While a growing number of countries announce their 2050 climate neutrality pledges and Contracting Parties of the Western Balkans have already committed to this target by the adoption of the Sofia Declaration, concrete long-term plans of action are still to be made. A new study of the Green Policy Center provides recommendations on how to set up long-term strategies to reach a climate-neutral future in the Energy Community.

1. Carbon neutrality
in the Energy Community
Drivers and Policy Proposals
9 July 2021

2. Topics to be discussed
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• Starting points
• Connection to the EU ambition and its positive aspects
• Externalities and co-benefits of climate neutrality
• Economic benefits of ambitious targets
• Climate laws
• Good practices for setting up long term strategies

3. Starting points
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• Paris Agreement (2015) climate neutrality goal („balance” between
emissions and sinks)
• The global climate neutrality goal indirectly a national climate neutrality goal
puts short- and medium-term national
climate action efforts into perspective
• IPCC Special Report on 1.5°C (2018) the expectation is to reach net-zero
emissions by the middle of the century
• Growing number of 2050 climate neutrality pledges worldwide & Sofia Declaration (2020)
• Concrete long-term plans of action & underpinning climate laws are still to be made in many
countries

4. Connection to the EU ambition and its positive aspects
The EU has declared that Europe should be the first climate neutral continent  EC is
aligning EU acquis and policies with this goal:
• European Green Deal and EU Climate Law:
• New / updated legislation is coming under EGD and Fit for 55 Package  influence on the
EnC Treaty;
• Economic and Investment Plan for the Western Balkans:
• €9 billion of funding investments in the areas such as transport, energy and green
transition;
• Greening of investments:
• Spill over effect of the Action Plan on Financing Sustainable Growth, EU Green Taxonomy
and new financing policies of EU MS and institutions;
• Fight against carbon leakage:
• Introduction of carbon pricing could avoid the negative effects of CBAM and could also
raise revenues for green and just transition. 4

5. Externalities and co-benefits of climate neutrality
• Reaching carbon neutrality would have several additional co-benefits  such as
environmental, health and social
• Air quality improvements needed:
• Ambient air pollution caused an estimated of 61 to 92 thousand citizens of the ENC CPs only in
2016;
• air pollution is also responsible for high costs both for the health systems and economies  only
in the Western Balkans this is around €6,1-11,5 billion yearly;
• Decarbonisation of the currently used energy systems:
• Phasing out fossil fuel subsidies could have saved €2 billion between 2015-2019;
• Decarbonisation could lower the import dependency on fossil fuel resources by up to 54% by
2050;
• More sustainable agriculture:
• shift to a plant-based diet could lead to the reduction of global mortality by 6-10%, GHG
emissions of the food production by 29-70% and health co-benefits around 0,4-13% of the global
GDP by 2050;
• Further positive affects on employment, poverty alleviation and inequality. 5

6. Economic benefits of ambitious targets I.
• Relatively low emission levels per capita compared to EU, growing economies, diverse
trajectories to 2030
• Highest data (UA, BiH, RS): 7,2-8,2 CO2e vs. EU average: 8,7-9,8 CO2e
• 31-38% increase in GDP/capita by 2025 (IMF)
• Decrease of emissions (AL, BiH, MK, MD, MNE) vs. Increase of emissions (GE, RS, UA)
• 66% share of the energy and transport sector within total GHG on average vs. 20% share of
Industry (including energy) within the GDP
• High economic price for no action
• Global losses from natural disasters in 2020 - €177 billion
• Natural disasters cost €15 billion annually in low- and middle-income countries
• The cost of adapting to climate change could increase six-fold by 2050 in case of no action
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7. Economic benefits of ambitious targets II.
• Carbon neutrality is a way to ensure the „right to development” and an opportunity for a
sustainable future
• Moral obligations of the developed countries;
• Carbon neutrality can guarantee a better future for all – e.g. EUR 11,5 bn/year healthcare costs in WB;
• EU investments in Southeast Europe towards green transition after the pandemic;
• High risk of stranded assets - 95% of PPs in SEE to be replaced by 2050, EUR 2.4 bn subsidies to coal-
sourced electricity, gas pipeline’s lifespan 30-50 years;
• Focus areas:
• Energy - energy efficiency, renovation of outdated residential heating methods, hydroelectric power
• Transport - favourable environment for low or zero-emission vehicles
• Waste: - circular economy potential
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8. Climate laws I.
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• The new EU climate law the Union will be climate neutral by 2050 (and
net negative thereafter)
the climate neutrality goal will be a central part of every
subsequent EU legislative proposal
includes key elements of an effective climate governance
regime: e.g. how to set interim targets, the creation of a
scientific advisory body, and the intention to engage with
sectors on a permanent basis

9. Climate laws II.
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• National level climate laws growing number worldwide
useful sources to identify best practices
study summarizes the essential elements of the adopted
national climate legislation
Key aspects presented: goals, planning and measures;
monitoring and revision; institutional arrangements; policy-
science cooperation and public participation

10. Climate laws III.
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• Goals medium term targets or milestones should serve the
long-term goal of climate policy - climate neutrality
backward planning
• Planning and measures serious and comprehensive and coordinated planning
(vertical and horizontal – break the “silo approach”) – e.g.
inter-ministerial coordination bodies
• Monitoring and revision provides a solid basis for amending adopted strategies
and legislation
predictability and continuous recalibration must be met
at the same time

11. Climate laws IV.
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• Institutional arrangements main responsibilities should be clearly defined
independent, previously non-existent institutions
may be needed
• Policy-science cooperation UNFCCC and the IPCC
Support decision-making, monitoring progress and, in some
countries, generating public discourse on climate change
• Public participation widest possible awareness raising and involvement

12. Good practices for setting up long term
strategies I.
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• Expectation by the Paris Agreement
• More flexible and can be more comprehensive than legislation
• Can include different scenarios/options
• The study divided them into procedural and implementation issues while the other
substantive issues

13. Good practices for setting up long term
strategies II.
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• Key elements during the formulation and implementation:
→ political and legal commitment
→ policy-coordination
→ align development goals and well-being priorities with
climate targets
→ effective governance system
→ revision & update

14. Good practices for setting up long term
strategies III.
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• Content related key elements:
→ clear long-term vision (including financial & investment)
→ emission reductions and enhancements of removals
→ interim, milestone targets
→ linkages with NDCs, SDGs and other (societal) national
goals as well as synergies and potential co-benefits
→ include national action for a just transition
→ formulate pathways based on scientifically sound
modelling

15. Thank you for your kind attention!
CONTACT:
info@greenpolicycenter.com
www.greenpolicycenter.com
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