European Green Deal: involving the Western Balkans

This month, the European Commission spear its flagship economic policy: the European Green Deal. Achieving it would bring Europe to climate neutrality by 2050 and see European Union economies produce net zero CO2 equivalent emissions by that date. The commission has pledged to study how to increase the EU’s reduction target for 2030 to at least 50 percent, and even try to get closer to 55 percent. The current target is 40 percent.

To achieve this new, more ambitious goal, the EU must deploy a wide range of conventional, proven, radical and disruptive economic and political solutions. Interventions that could drive the European economy towards the 55 percent target include rapid implementation of technological innovation, increasing funding for research and development (R&D), redefining the strategy of public financial institutions and the integration of electricity markets. This objective is also linked to the EU’s stated ambitions for global competitiveness. The theory behind all this is that the transition to carbon neutrality will modernize European industry, create new high-quality jobs and boost Europe’s R&D and innovation record, which is currently somewhat fragile, particularly in comparison with the United States, Japan – and, increasingly, China.

All this will inevitably affect the Western Balkan countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. But to bring about real transformational change, we must also involve these countries as much as possible in these ambitions. Such mutual interest can provide good grounds for an agreement between them and the EU, which would fully include the Western Balkan countries.

The Western Balkans have attractive assets to support Europe’s energy transition.

There are at least four reasons to consider such a deal. First, the energy systems of the Western Balkans are already partially integrated with those of the EU. This integration is set to develop despite everything. Second, the Western Balkans have significant and developed renewable energy capacity as well as additional potential to contribute to European targets for reducing energy CO2 emissions. Third, the region has developed and significant hydroelectric capacity, which is both a good solution for renewable energy and offers potential for large-volume energy storage. And finally, leaving the Western Balkans out of the European Green Deal could lead to a disparity in electricity prices with EU countries, due to the higher carbon price in the EU, which is absent in the neighborhood .

The Western Balkans have attractive assets to support Europe’s energy transition: large coal mining areas with excellent grid infrastructure that can be used for industrial solar power; lower labor costs; engineering skills; and geographic proximity to advanced industrial economies with high energy demand. With appropriate incentives, these assets could attract investment in the new wave of low-carbon industries and further contribute to the European industrial transition.

The EU could deploy several international cooperation formats to include the Western Balkans in the European Green Deal. Among them are the Energy Community, the European Network of Electricity Transmission System Operators, the Regional Cooperation Council, the Energy Connectivity of Central and South-Eastern Europe, the Berlin Process, etc. Each of them brings value and tools to achieve this and to guide the region towards hosting modern, low-carbon, high-value industries.

International financial institutions such as the European Investment Bank, the EBRD and the World Bank play a key role in the development of the region. Most of them follow strong climate-aligned policies. Recently, the European Investment Bank – the world’s largest lending bank – called itself a “European climate bank”, withdrew from investments in fossil fuel projects and announcement that it will “align all financing activities with the objectives of the Paris Agreement from the end of 2020”.

If the EU wants to maximize the impact of the European Green Deal and make it economically more attractive for all governments, it should include the Western Balkans as a stakeholder and ensure that these countries participate in the negotiation process. In this way, the EU will not only guide the region towards the 2030 and 2050 goals, but it will also be able to extract the maximum value that the Western Balkans can offer. This will make the European Green Deal a real deal, based on clear mutual interest, in which the Balkans will not fall into the usual role of policy makers and reluctant followers of regulations, but rather will be active contributors.

This transactional aspect of integrating the Western Balkans into the European Green Deal will accelerate the region’s transition, but could also increase the chances of success of the EU’s climate neutrality agenda across the continent. The EU should negotiate such an agreement with the Western Balkans based on the contributions and assets that the six countries could bring.

To achieve this, the Western Balkan countries themselves should come together to form a government negotiating group. They should establish an international technical assistance team that would help negotiators assess the region’s clean economy strengths and identify the most economically beneficial pathways to rapid greenhouse gas reduction.

In her speech In the European Parliament as President-elect of the European Commission, Ursula von der Leyen clearly stated that she would lead a “geopolitical commission”. The involvement of the Western Balkans in the development and negotiation of the EU’s flagship economic policy will be an important element of the security of this vulnerable region. In partnership, the EU and the Western Balkan countries will be able to make a concrete and political difference in a region that currently lies beyond the EU’s borders but nevertheless remains at the heart of Europe.