How did the EC assess the updated BG National Energy and Climate Plan?

At the end of May, the European Commission issued an assessment of the latest update of the Integrated National Energy and Climate Plan (INECP). The EC’s assessment allows to track which of the targets and measures set are in line with European requirements and which are less ambitious.

Decarbonisation

Based on the INECP’s forecasts, Bulgaria expects to reduce its total greenhouse gas emissions (including LULUCF) by 78.2% by 2030 and by 92% by 2040, compared to 1990, with the aim of reaching net-zero emissions by 2050. Bulgaria’s INECP includes a commitment to climate neutrality by 2050.

The updated projections in the plan show an improvement compared to the draft, indicating that existing and planned policies and measures will lead to a 11.06% reduction in emissions by 2030 compared to 2005. This exceeds the national ESR target by 1.06 percentage points.

In 2023, greenhouse gas emissions from sectors covered by the Regulation on mandatory annual greenhouse gas emission reductions for Member States in the period 2021–2030 (ESR) represented 52% of total emissions in Bulgaria; this figure is expected to fall to 47.8% by 2030.

While the final NECP builds on the information provided in the draft regarding the policies and measures, it could be enhanced by offering a clearer description of their scope, timing, and anticipated impact on reducing greenhouse gas emissions.

There is not enough detailed information on the projections for agriculture. The sector is described as the largest source of non-CO₂ emissions, particularly N₂O from agricultural soils, although waste is also an important factor. The plan outlines several appropriate policies and measures for both sectors, but the lack of quantification of their impact makes it difficult to assess their effectiveness.

The updated NECP provides information on carbon dioxide capture, utilisation and storage projects. One of these projects is expected to capture 800 kt per year by 2028. However, the document lacks a comprehensive strategy for carbon dioxide capture, storage and utilisation. It also fails to provide estimates of potential storage capacity, set annual targets for injection capacity or outline key national legislative proposals.

The NECP refers to the 2019 National Climate Change Adaptation Strategy and its Action Plan to 2030 in response to a EC recommendation, recognising the importance of integrating adaptation planning. Nevertheless, adaptation policies and measures are largely absent from the relevant Energy Union dimensions. The NECP contains a thorough analysis of climate-related vulnerabilities and risks, based on a 2023 study by the National Institute of Meteorology and Hydrology. However, it lacks a quantitative assessment of impacts.

The plan includes a commitment to phasing out the use of fossil fuels for energy by 2038. This commitment is only mentioned as part of broader decarbonisation strategies and does not specify concrete actions or provide quantitative information on the development of alternative renewable energy capacities.

Furthermore, the consistency between the NECP and the JTPs for Stara Zagora, Kyustendil and Pernik is not adequately explained, nor are the milestones in the timeline for updated coal phase-out commitments.

The plan states that Bulgaria does not provide subsidies for fossil fuels and therefore does not include a timetable for phasing them out. In its comment, the EC notes that both the study and the Commission’s 2024 report on energy subsidies in the EU have identified subsidies.

Renewable energy sources

Indicative trajectories for the deployment of renewable energy technologies for the period 2020–2030, with projections up to 2050, are presented. Bulgaria has set a specific target of 6.2% for the deployment of innovative renewable energy technologies by 2030. The plan also includes a target of 42.04% for renewable fuels of non-biological origin (RFNBO) in industry by 2030. However, there is no specific target for the share of renewable energy required to achieve the indicative target of 1.6% for industry by 2030. No indicative share of renewable energy sources for district heating and cooling is presented for the period 2021–2030 either.

The document lacks additional information on the conclusion of power purchase agreements (PPAs). Regarding the use of renewable energy in heating and cooling, Bulgaria indicates that renewable energy sources will account for 44.01% by 2030, with the aim of promoting innovative geothermal and solar technologies, as well as waste heat and cold utilisation. The plan anticipates an increase in the share of renewable energy in transport to 29.93% by 2030, including contributions from RFNBOs.

Although biomass will continue to account for the largest share of renewable energy sources for heating and cooling in 2030, stricter sustainability requirements will apply to it in line with Directive (EU) 2018/2001 (the ‘revised RED II’), meaning its share will gradually decrease over the coming decades. The final plan does not provide further details on specific measures other than the objective of developing a vision for heat market development and improving small producers’ access to district heating networks.

Energy efficiency

Bulgaria does not include the annual energy consumption reduction that all public bodies must achieve, as required by Article 5 of Directive (EU) 2023/1791 (the recast Energy Efficiency Directive). Furthermore, Bulgaria does not report the total floor area of heated and cooled buildings owned by public authorities that must be renovated annually, nor the corresponding annual energy savings that must be achieved. Additionally, it does not indicate whether it has opted for the standard or alternative approach. However, Bulgaria has identified policies and measures to reduce energy consumption by public authorities and renovate public buildings, including introducing building information modelling at a national level.

The EC understands that Bulgaria has robust energy efficiency funding programmes and support schemes, including financial instruments and public guarantees, which are capable of mobilising private investment and additional co-financing. Bulgaria has identified existing policy measures to promote the use of credit products for energy efficiency and innovative financing schemes, such as energy performance contracting.

While the plan does not increase the ambition of the long-term renovation strategy, it does recall some of its key elements, such as the targets for energy savings, renovated area and CO₂ emission reduction for 2030, 2040 and 2050.

The plan describes additional measures and initiatives related to building renovation that were not included in the first NECP.

Energy security

However, the final plan does not clarify how Bulgaria intends to diversify its gas supplies or continue promoting a reduction in gas consumption by 2030. However, it does provide a forecast of the future role of natural gas. In the WAM scenario, primary energy production from natural gas is expected to decline slightly at first, from 169 GWh in 2022 to 164 GWh in 2030, and then much more rapidly to 50 GWh in 2040 and 8 GWh in 2050. In the WEM scenario, however, primary energy production from natural gas increases to 190 GWh by 2030, before decreasing to 168 GWh by 2040.

The final plan contains only a few additional projects, not additional information on storage targets.

Energy market

The plan provides a detailed quantification of flexibility needs, albeit in a non-structured manner, and does not set specific targets for demand response (DR), except for measures enabling participation in DR. According to the EC assessment, clear targets for improving the flexibility of the energy system are provided. The country aims to increase flexibility by enabling the non-discriminatory participation of new flexibility services and the aggregation of demand response (DR) in intraday and day-ahead markets, as well as by expanding interconnections.

Research, innovation and competitiveness

The updated NECP includes a partially comprehensive approach to decarbonising sectors of the economy, but does not set targets to support research, innovation and competitiveness in clean energy technologies. In terms of the share of public expenditure in GDP, the path towards 2030 and beyond has not been defined. Instead, Bulgaria relies on a number of medium-term European funding programmes (2021–2027) as the main source of funding to support the energy transition and clean technologies.

The plan refers, in general terms, to simplified procedures for issuing production permits, and, more specifically, to projects with the status of Projects of Common Interest (PCIs, TEN-Es). Information is provided on policies and measures to develop clean energy and digital skills.

Financing the energy and climate transition

However, the plan does not provide an assessment of overall investment needs. The focus is mainly on investments in new renewable energy sources for electricity and heat production. Although this assessment is based on a reliable methodology that mainly uses a top-down approach, the investment needs of other sectors are not fully described. The proportion of public investment remains unclear, and the instruments used to mobilise private investment are not described. While a list of EU financial sources is included, national and regional public sources are not considered. The types of financial instruments are not described in detail.

Bulgaria does not provide a reliable assessment of the macroeconomic impact. Instead, the country presents different policy scenarios and assesses their impact on carbon intensity, energy prices and investment. However, the NECP does not establish a direct, quantifiable link between specific policy measures and their macroeconomic impact. Furthermore, there are limitations to the model-based analysis of GDP and employment. The impacts on health and the environment are described in qualitative terms.

Just transition

While the NECP provides information on the impact of the transition to climate neutrality on employment and skills, it does not sufficiently address the impact on the most vulnerable households.

Furthermore, the plan does not specify the form of support, the impact of initiatives, or the available resources, except for the Just Transition Fund (JTF) and the Territorial Just Transition Plans (JTP). The deadline for phasing out coal in the JTP (Stara Zagora, Kyustendil and Pernik) is in line with the final, updated NECP. However, the NECP does not clarify the specific actions required to meet this deadline.

The analytical basis necessary for preparing the Social Climate Plan is lacking, including information on the expected impact of the ETS2 and identification of vulnerable groups. The NECP does not fully explain how the policy framework will contribute to the preparation of Bulgaria’s Social Climate Plan, nor how the two plans align.

Guidance on the implementation of the NECP

The EC encourages Bulgaria to ensure the timely and full implementation of the final, updated NECP. The country is invited to pay particular attention to the following key elements:

Monitoring the impact of transport decarbonisation policies, including planned measures to support the uptake of electric vehicles and the development of charging infrastructure to enable a shift to other modes of transport and low-emission zones;
Regarding greenhouse gas removals in the LULUCF sector, Bulgaria should increase monitoring and implementation of sustainable forest management practices and consider additional measures, including afforestation and agroforestry. It should also improve the targeting and commitments of existing interventions.
Regarding adaptation, quantify the relevant climate vulnerability and risks in relation to national targets, objectives, contributions, policies, and measures across the different dimensions of the Energy Union. This would enable the identification and quantification of the link with the specific objectives and policies of the Energy Union that the adaptation policies and measures are designed to support.
Regarding fossil fuels, enable the phasing out of solid fossil fuels by the 2038 deadline set out in the plan. Identify fossil fuel subsidies and outline a roadmap for phasing them out.
Regarding industry, strict measures should be introduced to decarbonise it, including reducing energy consumption, given that the share of energy consumed by industry is expected to decrease by less than in other sectors. A framework should be developed to support the use of renewable hydrogen and carbon capture and storage (CCUS).
Provide public and private funding for research and development to support the transition to clean energy, innovative technologies, and industries. Encourage additional synergies within the SET Plan, including institutional capacity building, and synergies with European funding programmes.
Regarding renewable energy, identify areas for accelerating the development of renewable energy sources and outline a comprehensive plan to increase their use in central heating and cooling, with simplified permit procedures. Commit to plans to modernise the electricity grid in order to integrate increased shares of renewable energy. Introduce a framework to enable renewable electricity power purchasing agreements and provide security for all market participants.
Regarding energy efficiency, introduce measures to achieve higher ambitions for energy efficiency by 2030.
Regarding buildings, accelerate the pace and depth of renovating the overall building stock, and assess market barriers to speed up implementation of the proposed measures.
Regarding electricity market flexibility, stimulate competition in the electricity market and enable the rapid deployment of non-fossil-based flexibility to further increase system flexibility.
In the field of nuclear energy, efforts should continue to diversify nuclear fuel supplies and ensure the long-term supply of spare parts and maintenance services.
Adopt a more comprehensive strategy for a just transition that addresses the impact on vulnerable households and allocates sufficient funding.
In terms of regional cooperation, streamline cooperation on gas quality harmonisation within the CESEC to unblock the Trans-Balkan pipeline and strengthen security of supply for Bulgaria and the region.