State of implementation 2021

As the energy crisis loomed, we have seen in some days the highest electricity prices in Europe recorded on the day-ahead market in Serbia which is not yet coupled. This proved that small isolated markets are more prone to price volatility and that their integration at regional and pan-European level was never more pertinent.

The same goes for the decarbonisation path the Energy Community has been embarking on in the footsteps of the Green Deal. An increasing number of Contracting Parties have formally or implicitly accepted that coal and lignite have no future in their energy mix in the mid-term. The full potential of renewable energy is tapped where a stable legal framework and competitive auctions for market-based support schemes have been implemented. Several Contracting Parties have adopted climate laws while carbon pricing – arguably the most effective instrument in the Green Deal’s regulatory toolbox – has remained a rare exemption. The rather reluctant endorsement of decarbonisation and the alignment of policies and measures with the European Union’s may be choked off by reactions to the energy price surge where governments do not stay the course. For now, domestic lignite and coal-generated power are again in high demand. What matters is that the Contracting Parties do not lose sight of the decarbonization objective in this situation, and follow the transition trail blazed by the European Union.

While the last twelve months may look dramatic from this November's vantage point, looking at the full period gives a more balanced picture. Among the open issues to be addressed in the upcoming period, three deserve special attention: electricity market integration, environmental protection and decarbonisation. Generally speaking, most Contracting Parties made progress in important areas but continue to lag behind in others: