Global Finance Titans: In a landmark move, international financial powerhouses, including the European Bank for Reconstruction and Development (EBRD) and the World Bank, are championing a groundbreaking €4 billion initiative designed to guide North Macedonia away from coal-centric power. The ambitious plan, set to be officially unveiled at the COP28 climate talks in Dubai commencing on Nov. 30, outlines a strategic roadmap for phasing out the country’s two coal power plants, concurrently ushering in 1.7 gigawatts of renewable energy.
EBRD President Odile Renaud-Basso shed light on the significance of this transformative initiative, aptly named the ‘Just Energy Transition Investment Program.’ The unveiling at COP28 is anticipated to underline North Macedonia’s commitment to embracing a more sustainable and environmentally conscious energy landscape.
At present, coal constitutes a significant 40% of North Macedonia’s energy source, underscoring the magnitude of this shift towards cleaner alternatives. Renaud-Basso emphasized that this initiative serves as an exemplary model, showcasing a holistic approach and the potential positive outcomes achievable through dedicated national commitment.
Notably, this program aligns with similar endeavors witnessed in countries like South Africa, Indonesia, Vietnam, and Senegal. Such transitions have been facilitated by a collaborative effort involving governments, public lenders, and private investors, signaling a global move toward a greener future.
The financial commitment of €4 billion reflects the substantial costs associated with this transformative undertaking, equating to approximately €2,000 per individual in North Macedonia’s population of 2 million. This underscores the inherent challenges that smaller or lower-income nations encounter when financing a transition to cleaner energy sources.
The United Nations had previously designated North Macedonia’s capital, Skopje, as the most polluted in Europe in 2018. Consequently, the country has been diligently working to shift away from coal, a move that gained momentum when it reopened the dormant coal-fired REK Oslomej power plant in 2021 to reduce electricity imports.
Both of North Macedonia’s coal-fired plants are not only outdated but also run on lignite, a particularly polluting type of coal. The upcoming transition plan is poised to lay the groundwork for the country’s journey toward embracing cleaner and more sustainable energy alternatives. The financial backing for this transformative initiative is anticipated to include a substantial portion of concessional financing, ranging between €300 million and €400 million. Additional funding is expected to be sourced from multilateral lenders such as the International Finance Corporation (IFC) and private-sector contributions.
While the IFC acknowledged the significance of supporting green transitions, it refrained from confirming specific plan details. The World Bank is yet to provide commentary on this monumental initiative. The North Macedonian government, as of now, has not responded to requests for comments. North Macedonia’s commitment to phasing out coal-fired power is aligned with its participation in the Powering Past Coal Alliance, a coalition of nations committed to discontinuing the use of coal in power generation. Despite initial targets for completion by 2027, North Macedonia extended this deadline to 2030 in January last year.
This delay, coupled with plans to open two new coal mines amid energy security concerns arising from the conflict in Ukraine, attracted criticism from environmental activists. However, the forthcoming €4 billion initiative marks a substantial leap toward realizing North Macedonia’s vision for a cleaner, more sustainable energy future.