Energy Transition Tracker: Energy Community Contracting Parties advance on energy transition

7 July 2022

The Energy Transition Tracker  published today points to positive trends in terms of progress made by all nine Energy Community Contracting Parties in reducing electricity production from coal and boosting renewables. Coal-based electricity production dropped in all Contracting Parties, diving to a five-year low and an average decrease of 13% from 2020 to 2021, while carbon emissions from fossil fuels fell by 11%. The share of renewables in the generation mix grew, with 979 MW of solar photovoltaic and 611 MW of wind added, while biomass capacity grew 2,5 times.

Speaking on the release of the report, Director Lorkowski said: “The latest Energy Transition Tracker shows a decrease in the use of coal and uptake of energy from renewable sources. However, we need ambitious policy measures to ensure that reducing the region’s reliance on coal is truly at a turning point. Tomorrow’s informal Energy Community Ministerial Council is an opportunity for countries to take important steps forward to advance their decarbonisation goals.”

The Energy Transition Tracker monitors the Contracting Parties’ progress in reducing emission footprints, improving functioning of energy markets, scaling up renewables, improving energy efficiency and planning for the decarbonised energy future. By doing so, the tracker provides a clear picture of where the Contracting Parties stand in advancing the clean energy transition. For the first time, the Tracker covers all Energy Community Contracting Parties, featuring also Georgia, Moldova and Ukraine. The Tracker also provides a first glimpse into the status and prospects of the Contracting Parties meeting the conditions of the European Commission’s proposal on the Carbon Border Adjustment Mechanism (CBAM).

Key findings:

Reducing the carbon footprint

  • Electricity production from coal fired power plants dropped from 2020 to 2021 in all Contracting Parties resulting in an average decrease of 13%.
  • Carbon emissions from fossil fuel fired plants dropped by 11% in the Energy Community.
  • Emissions of SO2 and NOx have decreased by 15% and 10% respectively in the Contacting Parties considered, while there was an overall 3% increase in reported dust emissions compared to 2020.
  • None of the opted-out plants have stopped their operation yet despite some of them having reached the end of the opt-out timeframe.
  • The total amount of direct coal subsidies in 2020 fell by 25% compared to 2019.
  • Non-internalization of costs of CO2 emissions, worth 3,8 billion euros at average EU ETS price in 2021, distorts the level playing field between EU Member States and the Contracting Parties.
  • The avoided costs of CO2 emissions would have amounted to close to 1,5% of the Energy Community’s GDP and could have been invested into the energy transition.

Making the energy market fit for decarbonisation

  • The energy crisis triggered short-term emergency measures in the wholesale and retail markets in some of the Contracting Parties.
  • Average day-ahead market prices in SEEPEX tripled in 2021 in comparison to 2020 and doubled in the first half of 2022 in comparison to the 2021 average.
  • The energy crisis slowed down the development of the retail market. Electricity prices for industrial customers, without taxes and levies, continue to follow the EU average price in 2021, while prices for households were kept at levels ranging from 22 to 41% of the EU average.

Boosting deployment of renewables

  • The number of renewables projects keeps growing, with 979 MW of solar and 611 MW of wind capacity added in 2021.
  • Self-consumption has taken off resulting in 33.718 active self-consumers across the Contracting Parties with installed capacity of 934 MW in 2022.
  • Albania and North Macedonia continue with renewables auctions. In other Contracting Parties the first auctions are yet to come.
  • Albania, Moldova and Montenegro achieved their 2020 renewables targets. As the deadline for reaching 2020 targets has been extended until the end of 2021, it remains to be seen whether some of the other Contracting Parties will follow.

Making energy efficiency the first fuel

  • The Energy Community has achieved the 2020 headline target for energy efficiency set by the Energy Efficiency Directive.
  • The amount of investments in building renovations in the Energy Community reached almost 1,3 billion EUR in the period 2021 to June 2022, yet was insufficient for the overall needs.

Reaching a decarbonized energy future

  • All Energy Community Contracting Parties signatories of the Paris Agreement and the UNFCCC, except Serbia, have submitted their revised Nationally Determined Contribution (NDC2). The submission of the Serbian NDC2 is kept on hold until work on the NECP is finalized.
  • Albania and North Macedonia were the first Contracting Parties to adopt their NECPs, while they are yet to be adopted in other Contracting Parties.