Energy Efficiency & Renewable Energy

1. Energy Efficiency & Renewable Energy For Western Balkan Sector Integration into EU Aleksandar Kovacevic

2. Discussion on EU accession and the regional sector integration Both EU accession and regional integration have quantitative aspects: • Large Combustion Directive and Environmental acquis aspects are measurable • Physical openness (transport infrastructure capacity, terminals, ports and multi-modal integration) is measurable • Cross border flow of goods and services is measurable both in financial and physical terms

3. Regional market integration • Cross border flow of goods and services is determined by relative productivity and efficiency of their provision in the neighboring country against alternative provision from more distant markets that also includes transport costs • If neighbor country is less efficient than World average while physical access to alternative market is available, regional trade and integration are likely to diminish. • Lack of physical openness provides opportunity for low volume – high margin unsustainable market entrants that influence trade and infrastructure policy. • High unit prices and transaction costs of these flows cover actual physical trade patterns.

4. Energy efficiency & renewable energy • Provision of energy determines local efficiency and productivity while • Energy efficiency of transport is one of determinants of physical openness and overall productivity • Competitive and efficient use of renewable energy is component of overall energy efficiency pattern • There are no transport means to access international energy markets that • Could provide economy of scale to transport infrastructure and remains the ONLY sector capable to underwrite improvement in physical openness i.e. Infrastructure investments

6. Western Balkans Region

7. Economic Overview

8. Energy Overview

9. Energy Indicators

10. Some Comparisons

11. City of Belgrade (1) • City of Belgrade contains 4,1% of the area and cca 18% of population of Serbia without Kosovo. • City consumes 24% of electricity in total while Belgrade households consume more than 26% of electricity consumed by households in Serbia. • In addition to that, Belgrade households consume almost 50% of district heating services in the country. • When energy sector output is deducted, Belgrade area generates only 18% of GNP.

12. City of Belgrade (2) • More than 39% of companies is registered in the City employing more than 31% of total employment in Serbia without Kosovo. • Over 37% of imports destine in Belgrade. • Over 33% of all motor fuels is being consumed in the City area. • Something about 40% of nominal profit is registered in the Belgrade area. • Belgrade is essentially home for high margin – low productivity entrants.

13. Belgrade Metropolitan Area … • Refines roughly quarter of crude oil in the region, • Produces half of lignite in the region and • Over third of district heating services while • Determining over half of waterborne transport capabilities with • Concentration of about 10% of population at about 2% of territory and • potential to make use of more than half of biomass theoretically available for competitive power generation

14. This reduction in transport capacity does not conform with UN ECE data (1999)

15. If everyone does little, we’ll achieve only a little David JC MacKay (If everyone does little, following conventional development pattern, we’ll achieve only a little change)

16. Few hints on required changes in physical infrastructure within next 10 years: • Change in technology in 60% of available power generation capacity • Change in heat source for ALL district heating systems in the country • Increase in container turnover in Belgrade for 30 times • Reconstruction of roughly 2500 km of railways • Increase in capacity of strategic Danube fleet capacity for at least five times Same or similar technical achievements have been seen during one or another 10 year period in the past.