In order to prevent the spread of carbon that directly affects climate change, the European Union has announced the introduction of new environmental taxes for countries where carbon dioxide emissions are higher than allowed. For Serbia, whose thermal power plants produce almost 70 percent of their energy by burning coal, the introduction of the tax will automatically mean an increase in the price of electricity, but also a reduction in economic growth and foreign investments.
The European Commission plans to introduce this tax during 2023, and it will include additional customs clearance of goods produced in factories that pollute the environment with carbon dioxide. CINS research shows that this will be a problem for Serbia as well, which, according to the approximate estimate of the Serbian Chamber of Commerce, will report about 8% of the produced electricity to the EU in 2021.
“If the EU introduces a tax on the import of electricity produced from fossil fuels from Serbia, it could pay customs duties per unit, megawatt-hour, or the amount of emitted carbon dioxide (CO2) for imported electricity, whereby in both cases the price it had to reflect the level of CO2 emissions in the EU,” Viktor Berishaj from the Climate Action Network Europe, which monitors climate change and energy policy in Southeast Europe, told CINS.
In Serbia, almost 70 percent of thermal power plants use coal, which is why over 27.3 million tons of CO2 are emitted into the air from them annually, of which only TPP Nikola Tesla over 20.3 million tons. Zvezdan Kalmar from the non-governmental Center for Ecology and Sustainable Development (CEKOR) concludes that all this will be broken on the citizens, because they will pay higher electricity bills.
“The Electric Power Industry of Serbia, for sure, does not have the funds to cover environmental measures from its trade, so the citizens will cover that,” Kalmar believes. In addition to electricity bills, this tax will, according to CINS research, also affect producers from the chemical, rubber, metal and automotive industries, which will seriously jeopardize economic growth, foreign investment, but also jobs.
Namely, Serbia is “popular” for foreign investors who, due to high taxes and strict environmental regulations, pay to transfer their plants from Europe to “third world” countries.
This is supported by the fact that the largest foreign investments in the past eight years in Serbia are the plants of heavy industries from China, which are not welcome in European countries, and some even in China.
The mines of Zijin and Zelezara Smederevo have already been fined many times for pollution, and the future tire factory Linglong in Zrenjanin, which is being built only two kilometers from the nature reserve, justifiably worries environmentalists. Slobodan Minic from the Fiscal Council stated that the introduction of a new environmental tax will be a problem for the part of the economy that uses unclean energy.
“If we have foreign investors who know that Serbia has 70 percent of dirty electricity, would they even open their plants here if they knew that they would pay high taxes when trying to export those products to the EU?” Minic asked CINS, adding that this creates an opportunity for citizens employed in these companies to lose their jobs.
“If Serbia becomes less desirable for investment, it would mean less economic growth, and perhaps stagnation or a decline in living standards,” explains Minic.
CINS states that Serbia sent an official objection to the EU’s introduction of new taxes, because the new rules would be a “direct violation of the Stabilization and Association Agreement”, because instead of close harmonization with EU regulations, full application of regulations is envisaged.
“The application and scope of the new regulations can have a significant impact on Serbia, because the EU is the country’s most important trade partner – about 65 percent of all exports are directed to the EU,” CINS was told in the Ministry of European Integration, Nova reports.
