Bosnia and Herzegovina: dismantling monopolies in the green transition


Bosnia-Herzegovina wants to phase out fossil fuels by 2050. For the country, which is largely dependent on coal, this is a serious turning point. However, the word "transition", which is often used for this process, is rather hated by the population, because it is not associated with equality and justice, but rather with an enriching political elite.


There are two trends that will mark the rest of our lives: the greening and digitising of everything. While digitalisation may be more a matter of comfort and choice, the green transition is an imperative, a question of ‘to be or not to be’. But the two still seem to go together. The European Union has introduced the European Green Deal in order to improve life and move the economy away from fossil fuels and greenhouse gas-intensive industries, as well as to mitigate the socio-economic costs of transition. This is a pathway towards a zero-emission, carbon-neutral economy by 2050. The Deal includes a fund designed to support communities most affected by plans to close the coal sector and other carbon-intensive industries. It will support projects that include the closure of coal mines and the retraining of workers.

From green transition to just transition for the Balkans

After some time, the Green Agenda was adapted for the Western Balkans (WB) and adopted by WB states. In 2020, with the signing of the Sofia Declaration, the stage was set for the grand finale: a decarbonisation date of 2050 was determined for the WB countries (including Bosnia and Herzegovina) that did not have the bravery to announce a coal phase-out date prior to that. This unique opportunity also unlocks the funds for the Balkan countries to finance the so-called green transition.

Through the recently launched Platform Initiative in Support for Coal Regions in Transition in Western Balkans and Ukraine, some of the largest financial institutions are included to support this shift in the regions and sectors for which the transition to a green economy will be the most challenging. Within this mechanism, at least 100 billion euros will be mobilised in the period 2021-2027 for the most affected regions. One portion, some 9 billion euros, will be available to the countries of the Western Balkans. How many pieces of that cake each country will really get depends on each country’s ambition for a green transition.

Another transition that is unjustifiably late in Bosnia and Herzegovina

Bosnia and Herzegovina (BH) is a country that has only gone through various reforms in theory, but not in practice. The process of transition in this area has been going on since the 1990s. Thus, the word transition here is quite hated by the people because it is not related to equality and justice, but rather to the enrichment of political elites. The energy transition, however, has been knocking very shyly on the door for some time now, and the fossil clock is ticking until 2050. For a country mostly dependent on coal, this is a major turning point. For most inhabitants, the year 2050 probably seems light years away, but it should be remembered that this is almost as far from now in the future as the unfortunate 1990s are in the past. The intensity of system transformation that is currently taking place at the global level in terms of mitigating the climate crisis is inversely proportional to the domestic authorities’ level of awareness and concern on this topic. Not only do the media, the public and politicians in BH not perceive the existence and consequences of the climate crisis, but they do not even connect it with possible causes and consequences – in other words, there is no place or time for rational causality here. Not surprisingly, the climate crisis is just one in a series of crises led by the ubiquitous political crisis.

From the Green Agenda to green energy transition

In order to get closer to the goals of the Paris Agreement, the Sofia Declaration and the Green Agenda for the Western Balkans, and in order to reduce its own emissions and contribute to mitigating the climate crisis, Bosnia and Herzegovina was supposed to start the energy transition process a long time ago. Energy production is "responsible" for over 60% of greenhouse gas emissions in Bosnia and Herzegovina, with emissions of 7.1 metric tons per capita of CO2 emissions. Coal dependence is such that in 2020 a total of 67.9% of electricity in BH was produced by thermal power plants. Hence, energy transition, especially in energy production, is the first, and possibly the most important, step ahead.

Let’s look at the postulates of energy transition, which should, in addition to being green, be fair and just as well. It tackles the process of decarbonisation, applying the principles of energy efficiency and accelerating the use of renewable energy sources – including all stakeholders. It is based on three pillars: democratisation, decentralisation and digitalisation – the 3D of the power system’s energy transition. One of the postulates of democratisation of energy transition is based on the idea that citizens and private companies, in addition to the being in the role of electricity consumers, are given the role of producers – so-called prosumers. So, it is a revolutionary ‘alternating current’ in which every citizen gains a bigger say and stake in the energy system by contributing to the energy flow within the power grid.

Who holds the monopoly in the current energy transition in Bosnia and Herzegovina?

Unfortunately, the current laws in Bosnia and Herzegovina completely exclude the possibilities for civic energy: prosumers or renewable energy communities. This concept would allow citizens, apartment owners or members of local communities to jointly invest in the construction of small solar power plants on the roofs of residential buildings or on unused state and/or private land. However, this legal obstruction prevents citizens from having a shot at self-sufficiency, cost reduction and consuming electricity more rationally. They are prevented from compensating for surpluses or shortages of electricity – the government thus protects the monopolistic position of political party-besieged power companies and prevents the true opening of the electricity market, scheduled to happen as part of the Energy Community Treaty obligations.

Renewables as a way to amplify the power of ‘big fish’

Laws on the use of renewables in Bosnia and Herzegovina were, and still are, of primary importance, given that their application should strongly direct the state towards the production of electricity from Renewable Energy Sources (RES). Also, these laws were supposed to enable citizens to become active participants in the production of "clean" electricity (democratisation of electricity), and help the economy reduce its dependence on coal. However, the most disastrous part of the law is the possibility that, through unjustifiably high incentives for electricity from RES, mixed with an already corruption-riddled state apparatus, capital belonging to renewable tycoons, especially investors in hydro and solar power, is fostered quickly and generously. Thus, the law has enabled a system of state-guaranteed prices through extremely high incentive prices for investors in solar and small hydropower plants, paid for with citizens' money, while at the same time most of those citizens have been completely prevented from becoming participants in the electricity market, meaning that the possibility of realising the concept of pure civic energy was multiplied by zero.

Not only that, but another fundamental idea of the abovementioned 3D concept of energy transition is blocked: that is, that many “small” producers within one local community connect to the network to reduce losses. Instead, allowances have been allocated, namely quotas for RES which have been inserted into a common denominator with the major investors taking their place. That way, the incentive cake is distributed only to the big fish with political connections, money and power. In addition, these electricity moguls can be further enriched because there are no limits on the number of incentives; that is, for each power plant they build, they can receive guaranteed payments lasting between 12 and 15 years. Adding to that, a tradition of disregard for environmental impacts exacerbates the case even more, as mismanaged construction of small hydropower plants, which leave riverbeds completely dry, not only wreaks havoc on BH’s environment, but also turns the general public against renewable energy altogether.

A change in political power is needed

Due to the targeted media silence and the lack of awareness of the majority of citizens about the importance of the green energy future of society, these laws have not yet received the public attention they deserve. In fact, almost no one seems to care about them that much, which is not surprising in a country where a large proportion of citizens are faced with financial uncertainty, brain drain and instability in every sector of society. The Energy Community, however, now requires the necessary reforms and new legislation in order to adapt to EU energy and climate policy. The new laws on the use of RES, after two years of tailoring to the EU directive on renewable sources, cheaper market principles and the concept of citizens’ energy, envisage several significant and positive changes that would bring them closer to the laws on encouraging RES in EU countries.

The most important should be to stop encouraging private pocketing of gains, with the energy inclusion of citizens, without whom there is no just green transition.

Finally, citizens and private companies throughout the country, in addition to their status as consumers, would be given the opportunity to become producers – prosumers. The amendment to the law should finally include the concept of energy communities, which are flourishing in the region. However, due to the constant exclusion of citizens from the process of their creation, these laws do not receive sufficient public attention. Citizens, justifiably dissatisfied with the shameless stuffing of their money into the pockets of political tycoons and/or parties at the additional expense of their environment, see such laws as a powerful weapon of crime, instead of as an opportunity to empower themselves. It is therefore not surprising that, under such legislation, people in this country feel the same contempt and disappointment that they feel towards the kleptocracy of the power elite.

What is the green way out for Bosnia and Herzegovina?

We can no longer have economic growth at the expense of the planet and at the expense of the people. By adopting the Green Agenda for the Western Balkans, countries in the region, including Bosnia and Herzegovina, have agreed to be a part of this plan. In early June, a political agreement was reached between the European Parliament and the European Council on a new Instrument for Pre-Accession Assistance (IPA III), with a total budget of over 14 billion euros for the period 2021-2027, much of which is related to the Green Agenda. We have the guidelines for creating and implementing policies at the level of the European Union, political commitment in the Western Balkans and in Bosnia and Herzegovina, and the funding tools that will enable the transition, but only if we stop neglecting the facts and start accepting the transformation. Green transition is a topic that goes beyond ideological labelling, and which must be in the focus of society. As a society –as individuals, local communities, politicians, NGOs, businesses and scientists – we are responsible for the state of the environment we are stuck in, but we also have the power to improve things. In green transition no one should be left behind, but also, no one should allow themselves, or anyone else, to be left behind.


This text has also been published in Perspectives Southeastern Europe #10: Green transition and social (in)justice.