The Vice-President of the European Commission, Frans Timmermans, often says that he comes from a mining region in the Netherlands and knows all about the difficulties. When the local authorities there decided to close the coal plants without devising alternatives for the local population, they turned the area around Maastricht into one of the country's poorest for decades. Unfortunately, this is exactly what might happen to all three coal regions of Bulgaria - Stara Zagora, Pernik and Kyustendil.
The administration of Galab Donev shows no progress in the preparation of territorial plans for the regions in question, which can still unlock 1.2 billion euros for a fair transition from coal. "Until now, no representative of the government has contacted the municipality of Kyustendil, regarding formulating a new version of the plans for a just transition. The main information we receive is from media appearances by members of the official cabinet and publications in various news agencies on the issue," says Kyustendil mayor Petar Paunov.
More worrying still is that Deputy Prime Minister Atanas Pekanov told Kinsights that the territorial plans will not be submitted to the European Commission before the renegotiation of the Recovery and Sustainability Plan is complete. At the end of 2022, MPs obliged the government to open the plan for negotiation in order to drop the commitment to reduce carbon emissions from electricity production by 40% by the end of 2025, taking the baseline levels from 2019, and to ensure the operation of coal plants without limitation until at least 2038. And if negotiations are not finalized by the end of 2023 and Bulgaria hasn't submitted its long awaited Just Transition Plans, the country risks losing most of the remaining funding for a just transition (or about 800 million euros) permanently.
In this case, it may turn out that in search of small political dividends now, through promises to preserve the coal power plants, politicians would leave those they claim to want to help without an alternative. After all, from the beginning of 2023, the stock market price of electricity is about BGN 270/mWh, and the costs of the Maritsa-Iztok 2 TPP for the production of 1 mWh are currently over BGN 350. In other words, the plant is uncompetitive once again.
Millions are at stake here
For the three most affected regions in Bulgaria - Pernik, Kyustendil and Stara Zagora, which are already classed as "underdeveloped" in the EU, 1.3 billion euros were assured for the just transition. If invested wisely, these funds could have initiated the process of economic diversification, and also retraining and active inclusion of mine workers and job seekers.
Instead, efforts are focused on negotiations with Brussels to preserve the current energy status quo. Thus, people who breathe polluted air and for whom there is a lack of perspective and quality career development locally, will be left without the means to look for an alternative.
In order to have access to European funding, Bulgaria, like all other EU members, had to present the so-called territorial plans for a just transition "within a strictly defined period, in order to take full advantage of the available funding", the General Directorate for Regional Development of the European Commission told Kinsights. "By the end of 2022, all territorial plans had been accepted by the Commission, except the Bulgarian ones," the executive authority of the EU says, adding that this is precisely why the country has already forfeited nearly 100 million euros from the total amount.
Commitment to the recovery plan
"The loss of further funding brings the coal regions into socio-economic disaster. De facto territorial plans should serve as a magnet for both investment and people in the region. They are direct receipts in both national and local budgets," Dr. Rumyana Grozeva, executive director of the Agency for Regional Economic Development in the city of Stara Zagora, told Kinsights.
But that doesn't seem to give sufficient motivation to the politicians. "Outlining a clear process containing the decarbonisation steps needed in the Just Transition Plans can only happen after the negotiations with the EC on the C02 reduction commitment have been finalized and sanctioned by the next National Assembly regarding the prepared scenarios for decarbonization," Mr Pekanov told Kinsights.
The problems arising from this are several. On the one hand, possible negotiations on the recovery plan could take months, which significantly shortens the period for drawing up, agreeing, submitting and approving the new Bulgarian Just Transition plans by the European Commission. In other words, the 2023 window is closing.
Remina Alexieva, an analyst in the Energy and Climate program at the Center for the Study of Democracy, says that renegotiating the RRF (the Recovery and Resilience Facility) is unpredictable due to the political instability before the upcoming elections, which could be ongoing. "Although the regulation describes formal terms for the procedure from 3 to 9 months, depending on the proposal, in this particular case it is a matter of renegotiation of a major part of the contract - the commitment to reduce greenhouse gas emissions from electricity production by 40%. This, in turn, is directly related to the cessation of work of the coal power plants and mines. The European Commission has already stated that this part of the plan could not be renegotiated."
On the other hand, Bulgaria does not seem to know what it wants and how to achieve it. Romania, for example, is also seeking to extend the life of its coal plants. However, this does not prevent the country from submitting its territorial plans, as well as receiving her tranches on all lines for a just transition - recovery plan, operational programs, Modernization Fund, etc.
"The negative consequences are there for all of us as a Bulgarian society, and not only in financial terms (even this is the smallest damage). The budget of Stara Zagora municipality is mainly formed by local taxes and fees paid by local residents and businesses. When there is no work, no people, no business, and no income, then there is no funding for the main functions of the municipality," says Dr. Grozeva.
The situation in Galabovo and Radnevo is even more critical: 50% of the budgets of both municipalities are formed directly by the mining and energy complex. "Without an alternative, do we close the municipalities? Economic urgencies ultimately trump political populist efforts. Moreover, people in the region are already aware of the new trends and the needs for reforms. Simply the lack of political courage and will in the elected officials to govern us has crushed the energy and spirit of the people," she adds.
Pernik, Kyustendil and Stara Zagora have already realized the need for transformation and speak openly about their views on the development of their regions. Pernik, for example, has the necessary prerequisites to become an independent economic center, creating jobs in the production of clean and high-tech energy," Deputy Mayor Stefan Krastev said. Kyustendil has identified more than 100 potential projects in areas such as green energy, tourism and small and medium-sized enterprises, which could be included in the updated territorial plan. Stara Zagora also wants to specialize in the production of green hydrogen, with the region being included among the 9 hydrogen valleys of Europe - a concept for the development of the EU's hydrogen industry.
However, for the green transformation and the new specialization, these regions need the 1.5 billion BGN in question, which Bulgaria is on the verge of losing. Without them, the damage will be even greater.