How much the CBAM tax complicates decarbonization and undermines the competitiveness of power utilities is illustrated by the fact that last night Serbia had 750 megawatts of electricity generated solely from wind, that prices on the European market were very competitive, yet due to the level of the tax, exports were not in our interest and were practically unprofitable – said Dušan Živković, General Manager of “Elektroprivreda Srbije,” at the Jahorina Economic Forum.
He pointed out that the 25 percent reduction in electricity exports from the region to the European Union has two consequences.
– The result is less electricity available in the EU, but also lower revenues for companies in the region. Because of this, all of us face a more difficult decarbonization process, which we are actively pursuing, and in addition, such a CBAM framework does not support further development of renewable energy sources – Živković emphasized.
At the panel “CBAM and the Western Balkans: How to Respond to European Climate Demands,” the head of EPS stressed that a domestic CO2 tax of four euros per emitted ton already creates a significant annual cost of EUR 100 million for EPS. Živković explained that it is important to reduce CO2 emissions and invest in decarbonization projects, but that the challenge remains how to secure financing for those projects.
– Power utilities like EPS, with large generation capacities of 8,000 megawatts, measure investments in billions of euros. All major projects are capital-intensive, such as the construction of the pumped storage hydropower plant “Bistrica,” but situations like the current one impose risks and raise questions about how to develop such projects under these conditions, build them, and count on a return on investment. At the same time, you must ensure energy security as well as business and financial stability, and all power utilities in the region are facing these challenges – said Živković.
He also mentioned that in the coming period it will be necessary to reassess the future of PPAs (power purchase agreements) and find alternative mechanisms through which the private sector can be an active part of the decarbonization process.
