We present to your consideration the conclusions of the Chairman of the Management Board of EMI Slavtcho Neykov, in his capacity of a moderator of the panel “Intelligent industry, energy and climate”, part of the international conference „Green transition – solutions and challenges for Bulgaria“.
International Conference „Green Transition – Solutions and Challenges for Bulgaria“
(Sofia, 15.10.2021 – www.greentransition.bg )
PANEL: INTELLIGENT INDUSTRY, ENERGY AND CLIMATE
CONCLUSIONS OF THE MODERATOR
А. ON THE GREEN DEAL CONCEPT
1. At the Green Transition discussion, the big absentee was actually the State, which via its institutions owes to the business and citizens more explanations on the nature of this transition. Along with the other actions at national level, it is imperative to have an efficiently structured Green Council launched where consensus is to be pursued (despite the failure of the Green Deal Advisory Council set up by the Council of Ministers in spring 2020).
2. As far as the Green Deal is currently associated predominantly with the energy sector in Bulgaria, absence of a long-term energy strategy transpires as a prime issue. In parallel, it is imperative to revise the respective legal framework at national level. Since at present, there is neither Parliament nor regular government, these two notions seem unrealistic, though targeted preparatory actions need to be put in place.
3, In essence, Bulgarian politicians have brought down the Green Deal subject matter to the energy sector topic, and more specifically, to the future of coal, which by and large is neither well-founded nor sufficient. The Green Deal relates to the new European Strategy for Growth while using best endeavours to safeguard the climate and develop green economy, and energy happens to be just one of the affected sectors.
4. At European level, the Green Deal concept is both financially and normatively backed, with Member States holding a key role. This is particularly relevant as regards devising effective mechanisms to both foster investment and secure a just transition for coal regions. In this context, the broadly disseminated notion about someone outside our country forcing on us something that all but demands from society to oppose it, is more than untenable. This is so not only because Bulgaria is part of the decision-making process at European Union level but also because objective market mechanisms have already effectuated the Green Deal principles, irrespective of politicians’ desires.
B. ON FURTHER USE OF COAL IN ELECTRICITY GENERATION
5. Given the enormous importance held by coal mines and power plants for country’s energy security and bearing in mind the social aspects related to their functioning, any prospects for them continuing to operate should be analysed.
However, several factors should be taken into account, namely:
- Abidance by the rules of competition, fundamental to EU, and the relevant regulations on environmental and climate protection; these cannot and must not be breached;
- EU links the rule of law with the financial support of Member States;
- EU is not to finance any activities whatsoever aiming to extend the lifespan of coal-fired power plant;
In view of the above, before undertaking whatever actions related to applying new ‘coal’ technologies, the economic rationale behind such actions must be fully clarified.
6. The main mistake of Bulgarian politicians is that they consider all but stopping the objective course towards coal extraction termination and respectively, coal-based facilities shut-down by way of administrative and political steps. In fact, politicians’ task is to make the best use of trends and funds provided in the interest of citizens and on the grounds of economically justified actions. Coal-based electricity generation will not collapse because of lack of political support but because without reforms, innovations and a clear vision, it will be swept away by economically more competitive technologies and energy sources very soon. From this stand point, defining years (albeit indicative) for gradual termination of coal mining and respectively, use of coal for power electricity generation, does not have any objective rationale or any specific legal grounds, for that matter.
7. Absence of a substantiated and realistic look on coal future distorts the entire national energy mix, including from the standpoint of nuclear energy and natural gas role. This has a direct impact on the investment process in the country at both national and regional level.
C. ON INVESTMENTS AND INVESTORS
8. Attracting new investment and investors underlies the foundation of the Green Transition. However, it is only by having a clear strategic, normative and regulatory framework adopted at national level, and respectively, working institutions that this can be brought about.
9. Business, including capital and energy intensive industries, expects the Green Transition to become a powerful driver of modernisation and digitalisation, trade and investment, innovation and development. The industry expects energy supplies to remain affordable, predictable, secure and environmentally-friendly. However, business also is well aware of its responsibility as regards delivering on green investment. In that respect, partnership with state institutions is a must, also in view of competitiveness compromise prevention.
10. At national level, state institution approach to attracting investment and new investors should entail adequate and targeted efforts to encompass all regions. This is vital specifically for coal regions, regardless of economic, social and demographic differences among them.
11. In this context, the role of local authorities is of particular importance. As of today, their involvement in setting up proper and purposeful conditions is insufficient. This issue is rather visible and sensitive in the coal regions.
12. Parallel to attracting new investors, a clear approach to well-established investors in the energy sector is also required. Such an approach should be based on the rule of law, strict implementation of contracts, and predictability and stability of the State’s licencing policy.
For instance, it is absolutely necessary to have a national vision developed about the so-called ‘American power plants’ (AES BULAGRIA and CONTOURGLOBAL MARITSA-EAST 3) for the time following expiration of their long-term contracts (respectively, 2026 and 2024). Currently, these power plants ensure about 18% of the electricity generated in the country, which makes them an important factor for national energy security. It should be expressly underlined that these power plants meet all applicable European standards on environmental protection. Furthermore, they provide direct and indirect employment and designated social programmes at local level, which also makes them an important factor from social perspective.
Particular attention should be given to private investors in the area of electricity distribution since in the context of the Green Deal their functions will gain an even higher significance. This relates to development and maintenance of electricity distribution networks and the entire scope of activities they are licenced for.
13. It is necessary to undertake steps towards faster launching of the European Modernization Fund intended to support some countries, including Bulgaria, on the road to climate neutrality, with a focus on energy system upgrading and improving energy efficiency.
14. Along with investment options provided under various national and European mechanisms, it is urgent to consider the coal region targeted options offered by the Just Transition Fund. To this end, it should be explicitly emphasised that preparation for specific territorial transformation plans for these regions under the Just Transition Mechanism is the responsibility of the State. State institutions should pursue active participation of local authority and local entities in the affected regions. The objective of the consultant funded by EC is to prepare social and economic analyses to help drafting concrete plans.
D. ON COMMUNICATING THE ISSUES TO SOCIETY
15. Sociological surveys conducted on the occasion of the Conference (TREND Agency – https://rctrend.bg/project/209718/) show a significant unawareness even about the Green Deal general framework. This calls for a rapid intervention by the state institutions and the business, NGO, etc., so as to overcome the lack of information. Such an endeavour would require active involvement of media.
16. Despite unrelated directly to the Green Deal, the dramatic increase in electricity prices has raised serious concerns among people. This is why there should be a clear focus on energy poverty aspect (including on the so-called group of ‘working poor’), regardless of this matter being of a social rather than an energy nature.
17. The dimensions of Green Deal inadequate representation nation-wide, as regards its essence, are broad, with some serious implications at local level. This applies primarily to the directly affected regions (mostly, the coal-mining regions). Therefore, communicating to society aspects of both Green Deal general framework and local community-specific information should become a priority.
18. A Green Deal aspect requiring clearer and broader communication to the public is related to spending financial funds allocated.
Bearing in mind the corruption practice suspicions dwelling among the general public in the recent years, the latter aspect is notably relevant as regards the funds already spent in the energy area, amounting to billions of Bulgarian taxpayer money, as well as the control and accountability tools intended to be applied for the future spending of funds earmarked under various European mechanisms.
