Economic development of the Western Balkans: Opportunities and limitations for Green transition

Abstract

The Western Balkans countries have the aim to become part of the European Union. According to that aim, they have implemented economic and systemic reforms in the last three decades. As countries in the region are signatories to the Energy Community Treaty, they have committed themselves to harmonize legislation, define and implement national plans aimed at reducing carbon emissions, improving energy efficiency and increasing the use of renewable energy sources. Having in mind their commitment, the aim of this paper is to determine the progress in the process of economic development, i.e. to define the chances and limitations to implement the process of energy transition. The results of the research show that despite the started reform processes and the progress in the Human Development Index, the COVID-19 crisis slowed down the development of the region and led not only to recession and falling living standards, but also to rising unemployment. In addition, a great challenge for the region is the reduction of energy and carbon intensity because the structure of the power industry is dominated by coal-fired power plants that are outdated and inefficient. The region lacks investment and consistency in implementing ongoing reforms. The Green Agenda for the Western Balkans represents a chance for the region, because through the Instruments of Cross-Border Cooperation, it encourages investments in projects that not only enable energy transition, but also the development of other sectors of industry and agriculture.