Smoother Transition to the Green Agenda

The region, including North Macedonia, is actively pursuing ambitious energy transition plans and is striving to attract investments to bolster these projects

Decarbonisation is at the heart of the EU policies, aligned with the bloc’s commitment to climate action under the Paris Agreement. North Macedonia’s NDC has set a GHG emissions reduction target of 82%, compared to 1990 levels, by 2030.

“This commitment underscores our dedication to the principles of the Paris Agreement and represents a significant step towards a more sustainable, competitive and just future,” says North Macedonian Economy Minister Kreshnik Bekteshi.

North Macedonia’s Just Transition Roadmap (JTR) was adopted as a key strategic document by the Government in June 2023. The JTR introduces scenarios and socioeconomic measures to ensure transition benefits are shared and to support vulnerable regions, communities and workers from falling behind.

“We are very pleased to see the international acknowledgement of our ambition and action, and are delighted to become the first country in Europe, and one of the two first small countries, to join the Climate investment Fund’s Accelerated Coal Transition (CIF ACT) programme,” notes this minister.

Our interlocutor explains that the investment plan is structured to deliver transformational impact and accelerate North Macedonia’s coal transition through three components that address the CIF ACT’s pillars of governance, infrastructure and people. Those are: retiring coal assets and re-powering with RE; Socioeconomic Regeneration of Pelagonia and Southwest regions (coal impacted regions); and Energy efficiency, clean heating and distributed generation programme.

We have achieved significant progress over the last year in terms of undertaking necessary steps towards the transition process

“To this end, the Investment plan targets a financial package of USD 676.3 million. The $85 million in grants and concessional loans from CIF ACT funding is expected to leverage $471.3 million from MDBs and mobilise a further $85 million in private sector investment. This will be distributed across the three IP components, targeting the pillars of Governance, People and Communities and Infrastructure.

“I would also like to express our appreciation to all our partners, including the EBRD, World Bank and IFC, KfW and others partners who joined our Just Energy Transition Investment Platform, which was launched during COP28 in early December 2023. The total early estimates for required investments amount to three billion euros, which is to be mobilised from private and MDB investments, supplemented by public finance to reach the climate ambition. In addition to these, we aim to mobilise $285 million in grants and concessional finance from donors and philanthropic contributors through close partnerships in order to support decommissioning, just transition measures, storage and grid strengthening, and capacity building. It is also expected that €2 billion will be deployed by the private sector through the lifting of investment barriers, primarily in renewables.

Some of the key milestones and progress towards the green transition that I would like to share include the following: ESM initiated the green transition in the region by investing in photovoltaic PP in Oslomej. This was aligned with the Government strategy, emphasising the need to move in this particular direction. The choice of an old coal mine as the most suitable location was based on its limited usage for any other purpose. Such a transformation is necessary not only for the protection of the environment, but also for strengthening and ensuring the reliable production of electricity and thermal energy.

This transition will be expensive, but it will be even more expensive if delayed. We have a strong base to move in that direction. Not only energy sector players, but all of us need to be involved and to be part of this just transition. This is also proven and on the right track, considering the fact that the private sector and even citizens have already initiated investments in photovoltaics for their own needs. Over the course of just two years, around 600 MW of renewable energy plants have been constructed by private investors, which is a really good trend that should be continued at the same pace.

Where do you identify the most significant need for cooperation with Western Balkan partners in achieving the goals of the EU’s Green Agenda?

― We are all equally dependent on coal in this region and, consequently, decarbonisation will be a great challenge for all of us. However, we should keep in mind that the European Union has adopted a new growth plan for the Western Balkans’ aspiring EU candidate countries that provides a clear signal that Europe is heading in that direction and that we have to follow its example if we want to achieve our goal. The aim is to accelerate the Western Balkans’ socioeconomic convergence with the EU, extend some of the benefits of EU membership to the region and, ultimately, speed up the accession process. In order to incentivise reform, the plan includes €6 billion in conditional loans and grants for all Western Balkan countries.

This offers Western Balkan states a chance to take substantial strides towards a sustainable growth model, as outlined in the EU’s 2020 investment plan and the Green Agenda for the Western Balkans. The original initiative aimed to facilitate the region’s green transition, encompassing aspects like decarbonisation and the integration of energy markets. However, progress has been sluggish due to insufficient funding for such initiatives. The EU’s new plan establishes ambitious targets for Western Balkan states spanning various areas. Its execution entails aligning the region’s economies with the European Single Market, incorporating the free movement of goods and services, and advancing towards the climate objectives outlined in the green agenda. The plan additionally calls for enhanced regional cooperation, particularly in energy, electricity markets and transportation (including the construction of rail connections between major cities around the region). Furthermore, each Western Balkan state must persist in implementing the fundamental democratic reforms that are crucial for EU membership.

A key element of the growth plan involves fortifying the common regional market in the Western Balkans, particularly in the electricity, transport and energy sectors. It is very important for the EU to guarantee that its funding is accompanied by integration into EU mechanisms aimed at fostering capacity and expertise building. The European Commission should extend its sustained support to the Western Balkans in this context, fostering regional collaboration with crucial EU involvement in addressing the green agenda’s objectives. The new growth plan holds the potential to serve as a successful model of targeted funding for the green transition. In order to ensure the effective absorption of this funding, Western Balkan states must remain dedicated to implementing the Green Agenda while progressing towards the stipulated requirements of the new plan. Simultaneously, the EU should actively promote increased investment in energy security, transportation networks and renewable energy sources. This stands as a vital step in reducing reliance on external actors and enhancing regional cooperation.