An energy crisis looms in the Western Balkans. As EU leaders scramble to maintain their energy supplies for the coming winter, at least two Western Balkans states – North Macedonia and Kosovo – will declare an energy emergency in August, in anticipation of shortages during colder months.
The covid-19 pandemic caused a significant economic shock in the Western Balkans. According to the World Bank, the GDP of countries in the region contracted by 3.2 per cent in 2020, before rebounding to 7.4 per cent growth in 2021. However, the global surge in energy prices is threatening the region with a new range of economic challenges. This means that policymakers working on the European Commission’s Green Agenda for the Western Balkans will need to reconcile rising prices and energy security with the goal of environmental protection. This will require strong and coordinated action from governments in the region, along with a great deal of support from the European Union.
Russia’s war on Ukraine has weakened the Western Balkans’ already fragile energy security. The region has long experienced periodic blackouts in winter. With the exception of Albania, which relies mainly on hydropower, Western Balkans states source much of their energy from fossil fuels – especially coal. Serbia, Bosnia and Herzegovina, and North Macedonia are largely dependent on Russia for natural gas, but this only accounts for a small proportion of their energy mix. So, even though all Western Balkans countries except Bosnia and Serbia have joined EU sanctions on Russia, their limited use of natural gas prevents the Kremlin from retaliating against them by cutting off their energy supplies – especially given that only Serbia has recently renewed its gas contract with Russia (at a relatively low cost). This also helps protect them from the direct impact of surging natural gas prices. Nonetheless, high prices for imported electricity mean that the Western Balkans will not emerge from the crisis unscathed. Several states in the region are vulnerable to these rising costs – particularly as winter approaches and demand for energy rises.
For Western Balkans states to become energy secure, they will need to pivot to the EU and adhere to the union’s regulations and policies. This is especially important with regard to the green agenda, a central part of which is the transition to renewable energy.
Western Balkans countries should also diversify their energy production and supply chains. To achieve this, they should work with the EU to formulate innovative and country-specific approaches to the green transition – backed by both political will and institutional support. In fact, by signing the Sofia Declaration, they have already committed to doing so.
Most states in the Western Balkans rely mainly on coal-fired power plants to meet their energy needs. The use of these plants jeopardises their ability to fulfil the commitments outlined in the European Green Deal – one of which is a 55 per cent reduction in carbon emissions (compared to 1990 levels) by 2030. Nonetheless, given the immediate pressure of the energy crisis, these countries will need to continue burning coal in the short term. Indeed, North Macedonia and Kosovo have already announced that they will delay plans to phase out their coal-fired power plants over the next few years.
To survive the energy crisis, Western Balkans states will also need to improve their cooperation with one another within the framework of the Berlin process. They could do so by preparing joint investment proposals in renewable energy and the integration of the electricity and gas markets.
The European Commission’s REPowerEU document outlines a €300 billion plan to cut the EU’s dependence on Russian fossil fuels by two-thirds by the end of 2022, and to import no Russian energy at all by the end of 2030. This strategy marks a historic shift in the union’s approach to energy issues. It will have a significant impact on the Balkans energy sector. The plan focuses on accelerating the green transition and diversifying supply through investment in liquefied natural gas terminals and other gas infrastructure.
Therefore, the Balkans could become an important transportation corridor for Europe’s energy supplies – particularly natural gas – in the medium term. This is especially true of various gas pipelines that could connect EU member states to countries on the Caspian Sea, such as Azerbaijan, and to the Greece-Bulgaria interconnector that is scheduled to become operational this summer. There is also a planned liquefied natural gas terminal in Alexandroupolis, which will connect to the Trans Adriatic Pipeline and should become operational in 2023.
In the long term, the REPowerEU plan should both promote energy efficiency and accelerate the union’s transition to renewable sources of energy. Western Balkans states should join the EU on this journey by investing in renewables (especially hydropower) and cross-border interconnectors, and – as discussed – aligning with EU energy legislation.
EU foreign policy chief Josep Borrell and the vice-president of the European Commission, Frans Timmermans, have rightly argued that “as we accelerate the transition from a hydrocarbon-based economy to a sustainable one based on renewable energy, we cannot be blind to … geopolitical effects”. Western Balkans states only have small energy markets. But, due to their close proximity to the EU, they can be crucial to the union’s energy policy. This is why the EU should aim to end Russia’s gas monopoly in the Western Balkans – notwithstanding the relatively minor role natural gas plays in the region’s energy mix.
Furthermore, the EU should build transportation networks for gas and crude oil in the Balkans. Such networks will be key to the geopolitical contest between the West and Russia. It is high time for the EU to put forward a bold and comprehensive energy security concept for all of south-eastern Europe.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.