The adoption of amendments, and the new group of energy-related acts are crucial for Serbia’s energy transition, which is set to be implemented through several new regulations. All countries in the Western Balkans must transition to carbon-neutral energy sectors and become part of the integrated energy market. The main goal of the transition is to increase the share of renewable energy sources, improve energy efficiency and reduce greenhouse gas emissions.
Members of the Serbian Parliament adopted the Amendments to the Energy Act, the Act on Energy Efficiency and Rational Use of Energy (the “Energy Efficiency Act”) and the Amendments to the Act on Mining and Geological Research (the “Amendments to the Mining Act”) on April 20.
Recent Amendments to the Energy Act primarily focus on excluding some of the existing provisions. The excluded provisions are now a part of the Use of Renewable Energy Sources Act and were removed from the Energy Act to avoid repetition.
The Amendments to the Energy Act introduce the obligation to come up with a National Energy and Climate Plan. This obligation was initially introduced for Member States of the European Union, through Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 (the “Regulation“). The Regulation requires all member states to present actions they intend to take in the field of energy to achieve short-term and long-term climate goals. It also states that signatories must present implementation plans for these activities from 2021 to 2030.
Furthermore, the Energy Community, an organization Serbia is a member of, adopted the Recommendation on the preparation of national energy and climate plans in 2018, and subsequently adopted the guidelines on the development of these plans. Members of the Energy Community were supposed to submit the final versions of their plans to the Secretariat of the Energy Community by the end of October 2020, and subsequently to report every two years on the implementation of these plans, starting from 2022.
Another novelty introduced by the Amendments to the Energy Act is related to changes in acquiring the status of a customer with special requirements in energy supply. Namely, an individual may obtain the status of a customer with special requirements in energy supply based on a decision of the local government. The Government of Serbia determines the conditions for and manner of acquiring this status through the Decree on Customers with Special Requirements in Energy Supply, so the consumer would have the right on a reduction on monthly electricity or natural gas bills.
The Amendments to the Energy Act also establish the concept of public interest as a basis for expropriation, administrative transfer, and incomplete expropriation of real estate for the construction of energy facilities (i.e., power line, oil pipeline, product pipeline and gas pipeline). This provision provoked negative comments from the public. However, without the appropriate capacity, it is not possible to create a clean energy system, so it remains to be seen how the Serbian authorities intend to apply this regulation in decisions on expropriation, in each specific case, and turning private interest into public.
The Energy Efficiency Act introduces new provisions which are very important for Serbia and its path to EU accession. Serbia aims to increase energy efficiency in the next decade to approach EU energy consumption levels. In this sense, Serbia had the support of the Energy Community and the European Union to pass this and other aforementioned acts.
The issue of energy efficiency is certainly significant for economic development, as investments in green technologies are increasing in the 21st century. Greater energy efficiency can lead to significant savings for Serbia. These developments in Serbian legislation should also ultimately lead to new jobs.
Some of the notable innovations of the Energy Efficiency Act are the establishment of the Energy Efficiency Financing and Incentives Authority (the “Authority”), digitalization, the introduction of “energy services” and more. The Authority is tasked with providing incentives for energy efficiency, preparing project proposals for financing, providing information and advice regarding energy efficiency and so on. The establishment of the Authority should attract financing from funds, international organizations, as well as grants from the EU.
Furthermore, the Energy Efficiency Act introduces the so-called “energy service” which entails financial or other benefits based on an agreement which leads to an increase in energy efficiency. This also includes energy audits, the design, construction, reconstruction, repair and maintenance of buildings and industrial facilities, management and supervision of energy use and other activities. An energy service agreement is a public contract in which the Energy Efficiency Authority or other public authorities use their funds to finance the energy service.
Finally, it is interesting that the Energy Efficiency Act envisages energy labeling requirements (i.e., the duty to label products that affect energy consumption before being placed on the market), as well as an eco-design obligation (for certain products).
In addition to the above, another regulation in the field of energy that underwent changes is the Mining and Geological Research Act (the “Mining Act“). The Minister of Mining and Energy, Zorana Mihajlović, commented that the amendments to the Mining Act “will provide security for investors, so that they can enter research more efficiently and quickly and to further step into exploitation.” The Minister of Mining and Energy stated that Serbia’s mineral reserves are worth USD 200 billion.
With the Amendments to the Mining Act, the legislator intended to create more economical and transparent conditions for the exploitation of raw minerals, which means a more suitable basis for investments as well as increasing the share of mining in Serbia’s GDP, and further progress in the harmonization of legislation with acquis communautaire. One of the changes concerns Article 3 and the definition of collateral, to include bank guarantees, corporate guarantees and promissory notes. The Amendments to the Mining Act emphasize the importance of collaterals in several places. For instance, the Ministry of Energy, or the competent body of an Autonomous Province, shall revoke the exploitation permit if a company does not submit any of the collateral as mentioned above.
One of the key changes affects Article 4 of the Mining Act, and the new provisions regulate that geological research and exploitation of mineral resources are in the public interest. In addition, the Amendments to the Mining Act now provide for the mandatory prior consent of the Government of Serbia for applied geological exploration and exploitation of nickel, cobalt, and uranium.
Furthermore, mining and geological engineers will get their own professional chamber – the Chamber of Mining and Geological Engineers of Serbia (the “Chamber“) as a legal entity which will be established with the goal of improving skilled workers’ working conditions in areas such as geological exploration and construction of mining facilities. The Amendments to the Mining Act also regulate the internal organization of the Chamber and the principles of financing.
Additionally, the Amendments to the Mining Act envisage the possibility of concluding an investment agreement between the Republic of Serbia and the investor, which is in essence an agreement that regulates relations in the construction of the necessary infrastructure, fiscal and legal benefits related to the project and so on. However, if the Republic of Serbia concludes such a contract with an investor, this does not mean that the investor acquired the investment, nor that investor acquired the right of geological research and exploitation in the sense of the Mining Act.
Finally, the Amendments to the Mining Act introduce the electronic exchange of submissions, so that all persons who wish to submit requests or other documentation will now be able to communicate with the Ministry of Mining and Energy in electronic form, with an appropriate qualified electronic signature and/or qualified electronic seal.
Serbia’s initiative to pass this set of acts strongly demonstrates its willingness to introduce new and improved solutions in the energy sector. Such changes are one of key areas of Serbia’s path towards EU accession. The true effect of these acts will become more evident once they come into force.
Authors: Ognjen Colić, Suzana Dončić, Teodora Ristić, Mina Kuzminac
