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Toward a just transition in Bulgaria: Key objectives and challenges

The roadmap for a European energy transition

The European Green Deal marks a highly ambitious bid by the new European Commission to cement the 27-nation bloc as a climate leader, steering Europe towards a transition to clean energy in a clearly defined timeframe. In December 2019, the Commission published the Communication on the European Green Deal, which sets out a clear roadmap to achieving a climate-neutral EU by 2050 and meeting the desired climate and energy targets for 2030. It is a strategy which aims to transform Europe’s economy and society, to ensure an energy transition that is also just, and inclusive.

First and foremost, Member States have very different starting points on the road to achieving climate neutrality. One can see disparity across the EU in terms of the economic standing of Member States, in terms of GDP, energy mix, emissions reduction targets, as well as their investment needs for energy infrastructure and technology. Implementation of the strategy will require a degree of pragmatism considering the existing state of affairs. It is therefore essential for the EU energy and climate goals to involve a degree of flexibility.

In order to meet the EU’s energy and climate targets for 2030, Member States produced National Energy and Climate Plans (NECPs). The NECPs define how Member States intend to address uptake of renewables, energy efficiency, greenhouse gas emissions, interconnections and research and innovation. They also cover objectives regarding the internal market, improving market coupling and grid and e-mobility infrastructure. Such plans are intended to take account of the Member States’ long-term decarbonisation goals while ensuring they meet the short-term objectives of security of energy supply and social stability.

Bulgaria’s renewable path

Achieving the transition to clean energy and energy market integration are two critical policy objectives for both Bulgaria and South-East Europe (SEE). The country’s energy mix is diversified and includes a diversified mix of thermal, nuclear and renewable energy sources (RES) including hydropower, biomass, solar and wind power and its diversification is expected to further continue. There is significant potential for expansion of renewable energy generation in Bulgaria, which would put Bulgaria on track to meetings its objectives under its NECP, but also increase energy security.

Historically, coal plants have played a significant role in Bulgaria’s economic development, and Bulgaria’s economic dependence upon coal power persists today. Today, Bulgaria is the most carbon-intensive economy in the EU, with coal being the primary energy source (around 48 per cent, according to the draft NECP from 2019). In view of this, and the high carbon intensity of the country’s economy, the Bulgarian energy transition will require a complex yet gradual, staged approach. A standout priority is ensuring that as Bulgaria’s energy transition proceeds, the security of supply – a core focus for Bulgaria and the SEE energy market – is not jeopardised.

In recent years, particularly in the period running up to 2013, Bulgaria has seen a very strong RES (wind and solar) expansion. Thanks to an installed capacity of 1,000 megawatts (MW) of solar, and 700 MW of wind generation, Bulgaria was the second Member State to meet its 2020 renewable energy targets. It is worth noting that this RES expansion occurred when technological costs were considerably higher than they are today.

Bulgaria’s 2030 renewables target for gross final energy consumption now sits at 27 per cent, according to its NECP. But the route to achieving this target requires a significant build-up of renewable capacity, while it is self-evident that security of supply cannot be jeopardised as this process unfolds. Renewables – such as wind and solar – are the future of energy, but they remain an intermittent source of power. At least for the medium term, policymakers will need to consider maintaining coal power in Bulgaria when it concerns the cleanest, most reliable coal-based production available (with a high ramp-up and ramp-down flexibility.) At present, other technologies do not provide enough capacity, nor flexibility to maintain the security of supply in Bulgaria, as its energy transition progresses.

Furthermore, clear signals will need to be given to foreign investors to prevent decarbonising regions from experiencing economic decline. The importance of private investment cannot be understated – including the need for major investments in the energy sector. Targeted investment will help the country develop powerfully innovative solutions to energy problems – such as with energy storage. For these reasons, investor protection, predictability of the regulatory environment and equal treatment of foreign and domestic investors must be ensured. Finally, the enormous potential of digitalisation in the energy sector needs to be fully harnessed – as doing so, will aid Bulgaria’s advancement towards a carbon-neutral reality, by enhancing efficiency and reducing generation costs.

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