This document is a summary of the main messages conveyed by representatives of government institutions, business associations, trade unions, commercial companies, political parties, national universities, non-governmental organizations and experts in the course of a round table discussion dedicated to The New Energy Strategy of Bulgaria.

The discussion was part of the Green Week 2023 International Forum organized by Dir.bg and 3E-news. It was moderated by Slavtcho Neykov in his capacity as an energy policy expert.

Positions and proposals expressed herein are strictly personal and reflect Moderator’s perceptions of the discussion. While formulating the former, the Moderator has employed some written materials provided to him in advance and related to the event as well as synopses pertaining to energy strategy and delivered at forums conducted in recent months.

The document has been submitted to the President of the National Assembly, to MEPs, to the Prime Minister and the Minister of Energy coupled with a recommendation to hold an inter-institutional discussion under the auspices of the National Assembly with the purpose of defining and debating pressing topics associated with Bulgarian energy sector development. Such a debate will shape the framework of country’s future energy strategy, the drafting of which falls under the prerogative of the executive power.

ROUND TABLE

on The New Energy Strategy of Bulgaria

Sofia, 20 June 2023

I. ON THE EVENT

1. Organisation, attendance and format

The Round Table was organized within the framework of GREEN TRANSITION 2023^[1] International Conference as part of event’s formal agenda. The event drew huge interest and brought together representatives of: government institutions, business associations, trade unions, commercial companies, political parties, national universities, non-governmental organizations and experts who packed the Round Table hall.

2. Purpose and approach

This Round Table overarching purpose was to provide a platform for sharing current views on energy sector development while identifying the main issues faced by the strategic national vision of Bulgarian energy development in the context of the European energy policy and the related amendments therein. 

The event was conceived to be an open discussion so that attendees could express freely their current standpoints and comments on the topic. In fact, they capitalised completely on the time allocated. Some submitted written opinions which the Moderator took into account while drafting this document.

II. DISCUSSION SUMMARY – FRAMEWORK MESSAGES

1. Main issue – the ongoing absence of a long-term national vision

The main issue identified was the absence of a comprehensive national vision on energy sector development^[2]. This absence held direct relevance to the development of not only energy but also country’s economy. Recalled was also the finding stated earlier in the above-mentioned forum about Bulgarian Green Transition being branded as a total anarchy.

It was underlined that from the perspective of both scope and structure, the Integrated Energy and Climate Plan^[3]could not be a substitute for a national energy strategy. The Plan was structured to meet European needs and matched European institutions’ pre-set structure. However, the Plan could serve as an essential source in drafting the national energy strategy.

This absence was felt the most in the context of a green transition towards a new type of zero-emission economy. At both global and European scale, the transition was advancing at an accelerated pace. Against this backdrop, Bulgaria not only failed to produce an up-to-date energy strategy, duly adopted, but was witnessing utterly opposing and contradictory messages conveyed at political level, namely on the issues of: coal, nuclear energy, natural gas, petrol, network infrastructure development, etc. Such an approach blocked European funds absorption, rendered ineffective national funds use and affected negatively the entire investment process. Through the prism of Green Transition, this adverse impact was multiplied, going well beyond the energy sector.

2. Approach to Strategy drafting

The discussion illustrated clearly the fundamental difference between business and government perceptions regarding energy policy financial/economic and legal framework.  The discrepancies referred to: treatment of investors, inadequate financial and economic environment, absence of a targeted financing, taxation matters, etc. Additionally, it was pointed out that there was still a strong political factor influencing the way certain investors and partners were treated, such a treatment being hardly substantiated in a logical manner.

Quite inexplicably, the approach to fuels continued to stand aside from the overall energy subject considerations at strategic level.

It was stated adamantly that government institutions were expected to be proactive in standing up for national interest in the process of drafting European legislation, and to make realities of Bulgarian economic situation known better to European institutions, including as regards energy sector. Yet again, reiterated was the necessity for a clear strategic framework of sector development, devised together with all civil society stakeholders and supported by academia and business.

Bulgaria’s new energy strategy should be founded on realistic and objective data and modelling. Forecast assumptions on energy consumption, energy intensity, investment and energy mix, and economy energy intensity should be strategy key elements. It should account for the provisions laid down in both European documents (FIT FOR 55; EU reference scenarios, etc.) and documents formulated explicitly for the needs of Bulgaria (e.g. Report on Decarbonization of Electricity System in Bulgaria 2022-2050[⁵]).

However, as a whole, the principled approach would require accounting for some important prerequisites related to strategic development of the energy sector, including from the perspective of economy decarbonization:

–        less government interference;

–        avoid favouring specific technologies;

–       adopt coupled measures and policies on low-carbon industry, household, transport, services and urban development, supply security, etc.;

–        devise a coherent transition mechanism to include exploitation of  available national energy resources on the basis of economic rather than political and administrative rationale.

3. Energy strategy, institutions, political risk and corruption

Against the background of clearly established legislative obligations to draft and adopt an energy strategy^[6], identified was a series of ongoing issues related to institutional support in devising and implementing energy strategy. These referred to, inter alia, several national institutions and agencies, relevant to the strategic development of the Bulgarian energy sector.

National Assembly’s passiveness as regards drafting a new energy strategy was totally inexplicable provided they held an imperative obligation to adopt it, and possessed the mechanisms to influence the executive in devising it.

Perceiving the topic from institutional perspective, the most effective formula of an operational approach to strategic matters should be sought for and established. At this stage, the so-called Advisory Council for the European Green Deal^[6] demonstrated inefficiency rather than offering concrete and pragmatic solutions.

In view of the institutional deficiencies mentioned, one of the possible options was to look into a concrete proposal for setting up an Energy Board. This could prove to be a more long-term and much more flexible formula for an institutional approach whereby both strategic and operational issues could be brought to the table to target strategic goals attainment.

The Energy and Water Regulatory Committee should be stabilized and strengthened by additional staff and enhanced independence. EWRC role encompassed more than energy strategy implementation. With the Green Transition it would gain an even higher importance. That was why the two aspects mentioned above had to be considered promptly.

Presented were also some comments in principle regarding the political risk which remained to be a dominant public challenge. Currently, political risk was considered as one of the main factors limiting investment process while creating an environment of legal and economic uncertainty. The process of energy strategy drafting required containing the political risk as much as possible via expertise and transparency of the approach to strategic matters.

In the same line, information on longstanding practices involving unaccounted spending of huge amounts of Bulgarian and European taxpayer money lingered on. This remained a concern because such practices could be linked to acts of corruption. The amounts which were directly or indirectly related to the energy sector and via it, to the national economy, were estimated to be in the vicinity of billions BGN.  The new national energy strategy should provide or at least, make reference to specific mechanisms designed to counter such deficiencies. That was why accountability and transparency requirements were believed to be indispensable.

4. Energy security, energy intensity, capacities and infrastructure

National energy security, in all of its dimensions, persisted to be an unresolved strategic issue.

A strategic dimension that had not yet come out of the obscurity zone was what type and how much final energy was needed by the Bulgarian society. To a major extent, this was the reason for the energy mix continuing to be an enigma. In parallel, official data on country’s energy intensity as well as carbon intensity remained to be a cause of concern as compared to EU data^[7]. On the former two strands, clear measures needed to be outlined at strategic level, with a particular attention paid to the immense reserve in the area of energy efficiency.

This lack of clarity about country’s energy consumption and its impact on the energy mix rendered questionable not only the huge private and government investments, executed and planned, but also the efficient use of regional and European collaboration opportunities, and Bulgaria’s positioning in that respect. These circumstances contributed even more to the rapid change in energy market from the perspective of both energy sources and market structure, the latter reflecting the conceptual dynamics of base load capacity role.

An additional factor was the absence of an adequate long-term policy on diverse types of energy networks whose development deserved to be a priority at national level bearing in mind network importance for national, regional and European energy security.

5. Staffing in the process of strategy implementation

Staffing was yet another dimension of the absent energy strategy. In the course of the Round Table this dimension was noted multiple times as a cause of some serious concerns for the energy sector and the activities related to the Green Transition implementation^[8]. Surely, transition success would depend on availability of qualified and competent work force, capable of implementing and integrating new technologies which were penetrating faster than personnel training. This, in itself, shaded doubt over efficient market instrument operations, energy security and citizen safety.

For that reason, personnel training policy required a total change to encompass not only staff engaged in RES area but in all other energy area. The same applied to the personnel in nuclear energy, etc. To this end, it was necessary to have not only a clear vision about all of the energy aspects considered herein but also about a targeted policy on school and university curricula, and on incentivising commercial companies operating in the energy sector.

The above-mentioned aspects presupposed coordination of energy policy with other national policies on regional development, demographic development, education, etc.

An essential element of such training programmes should be citizen inclusion in the Green Transition. This could be enabled through various initiatives, awareness and education campaigns, etc. However, such an endeavour should be the subject of a targeted and well-funded government policy rather than be entrusted to interested companies.

6. Government policy on research in energy sector development associated with the Green Transition

In addition to the staffing matters, there was a need of a well-defined national strategic approach to scientific development in the context of energy changes, including the variety of activities entailed in the Green Transition. This implied designated funding for research in the strands mentioned, including some risky ones which did not necessitate binding outcomes with financing.

In that sense, it should not be forgotten that energy sector transformation was directly connected to, inter alia, energy security, food security, and economy digitalization.

III. COMMENTS BY STRANDS

1. On RES capacity building

The concept associated with implementation of electricity generation projects based on renewable energy sources called for a change. In addition to the acute need for a strategic reassessment of electricity network role and support, the unjustified administrative burden involved in the implementation of such projects should be alleviated. Diminish the burden by way of electronic management should be a strategic objective.

For example, the legislation on changing agricultural land designation for the purpose of constructing electricity generation sites currently in force should be revised. Along with causing a dramatic delay in implementing investment intent, such a requirement failed to account for the negative effect on agricultural land-space which was reduced quite unjustifiably. It was necessary to analyse any particular case so as to ensure reconciliation between PV electricity generation and agricultural land designation, and to introduce the respective legislative amendments (Protection of Agricultural Land Act, Spatial Development Act, Environmental Protection Act, Condominium Management Act, etc.). This, inter alia, referred to the status of photovoltaic installations and to the approach taken towards them while considering licensing regimes, changes in the detailed site development plan, etc., and their alignment.

Particular attention deserved securing a prompt, accessible and administratively unburdened road to RES capacity development for autoproducers: for instance, placing PV systems on residential building roof-tops and facades, incentivising energy co-operatives, etc. Such an approach should be considered also from the perspective of a targeted government policy on stimulating energy efficiency endeavours.

In the reassessment process, interests of all parties involved should be accounted for so that relations as regards connection to electricity networks of such sites were legally regulated in a clear manner. Furthermore, public registers of PV installations should be set up so as electricity networks were serviced safely and flawlessly.

2. On natural gas

Bearing in mind the above-mentioned from the perspective of carbon intensity, natural gas use was definitely undervalued at strategic level. This finding was strengthened further when national efforts to implement international projects were compared with the projects on development of national gas infrastructure. Billions of BGN were invested in natural gas transmission lines towards third countries while natural gas market development in the country was neglected.

It was essential to perceive national gas infrastructure from the stand point of natural gas as a fuel and as technology development. The latter enabled hydrogen production and transportation which in turn was directly linked to carbon neutrality. In parallel, in view of the nature of natural gas distribution networks, much higher flexibility could be achieved in local implementation of the afore-mentioned projects.

To that end, an adequate evaluation would allow gaining a much clearer picture of gas infrastructure development at national level as well as of opportunities to enhance Bulgarian economy competitiveness.

3. On nuclear energy

In the context of both national energy security and decarbonisation, an integral part of Bulgarian nation energy strategy proved to be the implementation of national policy on sustainable nuclear energy development.

Bulgaria had accumulated a fifty-year experience in operating nuclear facilities for electricity generation. Prospects of nuclear capacity employed currently also needed to be assessed. Furthermore, nuclear energy had a proven history of supplying stable, reliable and predictable electricity in the long-run, and was in full alignment with the objectives of zero-emission energy and economy. This should also be reckoned with.

However, the above-mentioned aspects did not imply that there were no open issues. At strategic level, adequate remedy options should be sought for. Unfortunately, to date, the political discourse on nuclear energy dominated over а specific and concrete strategic vision. This resulted in dissipation of efforts, funds and time. In turn, it caused scattering of professionals who had been trained for years with no new replacements because of lack of training motivation. Apart from the highly profiled experts needed in the large-scale nuclear facility operations, the demographic collapse was also taking its toll. In parallel, the timeline of putting in place new nuclear facilities needed to be clearly and specifically outlined.

Any economic analysis of these facilities should be based on a financial and economic rationale.

Therefore, the energy strategy had to identify explicitly the place of nuclear energy at national level. This should be supported by analyses comprising economic, environmental and climate dimensions in the context of the Green Transition. Also, there should be a link between energy strategy and other strategic approaches pertaining to nuclear energy (e.g. radioactive waste management).

Energy strategy should focus explicitly on the penetration of new technologies (e.g. small module reactors) because of their flexibility as regards time and financing. However, this implied proactive actions for national infrastructure development (including administrative, regulatory and engineering capacity).

The new Bulgarian energy strategy had to give answers to the questions raised, to outline a timespan for building nuclear facilities and to provide for specific and timely procedures duly laid down in Bulgarian legislation and international conventions to which the country was a party.

Unfortunately, despite the support of nuclear energy in principle, the public showed sensitivity towards the topic due to years-long corruption schemes (especially regarding BELENE NPP project). Therefore, even though falling outside the energy strategy, arguments in support of new nuclear facilities should take into account explicitly public sentiments.

4. On fuels

As mentioned above, at strategic level, the approach to fuels somehow continued to stand outside of the overall consideration of the energy sector. This actually led to problematic situations, for instance, in the sector of petrol product manufacture and trade, thus hindering sector development.

In turn, some serious problems arose regarding energy security at national level, including availability and management of petrol and petrol product stocks.

For years, the discussions had been overly politicised to an extent where experts’ arguments were completely neglected. For example, alternative fuels were a topic requiring a strategic stance. However, an economically substantiated opinion on alternative fuels was still missing. This reflected on the social and economic aspects of the Green Transition and its social affordability. At economic level, business was of the opinion that the absence of predictability and high political risk had led to a cease of investments necessary in the petrol and gas infrastructure.

From institutional perspective, there was a competency fragmentation and discord among certain institutions (responsible for, respectively, finance, economy, energy and environment) which obstructed business operations. Change was needed but substantiated by a comprehensive strategic analysis which could result in administrative and institutional betterment.

From legal perspective, legislation had to be revised with the active participation of businesses affected. Chaotic amendments done hastily usually led to legal uncertainty, to administrative arbitrariness, to imposition of politically motivated but economically invalidated schemes, and to obscurity of legally-based procedures which might have a long-term negative impact.

In the context of the Green Transition, decarbonisation of transport fuels should take into account social and economic factors associated with such a transition, i.e. transition social and economic affordability, and competitiveness of Bulgarian economy.  A possibility should be provided for expert opinions to be submitted by academia, industry and business. The latter should be able to rely on an adequate short-term and long-term financing. Experts were of the opinion that mineral fuels would remain to be the basic transport fuels for a long period and reduction of fuel carbon intensity should be carefully thought through. Research should develop in parallel so as to seek for other economically beneficial and socially affordable solutions.

5. On coal

Energy strategy should outline adamantly what lay ahead and when in view of not only coal but transformation of coal-mining regions as well. It was clear that country’s willingness to extend the use of coal for years to come collided with market mechanisms. Thus, from strategic perspective, absence of a strategic planning would render an abrupt and unexpected collapse.

Unfortunately, there was a significant difference in the presentation and perception of coal at national and local level. There were some unequivocal signs that methods of targeted instigation of fear of job loss and devastation were being employed in order to maintain the status quo. In turn, reforms were blocked and huge loss of funds might be incurred instead of using such funds to mitigate consequences of the inevitable penetration of new green technologies.

However, the common aspect at both central and local level referred to political and administrative arguments and steps without any economic substantiation. The new Bulgarian energy strategy should put emphasis on the use of coal in the future national energy mix.

6. On energy poverty

The energy strategy was not the document where energy poverty should be commented and steps to counter it – detailed. Energy poverty was a social rather than energy matter. At the same time, it was inevitable to touch upon it but more in a sense of making a reference towards the need to draft a National Energy Poverty Prevention Programme. This matter might be noted in the context of specific obligations entrusted to energy institutions (such as EWRC) and some energy companies which were tasked with vulnerable consumers, including energy-poor ones.

Prepared by

Slavcho Neykov

Round Table Moderator

[1] https://greentransition.bg/
[2] the last energy strategy was adopted in 2011 to cover the years up to 2020.
[3]www.me.government.bg/files/useruploads/files/national_energy_and_climate_plan_bulgaria_clear_22.02.20.pdf
[4]https://amcham.bg/wp-content/uploads/2022/03/20220228-FTI-CL-Energy-AmCham-Executive-Summary-Press-Conference-Final.pdf
[5] Article 3, para 2;Article 4, para 2, item of the Energy Act
[6] https://www.strategy.bg/PublicConsultations/View.aspx?lang=bg-BG&Id=7697
[7]https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Energy_statistics_-_an_overview#Energy_intensity и др.
[8] The topic was brought to the table many times over in the course of other forums, including, for example, during the discussion of an European legal act on net-zero emission industry which focuses particularly on it.