Abstract
The Republic of Serbia, one of the Western Balkans EU candidate countries, is lagging behind in the process of energy transition regardless of its natural potential and policy instruments available. Despite the fact that ambition for energy transition has recently increased, in order to be concretely implemented, Serbia needs to cope with a set of challenges that limit its renewable targets to reach full decarbonization in 2050, according to the European Union’s Green Deal. Apart from energy transition, the war in Ukraine has posed another challenge to Serbia’s energy sector: diversifying suppliers of natural gas.. This resulted in the opening of a new gas interconnector which allows Serbia to source natural gas from Azerbaijan, cutting reliance on Moscow’s supplies and enhancing energy security.
Elettra Tirino (Senior Researcher G.E.O Ambiente)
Introduction
With its current energy generation methods proving inadequate in the face of climate change, Serbia faces a critical juncture, where the imperative to diversify its energy mix and enhance efficiency intersects with the need for sustainable development. Despite possessing ample resources, Serbia copes with its energy inefficiency utilization, underscored by its second-highest energy intensity in the Western Balkans. Indeed, Serbia’s energy landscape is marked by the dominance of low-efficiency thermal power plants fueled by lignite, a coal variant known for its environmental repercussions. Against the backdrop of evolving international agreements and regional cooperation initiatives – especially within the European Union –, Serbia charts a course toward a greener future, characterized by increasing legislative reforms and commitments to renewable energy adoption. However, entrenched interests and foreign influences pose big obstacles to Serbia’s energy transition. Additionally, the country confronts issues of transparency, public awareness, administrative capacity, and the necessity for robust planning mechanisms.
Green transition is not the only challenge the country is facing in the energy sector. Indeed, the energy crisis caused by the war in Ukraine encouraged the Serbian government to reconsider its almost total reliance on Russian gas supplies, a policy that made it significantly vulnerable to gas price increases. To reduce dependence on Moscow and access alternative natural gas suppliers, the Serbian government is funding several energy-related infrastructural projects. This includes the recently inaugurated gas interconnector with Bulgaria which allows Serbia to access gas supplied by Azerbaijan as well as liquified natural gas shipped by various suppliers to the Greek port of Piraeus. By diversifying its suppliers, Serbia is cutting its decades-long dependence on Russia and strengthening its energy security. However, since the Balkans are a crowded arena where different actors compete for influence, the opening of the interconnector altered geopolitical dynamics in the region. Indeed, by diversifying its gas suppliers Serbia aligned with the European Union’s energy strategy or reducing dependence on Russia, Serbia’s historical and political ally. While this will not reduce Russia’s clout in Serbia and the region, it will decrease Moscow’s capacity to significantly influence gas prices in the country.
In light of the two above-mentioned challenges to Serbia’s energy sector, the purpose of this analysis is twofold. On the one hand, the paper aims to elucidate the challenges and opportunities inherent in Serbia’s energy transition journey by offering insights into the pathways toward a more sustainable and resilient energy future for Serbia. On the other hand, it analyzes Serbia’s quest for diversification in the gas sector by looking into the most recent energy infrastructure project, the Serbia-Bulgaria gas interconnector, the role it will play in enhancing the country’s energy security and its geopolitical implications.
Serbian Energy Sector: un–Untapped Potential
With its traditional forms of generation not providing resilience to climate change, Serbia would benefit from diversifying its energy mix and working more on energy efficiency. Despite its potential, the inefficient use of energy represents a major concern in the country. Indeed, it has the second-highest energy intensity in the region of the Western Balkans – 3.5 times as much as the EU average in 2021 (IAE, 2022) – by using mostly domestic resources for electricity generation. As stated above, the only exceptions are oil and gas where the country remains dependent on imports, especially from Russia. Serbia mostly uses low-efficiency thermal power plants that burn lignite (almost 60 percent), a low-calorie coal, to produce its electricity, causing serious pollution. Most of the remainder is generated in hydropower plants (33 percent), wind power (2.4 percent), gas/oil combined heat and power plants (4 percent). A much smaller amount consists of solar, biomass, and biogas (around 0.5 percent each) (OECD, 2023). The electricity market in Serbia is dominated by the national power utility Elektroprivreda Srbije (EPS, Power Industry of Serbia), which owns all large coal and hydropower generation capacities and supplies most consumers. EPS has eight coal plants and with the Nikola Tesla A and B plants, it generates over half of Serbia’s electricity (OECD, 2023). The energy sector also has a strong impact on greenhouse gas emissions, with over 70 percent share in total emissions. Consequently, in the current situation, the Serbian energy structure cannot meet the requirements of sustainable development in the XXI century (Bjelic & Rajakovic, 2021).
Figure 1. Serbia electricity generation, 2010-2021
Source: Statista 2024, Retrieved at: https://www.statista.com/stati...
For what concerns fossil fuels production, Serbia has the second most coal-dependent power supply in the Western Balkans due to its reserve of lignite, mostly from the two largest mining basins in the country, Kolubara and Kostolac, in the North-East of the country. As Serbia intends to join the European Union, it should aim for complete decarbonization by 2050 in line with the European Union’s policy. However, both the Serbian government and the state-owned electric power utility company Elektroprivreda Srbije plan to remain locked into a carbon-intensive energy system for years to come. In 2021, hopeful signs appeared as Serbia canceled the Kolubara B coal power plant project, which, however, was not removed from the country’s draft spatial plan, together with other fossil fuel power plants (Ciuta & Gallop, 2022). Similarly, no new large hydropower plants have been built for many years, although several small ones (with a capacity below 10 MW) are planned. Due to the increasing concerns about the large amount of environmental and social damage they cause compared to the small amount of electricity they generate, changes to Serbia’s renewables legislation occurred in 2021. To slow down their construction, obtaining subsidies for small hydropower plants has become much harder than before. Dealing with renewable energy, Serbia narrowly missed its 2020 target of 27 percent share of renewables in gross final energy consumption (Gallop et al., 2021). Indeed, solar is advancing extremely slowly and biogas is playing a very minimal role despite having been incentivized more than other countries in the Western Balkans. The only exception is wind which has experienced a rapid upturn in the last few years.
Green Transition: A Solid Legal Framework
Despite the untapped potential, since the beginning of the new century, Serbia has aligned with many international agreements on climate change. In 2001, the Republic of Serbia ratified the United Nations Framework for Convention on Climate Change (UNFCCC) declaring the country’s contribution to the global efforts for greenhouse gas emission reduction by 9.8 percent by 2030 compared to 1990 emissions (Serbia National Determined Contribution, 2001). A second National Determined Contribution was submitted in 2022, defining the intended reduction of 13.2 percent to the 2010 level i.e. 33.3 percent compared to 1990 by 2030. Moreover, in 2017 Serbia ratified the Paris Agreement. However, major legal steps have been taken in the European Union’s framework.
In March 2012, the European Council granted the Republic of Serbia candidate country status and since 2013 the European Council decided to initiate accession negotiations with Serbia. In 2014, the Berlin Process was launched as an initiative aiming at stepping up regional cooperation in the Western Balkans region and aiding in the integration of countries into the European Union. By gradually harmonizing the national legal framework with the European Union acquis, Serbia performed numerous legislative alignments in the areas of climate change, environment, and energy. However, the European Union initiated the idea of regional cooperation among the Western Balkan countries by targeting the energy sector as one of the common denominators even before, in 2006, by signing the Treaty establishing the Energy Community. The Treaty has been institutionalized in the form of the Energy Community to create an “integrated pan-European energy market” that would involve the European Union’s member states and contracting parties (NECP, 2023). A closer partnership between the Union and Serbia was reached in 2020 when leaders from the region adopted the Sofia Declaration on the Green Agenda for the Western Balkans. This committed to full alignment with EU Climate Law, within the current Green Deal, and its goal to become the first climate-neutral continent by 2050. Finally, after signing the Sofia Declaration, ambitions for decarbonization grew in the Serbian parliament.
At the beginning of 2021, the Republic of Serbia introduced a package of reforms regarding energy and climate change as a starting point for the energy transition process towards climate neutrality. Most notably, Serbia adopted three key laws. The Law on the Use of Renewable Energy Sources aims to facilitate more investment in renewables (most importantly solar and wind farms) and to increase the share of electricity generated from renewables. Additionally, it introduces renewable auctions for large renewable facilities based on market premiums but maintains feed-in tariffs for small-scale facilities in order to reduce the cost of renewables. Lastly, it includes the concept of energy communities and collective investment in the sector. The Law on Climate Change was adopted as a base for establishing a system for limiting greenhouse gas emissions cost-effectively. The law stipulates monitoring and reporting on emissions annually which are essential for a more precise long-term planning in the transition of industry and energy to low-carbon and climate-neutral GHG emissions, and thus increase in competitiveness on the international market. Finally, the Law on Energy Efficiency and Rational Use of Energy aims to achieve energy saving and reduce the impact of the energy sector on the environment and climate change. Importantly, it defines the roll-out of subsidies to households for energy efficiency upgrades. Despite delays, the Republic of Serbia adopted in June 2023 the Integrated National Energy and Climate Plan (NECP). Indeed, the Energy Community Contracting Parties are obliged to develop NECPs to set out objectives in line with the Energy Community 2030 targets, policies, and measures in the five dimensions of the Energy Union (energy efficiency, renewables, greenhouse gas emissions reduction, internal energy market, and research and innovation). The aim of the plans is to draw up an integrated policy framework to steer decarbonization efforts until 2030 and beyond, aligning with the ambitions of the European Green Deal.
Green Recovery: Serbia Must Now Tackle Important Remaining Challenges
Despite the solid legal basis and the natural potential, Serbia is still lagging behind in the process of improving its energy efficiency. Serbia has been integrating the European Union’s rules into its legislation, however, a great part of them is just partly transposed, mis-transposed, or completely not transposed. Moreover, existing legislation is often not enforced, and implementation deadlines are not respected. Indeed, one of the main gaps within the Energy Community Treaty’s implementation is the complete lack of penalties for non-compliance, which allows countries to continue breaching the rules without concrete consequences. Behind inconsistencies, breaches, and delays, there are important remaining challenges that Serbia must now tackle to concretely initiate its green recovery process.
The first challenge is foreign influence. On one hand, the European Union has been seeking to promote radical reform by pushing towards decarbonization and a transition to renewable energy through a policy of “carrots and stick” (Batas Bjelic & Rajakovic , 2021). On the other hand, third parties such as Russia and China - along with Turkey and sometimes the United States – have all established a large foothold in the fossil-fuel-based economy of Serbia, cementing the status quo and aligning with vested interests in the energy sector. Russia has the largest footprint in Serbia. Most of the natural gas consumed in the Western Balkans is supplied by Russia. Moreover, Moscow owns critical gas transit and storage infrastructure – the TurkStream pipeline and the Bantski Dvor storage facility – and key oil assets, including Serbia’s national company Naftna Industrija Srbije (Ćorović , Gvozdenac Urošević, Katić, 2023). Instead, for what concerns China, it started making inroads into Serbia’s energy sector in the 2010s. Its soft loans, the core of the Belt and Road Initiative, have been channeled to modernize and expand coal-burning TPPs such as Kostolac (Ćorović , Gvozdenac Urošević, Katić, 2023). What is common to Russia and China – and even Turkey – is that their investments tend to be highly political. Often, the connection is between political leaders – through forms of side payments – who are the ultimate guarantors for external investors and act as a substitute for the rule of law (European Western Balkans, 2023). In this sense, foreign influence in Serbia is both a function and a contributing factor to state capture that defines the political economy of the country.
State capture fueled by internal actors is the other important challenge. The national power utility Elektroprivreda Srbije (EPS) exists in a close but ultimately destructive symbiosis with the Serbian state, and it has been slow to pick up on the potential of renewable energy sources and has continued to hold back Serbia’s overall energy policy. Successive governments have kept EPS in a privileged position, avoided opening up the electricity market to real competition, and provided it with subsidies when needed. They also allowed EPS to repeatedly breach environmental legislation and have turned a blind eye when the company has made life unbearable for communities near its operations (Varvara & Bjelic, 2021). Conversely, governments have also used EPS for their own benefit. EPS’ director and supervisory board members are appointed by the government which, despite the low profitability of the company, paid a large amount of money in the state budget that otherwise would have been available for investments. Moreover, low electricity prices for households are used as a social measure. At the same time, political support by EPS employees is bought by delaying layoffs and keeping salaries at a relatively high level. This symbiosis is fomented by the general trend in Serbian energy policy to lack the willingness to move away from the model that the country is familiar with: a predominantly centralized model based on large facilities. Yet any moves are made as quietly as possible, with authorities apparently afraid of the public’s reaction. For instance, concerns about job losses from mine closures certainly represent a barrier to Serbia’s energy transition. Instead of clearly recognizing the issues, drawing up a plan in a participatory manner, and explaining the importance of a just transition to the wider public, as well as how negative impacts will be mitigated, Serbia’s authorities appear to be largely in denial (EBRD, 203).
Serbia, natural gas and the historical dependence on Russia
With an annual consumption of 2.7 bcm (Brkic, 2023), natural gas covers 15% of Serbia’s energy requirements (International Energy Agency, 2021). However, of these 2.7 bcm, only 0.6 bcm are produced domestically, forcing Serbia to rely on imports to satisfy its domestic gas requirements. . In the past fifteen years Russia, Serbia’s long-time political ally, has been the guarantor of the country’s energy security. Between 2009 and 2019, Serbia’s average dependence on Russian gas imports stood at 74% (Brkic, 2023). The figure increased to 89% in 2021 (Brkic, 2023). Russian gas is delivered to Serbia through the Turk Stream and its subsidiary pipeline, the Balkan Stream (Congressional Research Center, 2021). The Turk Stream consists of two parallel lines with a total capacity of 31.5 bcm per year. The pipelines connect the compressor station in the Krasnodar Krai in Russia with a receiving terminal located in the Thrace region in Turkey through the Black Sea. From the receiving terminal, the first pipeline supplies natural gas to the Turkish market whereas the second one, the Balkan Stream, supplies gas markets in Bulgaria, Serbia, and Hungary (Congressional Research Service, 2021). Before the construction of the Turk Stream, Russian crude reached Serbia crossing Ukraine and Hungary. However, tensions between the Kremlin and Kiev and their negative repercussions on gas markets forced Moscow to consider the construction of a new pipeline to circumvent Ukraine. This led to the South Stream project, a proposed pipeline that would have connected Russia with Bulgaria through the Black Sea (Jirusek, 2020). However, significant construction costs combined with the project's non-compliance with the EU’s competition and energy law eventually resulted in the cancellation of the South Stream (Stern, Pirani, Yafimava, 2015). Nevertheless, Russia’s determination to build an alternative gas corridor bypassing Ukraine soon led to the establishment of the Turk Stream project whose construction commenced in 2015. Therefore, since 2021, Serbia has received natural gas through the Turk Stream/Balkan stream (Brkic, 2023).
The most recent agreement for the supply of Russian gas between Belgrade and Moscow was reached in May 2022, a few months after the launch of Russia’s invasion of Ukraine, drawing significant criticism from EU politicians. According to the agreement, which will be effective until 2025, Gazprom must export 2.2 bcm of gas to Serbia at a price calculated on the basis of a formula linked to the price of crude oil rather than to that of the spot market (Brkic, 2023). Thanks to the 100% oil-linked formula, Serbia pays between $310 and 400$ per thousand cubic meters of gas, which is 10-12 less than what other countries in Europe pay (Brkic, 2023). Apart from receiving gas at an advantageous price, Serbia also benefits economically from the Balkan Stream. Indeed, as a transit country for gas that is shipped to Hungary, the Serbian government collects transit fees that accrue to the state budget (Loskot-Strachota, 2023).
Serbia’s diversification of suppliers and the Serbia-Bulgaria gas interconnector
The construction of the gas interconnector with Bulgaria reflects Serbia’s attempts to diversify its gas suppliers, a strategy that was accelerated by Russia’s invasion of Ukraine in 2022. Because of its political, historical, cultural as well as energy ties with the Kremlin, Serbia did not align with the EU's policy of imposing sanctions against Russia and therefore was not included in the Kremlin’s list of unfriendly states. Despite this, Belgrade was able to appreciate the economic and political consequences of Moscow’s weaponization of gas supplies against EU member states. This encouraged Serbia, which until then relied almost exclusively on Russia’s imports to meet its domestic requirements, to seek alternative gas suppliers. Moreover, while not having suffered Kremlin’s gas blackmails, Serbia was indirectly affected by the energy crisis caused by the war in Ukraine in multiple ways. Firstly, the country’s energy security was threatened by Russia’s reduction of gas supplies to the neighboring Bulgaria, through which Russian gas flows to Serbia (Loskot-Strachota, 2023). Moscow halted supplies to the country after the government in Sofia refused to pay in rubles, a measure imposed on hostile countries to circumvent Western-imposed sanctions (Tsolova, Koper, 2022). Secondly, at the end of 2023, Serbia as well as Hungary, were affected by Bulgaria’s introduction of a $10.80 per megawatt hour on Russian gas transiting through the country (Radio Free Europe, 2023). According to the Minister of Finance of Bulgaria, Asen Vasilev, the tax was not intended to “make gas more expensive for consumers in Hungary and in Serbia but to make it less profitable for the Russian state energy company Gazprom to ship gas via Bulgaria'' (Radio Free Europe, 2023). However, fearing a rise of their domestic gas prices, governments in Belgrade and Budapest harshly criticized the measure which resulted in Sofia’s decision to eventually cancel the tax (Todorovic, 2023). Finally, Serbia’s energy security was jeopardized by the effects of Western-imposed sanctions on Russia’s economy. The latter had a negative effect on the company operating the offshore section of the Turk Stream as well as Serbia’s capacity to secure oil supplies (Djurovic, 2023). Indeed, because of the EU-imposed embargo on crude oil imports from Russia, Serbia was no longer able to import oil through Croatia as of late 2022. While this affected the country’s capacity to source oil and not gas, it fueled Belgrade’s energy security since oil covers 25% of the country’s energy needs (Djurovic, 2023).
Serbia’s decision to pursue diversification of suppliers is not only the result of the war in Ukraine. Indeed, as a candidate country to the European Union since 2012, Serbia is obliged to enhance supply diversification in the energy sector to comply with Chapter 15 of EU’s Acquis. According to Chapter 15: “EU energy policy objectives include the improvement of competitiveness, security of energy supplies and the protection of the environment” (European Commission, 2012). In this sector, while Serbia discussed several energy-related projects before 2022, concrete steps were mostly taken after the energy crisis provoked by the war in Ukraine ensued. The interconnector between Serbia and Bulgaria will play a significant role in Serbia's quest for diversification of gas suppliers. The 170km-long interconnector connects the city of Nis, Serbia with Novi Iskar, in Bulgaria (Directorate-General for Energy, 2023). The Bulgarian section of the pipeline then connects with the Trans-Adriatic pipeline (TAP), giving both Serbia and Bulgaria access to gas supplied by Azerbaijan as well as to a liquified natural gas terminal in Greece, where gas can be shipped by various suppliers (Brkic, 2023). By accessing gas from alternative suppliers, Serbia will be able to reduce its dependence on Russian gas imports, thus enhancing stability of supply. Indeed, with a capacity of 1.8 bcm per year (EU u Srbiji, 2023), which is reportedly to be raised to 3.2 bcm in the future (Pavlova, 2024) the pipeline will cover 60% of the country’s annual gas needs (EU u Srbiji, 2023). According to the first deal signed between Serbia’s gas company Srbijagas and Azerbaijan’s oil and gas company SOCAR, Serbia is to receive 400 million cubic meters of natural gas from Azerbaijan in 2024. After 2026, Serbia could increase imports to 1 bcm (Radio Slobodna Evropa, 2023).
The 109 km-long Serbian section of the pipeline, which was put into operation in December 2023, was constructed in less than one year which reflected the fact that diversification of gas suppliers ranked high in Serbia’s political agenda (Ministry of Mining and Energy, 2023). The inauguration ceremony took place in December 2023 and was attended by the presidents of Serbia, Aleksandar Vucic, the President of Bulgaria, Rumen Radev and the President of Azerbaijan, Ilham Aliyev (Bne Intellinews, 2023). During the ceremony, the President of Serbia stressed the importance of the pipeline stating that the interconnector represented a “new era for Serbia’s energy security” (Bne Intellinews, 2023). The President of Bulgaria, for his part, added that the project represented a guarantee for diversification and security of supply for the entire region (Bne Intellinews, 203). Indeed, the regional and international relevance of the project were recognized by the European Union. The EU included the interconnector among its “projects of common interests” which refers to key infrastructure projects aimed at completing the European internal energy market and helping the EU to achieve its energy and climate objectives. Moreover, the completion of the project represented a significant achievement of regional cooperation in the Central and South-Eastern Europe (CESEC) energy connectivity initiative (Directorate General For Energy, 2023). For these reasons, the EU funded the Serbian section of the pipeline with a combination of a grant of €49 million by the EU Commission (Instrument of Pre-Accession) and a loan of €25 million by the European Investment Bank (Directorate General for Energy, 2023). The Bulgarian section, on the other hand, received €27.6 million under the Connecting Europe Facility Program and €6 million in structural funds (Directorate General for Energy, 2023). While the EU’s financial contribution was central for the realization of the project, the Serbian and Bulgarian governments played a role too by allocating funds from their respective state budgets (Western Balkans Investment Framework).
Winners and losers: the geo-political implications of Serbia’s diversification of natural gas suppliers
The gas-interconnector between Serbia and Bulgaria created geopolitical “winners” and “losers”. The actors that benefited from the opening of the new pipeline are Serbia, Bulgaria, Azerbaijan, and the EU. Indeed, as already discussed, by accessing Azeri and LNG gas supplies, Serbia was able to reduce its dependence on Russia as well as its almost total reliance on one single supply route, the Balkan Stream. This, in turn, enhanced the country’s energy security both in terms of stability (lower vulnerability in case of intentional gas disruptions) and accessibility (lower gas prices). Moreover, the construction of the new supply route will also make Serbia less exposed to supply disruptions due to potential incidents along the pipeline. Finally and perhaps most important, the new interconnector will strengthen Serbia’s role as “energy transit hub” at the regional level. Because of its central position in the region and the fact that it neighbors eight countries (most of which are EU member states), Serbia could be using natural gas supplies to increase its political and economic relevance in the region, a strategy Belgrade has pursued in other fields as well. This is reflected in the numerous energy infrastructure projects the Serbian government is considering such as the Serbia-North Macedonia, Serbia-Hungary, and Serbia-Romania interconnectors (Pavlova, 2024). In this context, the interconnector with Bulgaria, with its reverse flow capability, will further strengthen Serbia’s role as energy hub by allowing Azeri and LNG gas to flow from Southern (Bulgaria, Greece) to Central/Eastern Europe via Serbia, and the other way around. Another winner from the new gas interconnector is Azerbaijan. While Azerbaijan’s presence in the Balkans dates back to the opening of the Trans-Adriatic Pipeline, the energy crisis caused by the war in Ukraine opened a window of opportunity for Baku to further consolidate its presence in the region (Huseynov, 2022). By signing a deal for the supply of gas with SOCAR, Serbia became the ninth country (eight in Europe) to import Azeri gas, allowing Baku to expand its energy ties in the Balkans and Europe (Stojanovic, 2023). Last but not least, the EU is among those who will benefit from the interconnector for three reasons. Firstly, Serbia’s reduced reliance on Russia for gas imports will allow the EU to undermine Russia’s energy and overall influence in the region. Secondly, by diversifying its natural gas suppliers, Serbia will align with the EU's acquis not only in the context of energy policy but also energy transition. Indeed, the interconnector was identified in the EU’s “Economic and Investment Plan for the Western Balkans” as one of the flagship initiatives, promoting the transition from coal to more sustainable energy production” (Western Balkans Investment Framework, 2022). Finally, the interconnector may allow EU member states in the region to access gas from Azerbaijan or LNG terminals in Greece once the necessary infrastructural projects are completed.
While Serbia, Azerbaijan and the EU benefited from the interconnector, this was less the case for Russia. In principle, the interconnector will decrease Serbia’s reliance on Russia’s gas supplies and consequently also the Kremlin's capacity to significantly influence gas prices in Serbia. This represents a major change in Serbia’s energy policy as it is the countries’ first concrete step toward enhancing supply diversification. However, this does not necessarily mean that Belgrade will give up collaborating with Moscow in the energy field. Indeed, according to the provisions of the agreement signed with Gazprom in May 2022, Serbia will keep receiving gas through the Balkan Stream until mid-2025. Another aspect to consider is that while Serbia is reducing its dependence from Russia with regards to natural gas, the same is not true for oil. As a result of the EU-imposed sanctions, Serbia was no longer able to import oil through the Adriatic Pipeline via Croatia (Djurovic, 2023). Since oil covers above 20% of the country’s energy needs (International Energy Agency, 2021), the Serbian government announced the construction of an oil pipeline that will connect Serbia with the Druzhba pipeline in Hungary (Djurovic, 2023). While this will decrease reliance on one single oil transport route (via Croatia), it will not reduce imports of Russian oil, at least, not in the near future. Indeed, thanks to Druzhba, Serbia will be able to obtain Russian oil via Hungary which receives it via Ukraine (Djurovic, 2023). Reliance on Russian oil will thus give Moscow some degree of influence over Serbia’s energy sector in the future despite the efforts made at diversifying suppliers in the gas market. What is more, Serbia is unlikely to give up receiving Russian gas in the short term because it is highly beneficial. As already mentioned, Serbia pays one of the lowest gas prices in Europe and this is unlikely to change unless relations between the two countries deteriorate significantly. Second, as a transit country, Russian gas flowing through its territory brings transit revenues for the Serbian state budget while also enhancing the country’s role as “energy transit hub”. A final aspect to consider is Serbia’s foreign policy balancing act. Under Vucic’s leadership, the country has collaborated both with the “West” and the “rest” (Russia, China, Turkey) taking advantage of the competition between the different actors in the region. Consequently, the diversification of gas suppliers, while allowing Serbia to align with EU’s acquis, may also reflect Vucic’s strategy of balancing the West and Russia in order to extract benefits from both in the energy sector.
Conclusion
A combination of renewables and natural gas alongside energy efficiency improvements are required to reach Serbia’s ENCP targets and to align with the EU’s energy policy. Nevertheless, domestic players, such as politicians and state-back companies, and foreign influence – namely Russia and China – remain strongly in favor of the status quo. A set of measures could create a more enabling regulatory environment for the renewable energy transition in Serbia. First of all, Serbia should commit to enhancing instruments of public transparency and accountability. The lack of scrutiny over investment in major energy infrastructure has favored EPS, Russia, and China. Indeed, Serbia has been repeatedly criticized by the European Commission for fast-tracking a slew of major decisions on laws and investments, thus diminishing its transparency and increasing the possibility of corruption and rent-seeking (EBRD, 2023). Secondly, Serbia needs to create a more inclusive planning phase which involves balancing different interests and requires broad public dialogue about the direction of the energy future. Additionally, the topics of education and insufficient administrative capacity are closely correlated with an inclusive planning phase. The deficiencies in administrative capacity and education causes Serbia to set realistic targets but not ambitious. This is especially evident in the last NECP. These recommendations are continuously repeated by both the Energy Community and the European Commission Reports. In conclusion, Serbia stands at a critical juncture in its journey towards a sustainable energy future. Despite its abundant potential in renewable energy sources and a solid legal framework aligned with international agreements, the country faces significant challenges in transitioning away from its reliance on coal and fossil fuels. By taking decisive action and adopting a holistic approach to energy transition, Serbia can unlock its untapped potential, reduce greenhouse gas emissions, enhance energy security, and foster economic growth. The path ahead may be challenging, but with determination, collaboration, and innovation, Serbia can emerge as a leader in the Western Balkans in the transition toward a greener and more resilient energy landscape.
When it comes to natural gas, the opening of the new gas interconnector represented the first concrete step taken by Serbia to diversify its natural gas suppliers amid the energy crisis caused by the war in Ukraine. Thanks to the interconnector, Serbia will be able to access natural gas supplied by Azerbaijan, reducing its reliance on Russia and on a single supply route, the Balkan Stream. Moreover, by enhancing supply diversification Serbia aligned with EU’s strategy of reducing dependence on Russian gas and EU’s acquis, thereby making progress towards EU membership. In conclusion, whereas the new gas interconnector will make Serbia less vulnerable to Kremlin’s gas blackmails or unintentional gas shortages, it is unlikely that the country will give up collaborating with Moscow in the energy field. As long as gas from Russia comes at a low price and with little to no strings attached, Serbia has few incentives to significantly reduce ties with Moscow.
Bibliography
Information Content | ||
1 | Confirmed | Confirmed by other independent sources; logical in itself; coherent with other information on the topic |
2 | Presumably true | Not confirmed; logical in itself; coherent with other information on the topic |
3 | Maybe true | Not confirmed; reasonably logical in itself; coherent with some other information on the topic |
4 | Uncertain | Not confirmed; possible but not logical in itself; no other information on the topic |
5 | Improbable | Not confirmed; not logical in itself; contradicts with other information on the topic |
6 | Not able to be evaluated | No basis to evaluate the validity of the information |
Trustworthiness of the source | ||
A | Trustworthy | No doubt about authenticity, reliability or competence; has a history of total trustworthiness |
B | Normally trustworthy | Small doubts about authenticity, reliability or competence, nevertheless has a history of valid information in a majority of cases |
C | Sufficiently trustworthy | Doubts about authenticity, reliability or competence; however, has supplied valid information in the past |
D | Normally not trustworthy | Significant doubt about authenticity, reliability or competence, however has supplied valid information in the past |
E | Not trustworthy | Lack of authenticity, reliability or competence; history of invalid information |
F | Not able to be evaluated | No basis to evaluate the validity of the information |
- Agata Losckot-Strachota, “The war in Ukraine: a chance to reduce the Western balkans’ Energy-Dependence on Russia”, in “Europe and Russia on the Balkan Front: Geopolitics and diplomacy in the EU’s backyard”, Italian Institute for International Political Studies, Mar 2023, https://www.ispionline.it/en/publication/europe-and-russia-on-the-balkan-front-geopolitics-and-diplomacy-in-the-eus-backyard-118951 , A1
- Batas Bjelic Ilija R., Rajakovic Nikola LK., “National Energy and Climate Planning in Serbia: From Lagging Behind to an Ambitious EU candidate?”, Vol.32 2021 47-60, October 15 2021, https://journals.aau.dk/index.php/sepm/article/view/6300/5963 B-2
- Bne Intellinews, “New Bulgaria-Serbia gas pipeline put into operation”, Dec 11 2023, https://www.intellinews.com/new-bulgaria-serbia-gas-pipeline-put-into-operation-304959/
- Branimir Djurovic, “Druzhba via Hungary; the impact of the construction of a new oil pipeline on Serbia’s Energy Security”, Belgrade Center for Security Policy, May 2023, https://bezbednost.org/en/publication/druzhba-via-hungary-the-impact-of-the-construction-of-a-new-oil-pipeline-on-serbia-s-energy-security/ A1
- Congressional Research Center, “Turk Stream: Russia’s Southern Pipeline to Europe”, may 6 2021, https://sgp.fas.org/crs/row/IF11177.pdf A1
- Dimitar Bechev, “Energy in the Western Balkans”, BiEPAG, Background paper, May 24 2023, https://www.biepag.eu/publication/energy-in-the-western-balkans/ A-1
- CEE Bankwatch Network, The Energy Sector in Serbia, November 2023, https://bankwatch.org/beyond-fossil-fuels/the-energy-sector-in-serbia A-1
- Dejan Brkic, “Serbian Energy Sector in a gap between East and the West”, Energy Exploration and Expoitation, Vol 42, Issue 1., Nov 19 2023, https://journals.sagepub.com/doi/10.1177/01445987231215445 A1
- Directorate-General for Energy, “Inauguration of the Bulgaria-Serbia gas interconnector”, Dec 11 2023, https://energy.ec.europa.eu/news/inauguration-bulgaria-serbia-gas-interconnector-2023-12-11_en A1
- Energy Community, “Serbia. Annual Implementation Report”, November 1 2023, https://www.energy-community.org/implementation/report.html 1-A
- EU u Srbiji, “Gasni interkonektor Srbija-Bugarska”, https://europa.rs/gasni-interkonektor-srbija-bugarska/ A1
- European Commission, “Chapters of the Acquis”, https://neighbourhood-enlargement.ec.europa.eu/enlargement-policy/conditions-membership/chapters-acquis_en A1
- European Bank for Reconstruction and Development (EBRD), “Transition Report 2023-24. Transitions Big and Small. Country Assessments Serbia”. November 21 2023, https://www.ebrd.com/news/publications/transition-report/transition-report-202324.html, 1-A
- European Western Balkans, “Serbia’s Energy Dilemma: Between Russian Ownership and the Path to Renewable Transition”, November 10 2023, https://europeanwesternbalkans.com/2023/11/10/serbias-energy-dilemma-between-russian-ownership-and-the-path-to-renewable-transition/, 2-B
- Igor Todorovic, “Bulgaria to suspend transit tax for Russian gas”, Balkan Green Energy News, Dec 12 2023, https://balkangreenenergynews.com/bulgaria-to-suspend-transit-tax-for-russian-gas/ A2
- International Energy Agency, Energy System of Serbia, https://www.iea.org/countries/serbia A1
- Ioana Ciuta, Pippa Gallop, “The Western Balkan power sector: between crisis and transition”, CEE Bankwatch Network, December 2022, https://bankwatch.org/publication/the-western-balkan-power-sector-between-crisis-and-transition 1-A
- Iskra Pavlola, “Serbia plans to raise capacity of natgas link with Bulgaria”, See News, Mar 1 2024, https://seenews.com/news/serbia-plans-to-raise-capacity-of-natgas-link-with-bulgaria-850212 B1
- Jonathan Stern, Simon Pirani, Katja Yamifava, “Does the cancellation of South Stream signal a fundamental reorientation of Russian gas export policy?”, The Oxford Institute for Energy Studies, Jan 2015, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2015/01/Does-cancellation-of-South-Stream-signal-a-fundamental-reorientation-of-Russian-gas-export-policy-GPC-5.pdf A1
- Martin Jirusek, “TurkStream is South Stream 2.0 – has the EU done its homework this time?”, Atlantic Council, Feb 19 2020, https://www.atlanticcouncil.org/blogs/energysource/turkstream-is-south-stream-2-0-has-the-eu-done-its-homework-this-time/ A1
- Milica Stojanovic, “Serbia signs Natural Gas Deal with Azerbaijan”, Balkan Insight, Nov 15 2023, https://balkaninsight.com/2023/11/15/serbia-signs-natural-gas-deal-with-azerbaijan/ A2
- Miloš Dobrojević, European Green Deal: Serbian path towards renewable energy”, 7th Virtual Conference on Science, Technology and Management in Energy, December 2021,https://www.researchgate.net/publication/360643201_European_Green_Deal_Serbian_path_towards_renewable_energy#fullTextFileContent 1-B
- Ministry of Mining and Energy of the Republic of Serbia, “Integrated National Energy and Climate Plan of The Republic of Serbia for the period 2030 with the projections up to 2050”, June 2023, https://vladars.rs/eng/vlada/ministries/MIEM/Pages/default.aspx 1-A
- Nebojša Ćorović , Branka Gvozdenac Urošević, Nenad Katić, “Decarbonization: Challenges for the electricity market development - Serbian market case”, Energy Reports Vol. 8, November 2022, https://www.sciencedirect.com/science/article/pii/S2352484722000543 2-B
- OECD, “Multi-dimensional Review of the Western Balkans: From Analysis to Action”, OECD iLibrary, January 2023, https://www.oecd-ilibrary.org/sites/6d39d53e-en/index.html?itemId=/content/component/6d39d53e-en#section-d1e74744, 1-A
- Pippa Gallop, Emily Gray, Elena Nikolovska, Alexandru Mustață and Raluca Petcu, “The Political Economy of Energy Transition in Southeast Europe - Barriers and Obstacles, FES SOE PEET, September 2021, https://soe.fes.de/news-list/e/fes-soe-peet-political-economy-of-energy-transition-in-southeast-europe A2
- Radio Free Europe, “Bulgaria Defends Decision to Impose Tax on Russian gas transit as Hungary, Serbia vow to respond”, Oct 18 2023, https://www.rferl.org/a/bulgaria-defends-tax-russian-gas-hungary-serbia/32643100.html B1
- Rusif Huseynov, “Balkan-Azerbaijan Friendship is Transforming Europe’s Energy Prospects”, Balkan Insight, Dec 7 2022, https://balkaninsight.com/2022/12/07/balkan-azerbaijan-friendship-is-transforming-europes-energy-prospects/ A1
- Tsvetelia Tsolova, Anna Koper, “Europe decries blackmail as Russia cuts gas to Poland and Bulgaria, Reuters, Apr 27 2022, https://www.reuters.com/business/energy/gazprom-says-it-halts-gas-supplies-poland-bulgaria-payments-row-2022-04-27/ B1
- Varvara Aleksci, Batas Bjelic, “Do We Need More Ambition for the Renewable Energy Transition in Serbia? Foundations, of Energy Governance and Planning”, DAIS - Digital Archive of the Serbian Academy of Sciences and Arts, December 13 2021, https://dais.sanu.ac.rs/handle... 2-B
- Vesna Martin, “Green Transition and Sustainable Development in Serbia”, EKONOMSKE IDEJE, December 2023 https://www.ekof.bg.ac.rs/wp-c... 2-B
- Vladimir Spasić, “Serbia urged to adjust NECP renewables, energy efficiency goals to Energy Community’s targets”, Balkan Green Energy News, November 14 2023, https://balkangreenenergynews.com/serbia-urged-to-adjust-necp-renewables-energy-efficiency-goals-to-energy-communitys-targets/ 2-A
- Western Balkans Investment Framework, “Start of works on the EU-supported Serbia-Bulgaria gas interconnector”, January 1 2022, https://www.wbif.eu/news-details/start-works-eu-suppported-serbia-bulgaria-gas-interconnector A1
Mondo Internazionale APS - Riproduzione Riservata ® 2024