of Albania, which relies primarily on hydropower, the Western Balkan states derive much of their energy from fossil fuels, particularly coal. Serbia, Bosnia and Herzegovina and North Macedonia are largely dependent on Russia for natural gas, but this represents only a small proportion of their energy mix. So even though all Western Balkan countries except Bosnia and Serbia have joined EU sanctions against Russia, their limited use of natural gas prevents the Kremlin from retaliating against them by cutting off energy supplies – especially since only Serbia has recently renewed its gas contract with Russia (at a relatively low cost). This also helps protect them from the direct impact of soaring natural gas prices. However, high prices for imported electricity mean that the Western Balkans will not emerge from the crisis unscathed. Several states in the region are vulnerable to these rising costs, particularly as winter approaches and energy demand increases.
For Western Balkan states to become energy secure, they will need to look to the EU and adhere to the Union’s regulations and policies. This is particularly important in relation to the green agenda, a central element of which is the transition to renewable energy.
Western Balkan countries should also diversify their energy production and supply chains. To achieve this, they should work with the EU to formulate innovative, country-specific approaches to the green transition – backed by both political will and institutional support. In fact, by signing the Sofia Declaration, they have already engaged to do.
Most Western Balkan states rely primarily on coal-fired power plants to meet their energy needs. The use of these plants undermines their ability to meet commitments set out in the European Green Deal – one of which is a 55% reduction in carbon emissions (compared to 1990 levels) by 2030. Nevertheless, Given the immediate pressure of the energy crisis, these countries will have to continue burning coal in the short term. Indeed, North Macedonia and Kosovo have already announcement that they will delay plans to phase out their coal-fired power plants over the coming years.
To survive the energy crisis, Western Balkan states will also need to improve cooperation with each other under the Berlin process. They could achieve this by preparing joint investment proposals in renewable energy and the integration of electricity and gas markets.
The European Commission REPowerEU document presents a 300 billion euro plan to reduce the EU’s dependence on Russian fossil fuels by two thirds by the end of 2022 and no longer import Russian energy by the end of 2030. strategy marks a historic change in the Union’s approach to energy issues. This will have a significant impact on the Balkan energy sector. The plan focuses on accelerating the green transition and diversifying supply through investments in liquefied natural gas terminals and other gas infrastructure.
The Balkans could therefore become in the medium term an important transport corridor for Europe’s energy supply – in particular natural gas. This is particularly true of the various gas pipelines that could connect EU member states to Caspian countries, such as Azerbaijan, and to the Greece-Bulgaria interconnection which is expected to become operational this summer. There is also a liquefied natural gas terminal planned in Alexandroupolis, which will be connected to the Trans Adriatic pipeline and is expected to become operational in 2023.
In the long term, the REPowerEU plan should both promote energy efficiency and accelerate the Union’s transition to renewable energy sources. Western Balkan states should join the EU in this by investing in renewable energy (especially hydropower) and cross-border interconnections and – as discussed – aligning with EU energy legislation.
EU foreign policy chief Josep Borrell and European Commission Vice-President Frans Timmermans have rightly argued that “as we accelerate the transition from a hydrocarbon-based economy to a sustainable economy based on renewable energy, we cannot ignore… the geopolitical effects.” The Western Balkan states have only small energy markets. But, due to their proximity to the EU, they can play a crucial role in the Union’s energy policy. This is why the EU should work to end Russia’s gas monopoly in the Western Balkans – despite the relatively minor role natural gas plays in the region’s energy mix.
In addition, the EU should build gas and crude oil transport networks in the Balkans. Such networks will be essential to the geopolitical struggle between the West and Russia. It is high time for the EU to propose a bold and comprehensive concept of energy security for the whole of South-Eastern Europe.
The European Council on Foreign Relations does not take a collective position. ECFR publications represent solely the opinions of their individual authors.