– We have four blocks, but not all of them use the same coal. Two blocks are heating, two electric, and we are now converting Block 6 into a heating block. A contract has been signed, regulating that in 2022 it would be converted into a heating block, considering that the National Plan for the reduction of emissions provide for the operation of Blocks 3 and 4 until December 31, 2023. Full stop.
This was the answer given by the director Izet Džananović to the Naratorium journalist’s question regarding the future of the thermal power plant in Tuzla in September 2021. Confident in the implementation of the controversial Block 7, Džananović then said that it would start its operation after the shutdown of the two outdated blocks. By the end of 2021, Blocks 4 in Tuzla and 5 in Kakanj had used up 90 percent of the allowed 20,000 operational hours in the “opt out” mode, which assumed their shutdown by the end of 2023.
At the end of February 2022, when chaos in the field of energy and increased demand for electricity was announced by the Russian aggression against Ukraine, and the end of operation of Blocks 4 in Tuzla and 5 in Kakanj was approaching, the FBiH Government proposed a solution in the form of a decision extending the operation of these blocks.
The head of Elektroprivreda BiH (Electric utility company), Ademir Andelija, urged the MPs in the FBiH Parliament to support the decision and thereby enable “safe supply of electricity to end customers”. The operation of this company was in question, he whined, due to the implementation of the amended Law on Electricity, which limits the increase in electricity prices to 20 percent. He stated that the decision to extend the operation of the blocks was made for the purpose of saving the business and the Company, explaining that price limitations could not be set for the imported electricity.
Line minister Nermin Đindić provided the same argument, explaining that their analysis had showed that the energy sector in BiH needed additional measures to maintain a safe supply of electricity to households and the economy. The Prime Minister of the Federation of BiH, Fadil Novalić, at the session of the FBiH Parliament held in March 2022, also underlined the necessity of adopting the decision, allegedly due to the rise in energy prices worldwide. The decision was, of course, adopted.
The well-known phrases about “the normal supply of electricity to end users”, “energy independence” and “rising energy prices worldwide” were still echoing in the public in Bosnia and Herzegovina, when the Energy Community sent its first warning.
Back in 2015, the Council of Ministers of Bosnia and Herzegovina adopted the National Emission Reduction Plan (NERP) drafted according to the guidelines of the Secretariat of the Energy Community. It refers to the reduction of emissions of sulphur dioxide (SO2), nitrogen oxides (NOx) and solid particles from large combustion plants in Bosnia and Herzegovina. This plan actually includes two directives, the Directive on the limitation of emissions of certain pollutants into the air from large combustion plants (DVPS) and the Industrial Emissions Directive (IED).
In an interview to Naratorium in April this year, Artur Lorkowski, director of the Energy Community, confirmed that the FBiH Government’s decision to continue operation of Blocks 4 and 5 in Tuzla and Kakanj is unilateral and that it represents “a clear violation of Bosnia and Herzegovina’s obligations under the Energy Community Treaty.” However, the authorities in BiH, taking into account their past experiences, took this as a bluff.
Several says ago, experts from the Secretariat of the Energy Community stated for Naratorium that, after the adoption of the conclusion, no further clarifications have been provided by the authorities of Bosnia and Herzegovina.
In late October, an official warning about the launch of the dispute settlement procedure due to the unilateral decision of the FBiH Government arrived from the EC Secretariat in the form of an open letter.
– Experts added that the purpose of the preliminary procedure is to give Bosnia and Herzegovina the opportunity to react to the alleged non-compliance and enable the Secretariat to establish the full factual and legal background of the case. BiH has two months to comply with the requirements of the Treaty or to justify its position.
The Council of Ministers of Bosnia and Herzegovina has not yet responded to the EC Secretariat’s open letter, and according to experts, the deadline for providing a reply is December 28. After this date, one could discuss possible consequences.
Their and our pollution
While the authorities in Bosnia and Herzegovina are silent, the image of a hostile and hypocritical Europe that wants to destroy energy independence of Bosnia and Herzegovina is persistently created in the public space, despite the fact that the Council of Ministers of Bosnia and Herzegovina signed numerous documents assuring that the country would meet the conditions in order to contribute to the reduction of pollution.
After the open letter was sent to BiH, the voices of energy industry tycoons could be heard saying that the Energy Community’s warnings regarding the Directive violation were mere threats, criticizing Europe for requiring BiH to shut down thermal power plants at a bad time, while some EU member states responded to the energy crisis by burning coal again.
Answering the question about the difference between coal-powered thermal power plants that have been re-launched in the EU member states, the Energy Community replied that large plants in these countries must meet the stricter standards of the Industrial Emissions Directive.
– Based on their current emission profile, dust emissions from Kakanj 5 are in line with the applicable limit values, while all other emissions are well above. According to the Secretariat’s estimates based on the total emissions reported by Bosnia and Herzegovina, sulphur dioxide limit values were exceeded by more than 60 times as regards block 4 in Tuzla and almost 50 times as regards block 5 in Kakanj. It should be noted that the desulphurisation filter can reduce these emissions by more than 90 percent. It is therefore technically possible to comply with the limit values. As for nitrogen oxides, the degree of non-compliance is 7:1 or 5:1, while Tuzla 4 also exceeds the dust limit values by about 25 times.
Therefore, thermal power plants in the EU countries meet the standards for polluting particles emissions, while the outdated blocks that will continue to operate in Bosnia and Herzegovina exceed almost all limit values. However, there are still chances for this situation to change.
Nihad Harbaš, an energy expert, states that the competent entity ministries, the Federal Ministry of Energy, Mining and Industry and the Federal Ministry of Environment and Tourism, initiated a procedure with the state Ministry of Foreign Trade and Economic Relations to withdraw the mentioned blocks from the “opt out” option and take them back them to NERP, in order to modernize and extend their service life.
– Technically speaking, these blocks can work until 2028 and they probably will, given that Block 7 of the Tuzla TPP is still in limbo. This means that in a situation where the construction of a new thermal block is uncertain, the only option for a safe supply of electricity in the FBiH is the extension of the operation of the two mentioned blocks, which is in a way justified considering that energy crisis period is ongoing and that developed EU countries are switching back to the use of coal for the production of electricity. Harbaš stressed that BiH cannot build sufficient capacities to replace these blocks in a short period of time.
However, it should be emphasized that the primary cause of the planned phasing out of coal in the world is not polluting by-products such as sulphur dioxide, which can be removed using filters, but, above all, the release of carbon dioxide as the most common greenhouse gas that leads to climate change. In order for Tuzla and Kakanj blocks to meet the standards, it is necessary to make significant investments for their overhaul, which has not been publicly discussed so far. Therefore, in this case too, we see that the burden of the failed projects (Block 7, hydroelectric power plant Vranduk, etc.) has matured, so instead of investing in green energy sources, Elektroprivreda BiH must now (if BiH wants to comply with the signed documents) invest in blocks at the end of their service life.
– In the EU, the relevant combustion plants have already had to significantly reduce their emissions of sulphur dioxide, nitrogen oxides and dust by making the necessary investments. Although their restart due to the energy crisis is certainly not desirable and will represent a major challenge to the EU’s climate goals, from the perspective of air quality, the Energy Community has warned that they must be able to comply with the strictest standards.
Harbaš, on the other hand, explains that the continuation of the operation of these blocks puts Bosnia and Herzegovina in a favourable position in relation to the region and beyond, and that their shut-down would cause other problems.
– Closing these blocks would call into question the heating of the cities of Tuzla, Lukavac, and Kakanj, which would have immense consequences for the users, air pollution, but also the economic outlook of the district heating system users, and many others.
The Energy Community did not want to talk about the consequences of the decision to extend the operation of these blocks, because as they say, they still have not received an answer to the open letter from the Council of Ministers of Bosnia and Herzegovina. Harbaš stated that the previously opened cases against BiH will be the subject of discussion at the 20th meeting of the Ministerial Council of the Energy Community scheduled for December 15, 2022, and that certain measures will be adopted due to the persistent violation of the Treaty by BiH.
– More specifically, they will discuss the ECS-08/11S open case which refers to the natural gas and failure to adopt legislation and regulatory institutions at the level of BiH, the ECS-02/13S in the field of environmental protection due to the non-compliance with the provisions of Directive 1999/32/EC which aims at the reduction of sulphur dioxide emissions, and ECS-6/16S in connection with the third energy package, i.e. due to persistent and serious violations of the rules in the field of electricity and natural gas.
Harbaš Said that the EC sanctions against Bosnia and Herzegovina have so far been reflected in the ban on participation in the Energy Community and taking away the right to vote in the Ministerial Council.
– Bosnia and Herzegovina has until December 28 to respond to the Secretariat’s Open Letter. Once the facts are established, the Secretariat can send a Reasoned Opinion, where the contracting party is requested to resolve the identified issues related to non-compliance within two months. According to the Energy Community, in light of the response of the Council of Ministers, the Secretariat can submit the case to the Council of Ministers for the purpose of making a decision on the contracting party’s compliance with the law of the Energy Community.
The future of the export of “dirty” electricity and goods
Considering that the European Union has introduced fees and the stock exchange for trading limited quotas of carbon dioxide emissions and that on 13 February 2022 a political agreement was reached in the EU Parliament on taxes on products in the production of which large amounts of carbon are released, such as steel and cement, the question arises when the EU will introduce taxes on “dirty” electricity. Our interlocutor Nihad Harbaš assumes that, according to the plans, this will happen at the beginning of 2026.
– However, it is necessary to take all actions to prevent this from happening. The line ministry at the state level, Ministry of Foreign Trade and Economic Relations is working on this and the introduction of the ETS (Emissions Trading Scheme) has been agreed to avoid taxation on export goods and services. If ETS mechanisms are not introduced, the so-called CBAM – mechanism for calculating compensation for carbon dioxide emissions contained in the products imported into the EU will be implemented. The implementation of the calculation system will start on January 1, 2023, with the transitional period until December 31, 2025, during which certificates will not be charged for.
Harbaš explained that the CBAM mechanism (Carbon Border Adjustment) means the introduction of a carbon dioxide price for certain goods that arrive on the EU market from third countries, which also applies to Bosnia and Herzegovina, and the introduction of the ETS in Bosnia and Herzegovina avoids this unfavourable mechanism and its application in Bosnia and Herzegovina.
– CBAM is essentially an import tax on certain products from countries that do not have a carbon dioxide emissions taxation system in place, which is compatible with the European emissions trading system. In this way, the EU protects its economy from the unfair competitive products that are imported into the EU, originating in the countries where carbon dioxide emissions are not adequately taxed. CBAM should ensure that the price of imported goods in the EU reflects the price of carbon dioxide that domestic producers pay through the ETS mechanism, and should prevent the EU’s efforts to reduce carbon dioxide emissions from being annihilated by increasing emissions outside the EU.
In essence, CBAM is primarily a climate rather than a fiscal measure that should be used to fill European budgets, which also results from the fact that CBAM will not be applied to imports from countries that have an emissions taxation system compatible with the EU’s ETS.
The difference between the application of these two mechanisms also means a big economic difference for countries that export to the EU.
– If ETS is introduced, the funds collected through that system will remain in BiH and can be used for decarbonisation, while in the case of CBAM, all fees collected will end up outside BiH. One of the basic tools for the decarbonisation of the energy sector is precisely the ETS. Harbap reminded that this model was supported declaratively at meetings by all involved institutions at the state and entity level.
Let’s leave aside the dispute of the Energy Community against Bosnia and Herzegovina and the failure to implement the measures to which the state has committed itself. Let’s say that we have to keep energy independence at any cost.
What is the price of cheap, subsidized electricity for households?
– Numerous long-term health studies have shown that people living in areas with higher average concentrations of PM2.5, NO2 and ozone have a higher risk of death caused by chronic diseases, including stroke, lung cancer, chronic obstructive pulmonary disease, diabetes and coronary heart disease. The findings from these studies allowed scientists to develop concentration-effect functions that show the increase or decrease of mortality as the level of air pollutant changes. By combining these functions with data on population and the number of deaths, one can estimate the number of deaths that would have been avoided if the portion of air pollution attributed to coal-powered power plants in the Western Balkans had been eliminated.
|Country||Total expenses in millions of EUR (average value)||Total expenses in millions of EUR (confidence interval)|
|Bosnia and Herzegovina||627||408-831|
Table 5. 10 countries with the highest healthcare expenses resulting from total emissions of coal-powered TPPs in the Western Balkans (EU and the Western Balkans) in 2020
For a long time, scientists could only measure the short-term effects of air pollution, which mostly affects people who are already seriously ill. In contrast, based on evidence accumulated over the past two decades, air pollution-related deaths are mostly related to chronic exposure over several years. According to the 2020 Bankwatch Report, the number of years of life lost associated with each death caused by air pollution in the Western Balkans is about 20.
The same report states that the health effects and healthcare costs resulting from exceeding the maximum values of emissions in thermal power plants in Bosnia and Herzegovina occur in all countries and regions and are not limited to Bosnia and Herzegovina.
– Ugljevik and Kakanj thermal power plants are among five power plants in the Western Balkans with the worst health effects resulting from exceeding the maximum emission values. In 2020, carbon caused the most days with asthma symptoms in children – over 12,000 days. This accounts for 48 percent of all such thermal power plant impacts in the country covered by the NERP. Figures for the TE Kakanj Blocks 6 and 7 were similar, with 8,050 days with asthma symptoms in children suffering from asthma. Tuzla Blocks 5 and 6 are in third place, with 3,236 such days in 2020. Carbon dioxide is also responsible for the largest number of cases of bronchitis in children due to PM10 as well as for hospitalizations due to cardiovascular and respiratory symptoms, with 1,142 cases of the former and 469 of the latter in 2020. Hospitalization costs were estimated to total EUR 1.32 million (with a confidence interval of EUR 0.13 million to EUR 2.59 million). The high costs caused by exceeding the maximum emission values from NERP plants include almost EUR 2.9 billion from 1,345 deaths and EUR 119 million from days with reduced activity and lost working days.
Naratorium is part of a series of reports “Sumrak ugljenokopa” also wrote about the TE Ugljevik, but this thermal power plant is not included in the latest dispute of the Energy Community as there are no blocks with operational hours about to expire.
This text was prepared in cooperation with the Heinrich Boll Stiftung Sarajevo.