bne IntelliNews – bneGreen: Western Balkan power plants in doubt after China abandons its overseas coal projects


Chinese President Xi Jinping pledged at the United Nations General Assembly on September 21 not to build new coal-fired power plants abroad.

The announcement is important for the Western Balkans region, as China has supported several projects to build new coal-fired power plants, concentrated in Bosnia and Herzegovina and Serbia.

While Xi has not clarified whether this would also apply to projects already active (but not under construction) such as the extension of the Tuzla coal-fired power plant in Bosnia, it is a further blow to those aspiring to develop coal production. capacity, especially since several projects are already mired in controversy.

“We must improve global environmental governance, respond actively to climate change and create a living community for man and nature. We must accelerate the transition to a green and low-carbon economy and achieve green recovery and development. China will strive to reach a peak in carbon dioxide emissions before 2030 and achieve carbon neutrality by 2060. It takes hard work and we will do our utmost to achieve these goals, ”Xi said in the United Nations General Assembly.

“China will step up its support to other developing countries in developing green and low-carbon energy, and will not build new coal-fired power plants abroad,” he added.

In recent years, China has strengthened its presence in the Western Balkans, as well as the wider region of Central and Southeastern Europe, where it has invested heavily in energy and transport infrastructure projects. When Chinese growth began to slow a decade or more ago, China’s major engineering conglomerates began to look for new opportunities overseas. Typically, these projects are financed by loans from Chinese state-owned banks and carried out by Chinese construction companies. This has raised concerns about the indebtedness of countries such as Montenegro which have borrowed heavily from China, as well as the transparency of loan agreements.

Nonetheless, China’s willingness to finance coal-fired power projects has made it a welcome investor in countries like Bosnia and Serbia at a time when major international development banks active in the region have said they are not. would finance more coal projects. This led, for example, to the demolition of the planned Kosova e Re power plant in Kosovo after the World Bank said it would not fund the project. Despite the aspirations of countries in the region to join the European Union, many have failed to meet their emission reduction commitments, with harmful effects on health in the region and beyond.

“President Xi Jinping’s statement is the perfect opportunity for local and Chinese partners to step aside from these projects, which will undoubtedly turn out to be liabilities rather than assets,” said Pippa Gallop, CEE research coordinator Bankwatch Network. bne IntelliNews.

Analysts at independent climate change think tank E3G argued on September 22: “The end of Chinese coal funding could tip the balance for a few. [European] countries are still considering new coals ”.

“One third of the coal projects in Bosnia and Herzegovina and two thirds of the planned coal projects in Serbia depend on Chinese investments. This puts them in a position to end their new coal plans and consider withdrawing their existing fleets by 2040, ”they added.

The Europe Beyond Coal coalition has called for the cancellation of the Kostolac B3 coal plants in Serbia, and Tuzla 7, Ugljevik III and Banovići in Bosnia, according to an emailed statement to bne IntelliNews. He called for China’s pledge to end its support for new coal abroad, as well as Turkey’s announcement in the United Nations General Assembly of its intention to ratify the Paris Agreement on the climate of the United Nations, a critical blow for coal energy in Europe.

The four coal-fired power projects in Bosnia and Serbia – Kostolac 3 in Serbia and Banovići, Tuzla and Ugljevik III in Bosnia – involve Chinese companies.

“While we welcome China’s decision to draw a line in the sand and pledge to end its support for new overseas coal projects, this must be backed up by concrete actions,” he said. said Denis Zisko of the Center for Ecology and Energy in Bosnia, as quoted by Europe Beyond Coal. “China should start by ending its involvement in the new Tuzla 7 coal-fired power plant project. It is currently stuck and mired in scandal. It is an unwanted burden on the local community.

Following Xi’s announcement, the Bosnian Federation Minister of Energy, Mines and Industry Nermin Dzindic said it would affect the construction of Block 7 of the Tuzla Thermal Power Plant, and called for the project to be stopped, the Fena news agency reported.

“If the decision is as we heard it in the media, then we should sit down and think about the instructions to stop this project on a regular, legal and only correct basis,” Dzindic said.

Discussions are already underway within the Bosnian Federation on the advisability of moving forward with the extension of the Tuzla power plant. The project suffered a setback in July when it was revealed that General Electric (GE), a key subcontractor, had pulled out.

Dzindic commented to Fena on the discussions between the Federation government and parliament on the issue. “Last week we received official information from parliament to propose certain conclusions which will be dealt with during the debate. This information was sent by the responsible ministry to [power utility] Elektroprivreda BiH, the supervisory board and the management board. We have given seven days to comment and submit working material to us through the conclusions of what should be debated in Parliament. Therefore, the parliament gives the final consent and the signatory of the contract is Elektroprivreda BiH, which is owned by the FBiH government, together with our Chinese strategic partner, ”said Dzindic.

“In particular for Tuzla 7, the Chinese contractor, Gezhouba, was not able to fulfill its initial commitment due to GE’s withdrawal from the supply of the boiler. It now offers what is likely to be an inferior alternative, so the FBIH government should back out of the project anyway. President Xi Jinping’s statement now offers a great face-saving opportunity for both sides: China can show it implements its new pledge, while FBIH can save Elektroprivreda BIH from costly white elephant project Gallop told bne IntelliNews.

She also commented on another coal-fired power plant project in the other entity of Bosnia, the Republika Srpska: “For Ugljevik III also, the concessionaire has not fulfilled its commitments and it is not known why the government of the Republika Srpska continues to approve changes and time extensions. Once again, President Xi Jinping’s statement provides the perfect opportunity to end the agony of this project once and for all.

Meanwhile, Serbia took out a loan from China’s Exim bank for a project to expand and rebuild the Kostolac coal-fired power plant. However, even before China’s latest move, opposition parties in Serbia have expressed dissatisfaction and concern over Chinese investments in infrastructure projects in Serbia. “Instead of using favorable European grants and loans, we take expensive Chinese loans. Chinese projects are more expensive than those funded by international financial institutions, ”said opposition representatives, quoted by local media.

One problem for the region is that it will take time (and money) to develop the capacity to generate renewable energy to replace coal-fired power.

Serbian Minister of Mines and Energy Zorana Mihajlovic told RES 2021 earlier this month that at least € 5 billion will be invested in renewable energy sources (RES) in Serbia as part of an investment cycle worth 17 billion euros. Serbia currently depends on coal-fired electricity, but by 2040 it aims to produce at least 40% of its energy from RES and more than 50% by 2050.

During the United Nations General Assembly, the President of the Bosnian Presidency, Zeljko Komsic, said that the country currently has around 40% green capacity for power generation.

“However, the gradual shutdown of thermal power plants, and therefore most mines, expected of us in the next 25 to 30 years, will lead to a shortage of electricity that can hardly be replaced in time by the capacity of ‘green energy, while preserving rivers and ecological biodiversity, in line with international standards,’ Komsic told the assembly on September 22.

“I believe that many other states present here are faced with these [challenges] also. However, Bosnia and Herzegovina is keeping its promise to help reduce greenhouse gas emissions, ”he added.

About Eleanor Blackburn

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