Energy Transition Council of the President of the Republic Presents Guidelines to Accelerate Energy Transition
The Energy Transition Council of the President of the Republic presented at its 6th Session held on Wednesday in the Office of the President the Guidelines to Accelerate Energy Transition. Proposals were put forward at the meeting on how to increase the share of renewable energy sources, how to more significantly stimulate the so-called civic energy, namely how to remove all the obstacles in the development of heat energy distribution and the decarbonisation of cities. The President of the Republic Zoran Milanović participated in the Council session and the Minister of Economy and Sustainable Development Tomislav Ćorić was a guest participant of the session together with his associates.
Prior to the session, Special Adviser to the President of the Republic for Energy and Climate Julije Domac said that cooperation and dialogue with the Ministry of Economy and Sustainable Development is continuing at today’s session of the Energy Transition Council.
“We will discuss how we can accelerate the energy transition in Croatia, how to take advantage of the opportunities ahead, the technological and financial resources, how to make things even better than they are now. The ministry is doing its part of the job that lies within its competence. The Energy Transition Council consists of experts, businesspeople, representatives of energy companies and some state institutions that are making their ideas, knowledge and experience available to the ministry,” Special Adviser Domac said, explaining that cooperation and dialogue with the ministry has been ongoing for more than a year with the goal of finding the optimal way to implement energy transition in Croatia.
“Our goal is to enable citizens to reap the benefits of renewable energy sources and everything that comprises energy transition. Ambitious goals have already been set in national documents, and the new EU regulation “Fit for 55” will make these goals even more ambitious for Croatia and other EU Member States. This will require all of Croatia’s know-how, experience and technological abilities to be joined together in our response to those green challenges that have been set so ambitiously in order to contribute to the citizens’ quality of life. Energy transition is not just a matter of technology, sources of financing, great strategic values; it is also about the quality of life for all of us, the people who live and work in Croatia. In this sense, we are continuing the good cooperation with the ministry,” said Special Adviser Domac.
The Minister of Economy and Sustainable Development Tomislav Ćorić confirmed in his statement to the press that he views the Energy Transition Council as a very good platform for discussing and ultimately evaluating the energy transition and energy sector in Croatia.
“We in the Ministry of Economy and Sustainable Development base every discussion on arguments, so in this context we are very glad to accept those that have been put forward at the Council thus far and we will be glad to hear the profession’s and the Council members’ thoughts on energy transition. It is because this is a process that will be very challenging in the next few decades until 2050, when Europe, including Croatia, is moving towards a climate-neutral society. Today, we will hear the Council members’ thoughts on the matter and we who are from the Ministry will offer our arguments based on what has been accomplished and what we intend to do. I am confident that the conclusions of this meeting and the next one will once again contribute to policy discussions for the benefit of all citizens and ultimately for the benefit of Croatia’s desired transformation. Our vision is a country of renewable energy sources with a green economy and ultimately a climate-neutral society for decades to come,” said Minister Ćorić.
One of the main messages of the presented guidelines is that energy transition should be specifically aimed at increasing competitiveness and encouraging innovation, ensuring the energy independence of Croatia and reducing the negative effects on human health and the environment.
Guidelines to Accelerate Energy Transition
Summary
These Guidelines have been drafted by the Energy Transition Council of the President of the Republic of Croatia and external experts with the goal of accelerating energy transition in the Republic of Croatia.
The purpose of this document is to offer guidelines with the following intent:
– To underline the importance of energy transition and benefits for society as a whole;
– To identify the main obstacles in implementing the projects that contribute to energy transition;
– To propose measures and mechanisms for removing identified obstacles;
– To encourage public dialogue and cross-sectoral cooperation in the area of energy transition.
The Energy Transition Council of the President of the Republic of Croatia proposes to incorporate these Guidelines into a relevant legislative framework in the Republic of Croatia. The application of the proposed measures will enable an accelerated and successful energy transition, thereby strengthening the economy and creating a healthier and more resilient society in the Republic of Croatia.
1 Importance of Energy Transition for the Republic of Croatia
Energy transition represents the backbone of the fight against climate change, affording an opportunity for strengthening and positioning the Croatian economy, thereby shielding the society as a whole from the adverse effects of dependence on fossil fuel sources. Dependence on fossil fuels in combination with energy inefficiency has numerous adverse effects – impaired physical and mental health, continuous increases of energy costs and of energy sources, dependence on imports and global pollution. Renewable energy sources, energy efficiency and changes of models of production and consumption together provide a solution for creating energy independence, strengthening the resilience of energy markets on the increase of fossil fuel costs on the global market, and enable the use of locally available resources by creating new jobs.
The Republic of Croatia has recognized the importance of energy transition, and the achievement of climate neutral goals are included in the National Development Strategy of the Republic of Croatia until 2030 (Official Gazette 13/2021). Furthermore, a Low-Carbon Development Strategy of the Republic of Croatia until 2030 with a view to 2050 was adopted in June 2021 (Low-Carbon Strategy).
In addition to the aforementioned strategies, the issues of energy transition and adjustment to climate change that are already inevitable are addressed in the first national Climate Change Adaptation Strategy in the Republic of Croatia for the Period up to 2040 with a view to 2070 (Official Gazette 46/2020) and the Integrated National Energy and Climate Plan.
By drafting a comprehensive strategic and implementation framework, the Republic of Croatia has clearly opted for energy transition and the path towards climate neutrality, therefore it is imperative to act urgently in order to realize the set goals.
The Energy Strategy of the Republic of Croatia until 2030 as well as the energy strategies of other EU Member States is predominantly oriented to increasing the share of power plants from renewable sources. In this sense the Strategy anticipates significant investments in new wind farms capacities and solar power plants as well as other renewable energy sources through the use of prosumage and high application rates of energy efficiency measures. The application of solar energy, micro cogeneration and heat elevators enable cheaper production of clean energy, and directly benefits the citizens, the utilization of available energy potential, the mobilization of private capital, and the inclusion of citizens with the assistance of the mechanism of prosumer and prosumage as well as the creation of many jobs. It is important to note that with a regulatory policy too one can substantially impact the competitiveness of the economy, and the sensitivity towards the most vulnerable categories of consumers. Consumer protection and the consumer as the energy sector’s central point also requires a more correct and detailed approach such as the impact on the end-use price of energy, the mitigation of challenges in cases of increases in energy source costs and CO2 unit emissions, increases in investments in energy transition, measures of energy efficiency in the context of further introduction of smart grids i.e. fairer share of transition costs.
The so-called “Net-Zero Scenario” (net-zero emissions society) in 2030 supposes an installed power of solar voltaic power plants (PV) of 988 MW and a wind farm of 1,928 MW. It should be noted here that the “Net- Zero Scenario” has not been formally adopted, but has been presented as informative, and the S2 scenario from the Energy Development Strategy of the Republic of Croatia until 2030 with a view to 2050 is still in force (Official Gazette 25/2020). It is imperative to adopt as soon as possible the “Net-Zero Scenario” in order to bring Croatia in line with the demands of the Green Deal and the Carbon Neutral Goals.
In the past period the development of PV projects was limited by quotas and high investment costs, and the slower pace of construction of wind farms was noticeable. In 2050 the “Net-Zero Scenario” forecasts an even more significant increase in the construction of solar power plants and their installed power to reach 7,104 MW, and wind farms 3,975 MW. Added to these power plants are projects whose investors are natural and legal persons, and who will be connected to transmission and distribution networks.
Given the current pace, the Republic of Croatia is already lagging behind on the path to achieving the set goals. It is evident that the set goals are ambitious, but not unattainable, if we do not act immediately. New and even more ambitious goals will be set in the framework of the Fit for 55 legislative package whereby the need to accelerate energy transition will be further increased.
Besides sustainable electric power supply, it is imperative to carry out the transition in the heating and cooling sectors. Production and distribution of energy for heating and cooling rooms, and the preparation of hot water is one of the most demanding energy sectors as well as one of the predominant sources of greenhouse gas emissions and local pollution especially in the case of small home heating systems. The significant level of dependence on traditional biomass (firewood) as the primary energy heating source in the residential sector (mostly in rural but in urban communities too) has an adverse effect on the local air quality, and without ensuring sustainability and control of the origin and quality of biomass, has adverse effects on the climate too.
Just the residential sector accounts for approx. 35% of the total direct energy consumption in the Republic of Croatia. In order to adequately address the challenge of transition in this sector as well, it is imperative to accelerate investments both in the building sector’s energy efficiency and in renewable sources and efficiency in the production and distribution of energy for heating and cooling.
A key factor in this process will be the sector of heat energy distribution, remote heating (CTS – Clean Technology Service), which currently accounts for a mere 15% of the heat energy distribution market on the level of the Republic of Croatia.
In the Low-Carbon Strategy, the Carbon Capture and Storage technology (CCS) is defined as a temporary solution that would enable to continue using fossil fuels in the next few decades while at the same time gradually reducing greenhouse gas emissions, but Croatia has limited technical and natural preconditions for using CCS technology.
In addition to CCS, there is the ever more frequent term CCU i.e. Carbon Capture Utilization and Storage, therefore this should be researched and included in the strategic and planning documents of the Republic of Croatia. Furthermore, in the Energy Development Strategy of the Republic of Croatia until 2030 with an outlook to 2050, it is noted that the CCS technology can have a significant impact on energy transition. Also in the Strategy, the term geothermal energy is mentioned as one of the key factors for increasing the share of renewable energy sources in the heat energy distribution sector and centralized heating systems.
Increasing installed capacities of heat elevators for heating and cooling requirements that use shallow geothermal energy, or underground water, have the ability of quickly reducing emissions and increasing energy efficiency in the building sector, in accordance with the design of building in line with Nearly Zero Energy Building standards (NZEB) in force. Unlike shallow geothermal energy that is readily available everywhere, the use of deep geothermal energy is limited to individual locations where there is an increased temperature gradient and where salt geothermal water deposits have been discovered. Present estimates of various sources indicate a minimum of 1,000 MW of thermal capacities and 100 MW capacity to produce electric power although the real potential is even greater.
In order to ensure reaching the set goals and thus achieve the economic progress of the Republic of Croatia and create conditions for sustainable, inclusive and equitable energy transition that will benefit the Croatian society as a whole, it is necessary to proceed to remove identified obstacles and systematically ensure preconditions for the realization of the project.
2 Obstacles to the Energy Transition Process
2.1 Administrative obstacles
Administrative obstacles represent one of the key challenges of energy transition in the Republic of Croatia. They include: complex and lengthy procedures in individual approaches to the realization of projects, non-compliance with deadlines on the part of the public administration, lack of consistency in implementing individual regulations and in some cases demands that investors cannot fulfil.
Some of the identified administrative obstacles are as follows:
– Lengthy process and uneven procedures related to the assessment of the impact of the project on the environment and impact on the ecological network in accordance with the provisions of the Regulation on environmental impact assessment and the Environmental Protection Act. In Attachments I to III the measures that are necessary to implement the assessment procedure on the environmental impact are enumerated, i.e. the assessment on the need to assess the impact of the project on the environment. Since there has lately been an increase in newly drafted papers, the deadline for the approval procedure has been extended by the Ministry of Economy and Sustainable Development (MINGOR), and many projects have been put on hold. Approval of the papers’ findings is a precondition for starting the process of obtaining a location permit. Since this refers to small projects (less than 500 kW of installed power), the investors have been disadvantaged due to slowness, and the energy transition process has been slowed down.
– Lengthy process of obtaining the “Elaborat optimalnog tehničkog rješenja priključenja na mrežu EOTRP” (Study of the optimal technical connection solution to the network); the deadlines prescribed by law (Official Gazette 111/21) for issuing and delivery of the EOTRP are generally broken in practice. After obtaining the EOTRP, the investor is obliged to sign the connection agreement within 9 months theus the financial commitments in the early phase of the project start.
– Lengthy process of amendments to zoning plans aimed at the construction of new plants. Procedures to amend zoning plans usually last up to 12 months, sometimes even longer, and ultimately are not a guarantee of the real possibility of the project’s construction. The drafting of zoning plans (level of regional and local administration) does not accompany the need for locations (amendments last too long, and at the time the location permit is issued for an individual project, the plans must be coordinated) for installing the provided MW from renewable energy sources from the Strategy, especially in regions with an optimum potential (coast for wind and sun).
– Unresolved property-legal relations on state-owned land – procedure whose resolution lasts up to several years. The implementing provisions for Renewable Energy Source construction have yet to be adopted for state-owned land. Furthermore, the unresolved property-legal relations can significantly slow down the construction of new key networks and the necessary infrastructure.
– Lack of professional assistance within MINGOR to provide advisory support to investors and help secure a quicker and more quality realization of projects. According to the Directive on promoting the use of energy from renewable sources (EU) 2018/2001 Article 18: “Member States shall ensure that information on support measures is made available to all relevant actors, such as consumers including low-income, vulnerable consumers, renewables self-consumers, renewable energy communities, builders, installers, architects, suppliers of heating, cooling and electricity equipment and systems, and suppliers of vehicles compatible with the use of renewable energy and of intelligent transport systems.” The fulfilment of this Directive requires urgent strengthening of MINGOR capacities and the establishment of some sort of one-stop-shop, which would ensure the realization of demands from the aforementioned Article.
– A special challenge is the complex and lengthy public procurement procedure, without the possibility of simple amendments, which proves to be imperative during construction (construction is a lengthy and complex procedure with many unforeseeable situations and problems).
– In individual cases the sustainability of the public procurement system is called into question when the cheapest rather than the economically most favourable, etc. is selected, demands are introduced such as an imperative search for more tenders although in accordance with the Public Procurement Act (Official Gazette 120/16) the procurement in question is a low value procurement, etc.
– Lack of systematic structures of technical assistance for the development of energy efficiency projects and production of energy from renewable sources.
2.2 Legislative obstacles
Although the importance of energy transition is formally recognized in the Croatian strategies and laws that are generally in line with the EU acquis, Croatian legislation in some of its segments acts in a way that de-stimulates potential investors and stakeholders in practice and in an operational sense.
One of the obstacles to the realization of RES projects is linked to the Act on Renewable Energy Sources and High-efficiency Cogeneration (Official Gazette 100/15, 123/16, 131/17, 111/18), whose amendment of 1 January 2016 abolished the feed-in tariffs and introduced a premium system that is not yet in force. The first application of the premium system is expected only this year, but at the moment it cannot be assessed how many potential new projects there will be, first of all due to the uncertainty related to the assessment on the need to assess the impact of the project on the environment.
Investors are also pointing out challenges related to the assessments on environmental impact, i.e. the suspension of related projects. The Republic of Croatia has received a formal notice from the European Commission stating open issues about the application of the Habitats Directive regarding the implementation of procedures assessing acceptability of the environmental network of RES projects. In the period since receiving the formal notice, the projects managers were directed to the implementation procedure of assessment on the environmental impact and the implementation of the principal assessment of acceptability of the environmental network on the basis of results on account of which the projects were suspended without the possibility of adapting to newer environmentally more feasible solutions. Some estimates indicate that since May 2020, 7 projects of a total installed power of approx. 400 MW have been suspended whose investment is valued at over 3 billion euros.
Even if it exists as a separate document linked to Low-Carbon Strategy, the Republic of Croatia further has not adapted a scenario for achieving climate neutrality by 2050, and the Low-Carbon Strategy that has been adopted, has been adjusted to the Strategy of Energy Development, even though it should be the vice versa. According to EU legislation, the Low-Carbon Strategy should represent the umbrella development direction from which other development documents ensue, such as the Energy Development Strategy.
Besides mutual incompatibility between strategic umbrella documents, in some cases there is an unrealistic demand towards stakeholders. An example of this is the recently adopted “Pravilnik o sustavu za praćenje, mjerenje i verifikaciju ušteda energije (Ordinance on the System for Monitoring, Measuring and Verifying Energy Savings) (Official Gazette 98/2021) that states that the proposal of the “Akcijski plan energetske učinkovitosti za razdoblje 2022.-2024. godine” (Action Plan for Energy Efficiency for the 2022-2024 period) be sent to MINGOR by 1 October 2021, i.e. 16 working days after the publication of the Ordinance. All local and regional governments that are stakeholders according to the Ordinance are automatically facing situations of violating legal obligations. Furthermore, despite a significant number of stakeholders having valid Action Plans until the end of 2022, they are not acceptable, and it is necessary to draft new ones, within a deadline that is not possible to meet, whereby the system that should be used in the calculation of the SMIV (System for Monitoring, Measuring and Verifying Energy Savings) presently is not aligned with the the new Ordinance methodology. In the public consultation process related to the Ordinance, the aforementioned challenges have been pointed out, but the comments were neither responded to nor accepted.
In terms of civic energy, current legislation sets limits on installed power and the citizens that become producers of electricity must be careful not to put more electrical power into the network than is necessary for their personal needs in order not to be disadvantaged in the sense of losing their status for self-supply.
The new Electricity Market Act (Official Gazette 111/21) recognizes energy communities, although in line with the description in the aforementioned act the Citizen Energy Community (CEC) is more similar to the Renewable Energy Community (REC) in EU Directive 2018/2001 RED II on the promotion of the use of energy from renewable sources. The term “Renewable Energy Community” (REC) is a concept that is narrower than the Citizen Energy Community concept according to EU Directive 2019/944 on common rules for the internal market for electricity. Furthermore, the CEC should not be limited by spatial parameters. It is also stated that the CEC is a legal entity established to achieve the benefits of energy exchange produced and consumed in a certain spatial area of the local community. This significantly limits the CEC because only the possibility of energy exchange is mentioned, while according to EU Directive 2019/944 Article 2, paragraph 11, point c, the CEC is a legal entity that can participate in production, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency or charging services for electric vehicles, or provide other services to its members or shareholders, which is a much larger area of activity. Furthermore, the act stipulates that the CEC can be established only at the level of the local self-government unit, which significantly limits the possibility of citizens uniting for the benefit of the community. Rural and island areas often form natural units in which households are interdependent and connected, and they are located in areas of different local self-government units. The Directive does not restrict the CEC geographically, and such a restriction does not provide any benefits but creates unnecessary obstacles to accelerating the energy transition. Also, the act states that CECs operate on the basis of the law governing the financial operations and accounting of non-profit organizations, which creates another major obstacle in relation to the definition of the CEC in the directive that allows the CEC to be of any legal form. Although funding opportunities have traditionally been considered one of the key challenges in energy transition processes, in recent years the situation has changed significantly and administrative and legislative problems are now mostly seen as a determining factor for new projects. Tenders and calls conducted by the Environmental Protection and Energy Efficiency Fund, which contribute to energy transition, are fundamentally good and contribute to accelerating the process of energy transition. However, in practice it has been shown that due to their irregularity and unpredictability, the market balance is disturbed and the prices of services and materials rise sharply. Entrepreneurs cannot plan their business and, on the other hand, citizens and investors do not invest between calls, but projects stand still for several years as new co-financing is awaited. It is also important to mention that the latest call published by the Ministry of Economy for the submission of projects that can be financed from the Modernization Fund stemming from the EU-ETS Directive includes only the national classification in area C: Manufacturing industry, but does not include area D: supply of electricity, gas, steam and air conditioning, which means that suppliers cannot apply for RES, energy efficiency, energy storage and other projects, although the Modernization Fund is intended to decarbonise the energy sector in 10 EU Member States, including the Republic of Croatia.
2.3 Lack of strategic vision in the heating and cooling sector
Strategic and legislative acts of the Republic of Croatia recognize the importance and encourage the production of electricity from renewable sources, but heat production has been neglected for years and one of the key problems of district heating in Croatia is its inefficiency, both in terms of production and distribution. An additional problem for the residents of buildings stems from the age of the system and the lack of investment in modernization, which further complicates the process of decarbonisation of the system itself and the cities where they are located.
This is exemplified by the fact that back in March 2005 the Croatian Parliament adopted the Act on the Production, Distribution and Supply of Thermal Energy (Official Gazette 42/05, 20/10) according to which the Government of the Republic of Croatia shall determine, by a special bylaw, the sources and amounts of financial support for the production of thermal energy from renewable sources. The bylaw was never adopted and the aforementioned act was repealed in 2013 with the adoption of the Heat Energy Market Act (Official Gazette 80/13, 14/14, 102/14, 95/15, 76/18, 86/19). The new act declaratively states that the use of renewable sources for heat production is of interest to the Republic of Croatia, but it does not provide for concrete implementation mechanisms.
Another example lies in the fact that the pre-accession programs of the European Union SAPARD and IPARD, in which the Republic of Croatia could participate before its accession to the European Union, provided measures for co-financing wood biomass heating plants in rural parts of Croatia. In the 2014-2020 Rural Development Programme and by the decision of the Ministry of Agriculture, i.e. the Government of the Republic of Croatia, those measures were deleted, meaning that the co-financing of such heating plants was not envisaged. It is important to note that the Draft RED III and the EU Biodiversity Strategy require monitoring the sustainability of biomass (including that which is imported from third countries), which should be taken into account when planning all future projects.
In the area of forest and wood biomass use, the Republic of Croatia can and should compare itself with more advanced EU member states. For instance, in Austria, a country with a similar structure and practice of forest management, hundreds of smaller heating plants and wood biomass boilers have been built. In Croatia, 3 biomass heating plants were built (in Gospić, Ogulin and Pokupsko), 2 cogeneration biopower plants in Sisak and Osijek, and a dozen boilers were set up in public buildings. In Austria, the use of heating oil has been practically abolished in the whole country and replaced by wood biomass heating plants and boilers. In Croatia, according to data from the Energy Management Information System (EMIS), in which all public buildings are required to enter energy consumption data, over 2,800 public buildings are heated with heating oil (gas and extra light oil), with the total power of installed boilers running on heating oil in public buildings exceeding 1000 MW.
Of course, it is necessary to use wood biomass in a sustainable way, while sustainable forest management is an absolute imperative in the Republic of Croatia. A rough estimate of the amount of wood biomass that could be collected from these sources ranges between 300 and 400 thousand tons per year, which is enough to run 300 to 400 MW biomass heating plants. With the sustainable use of biomass, the Republic of Croatia has an extremely large and untapped potential for the use of solar, geothermal and waste energy, for the use of heat pumps and for the increased use of high-efficiency cogeneration for space heating and hot water. The use of these resources must become a priority and adequate resources and technical assistance mechanisms must be harnessed to make this possible.
3 Proposed solutions to remove identified obstacles
The key step to accelerate the energy transition in the Republic of Croatia is to create a favourable investment climate, which entails removing administrative and legislative barriers, as well as providing additional forms of assistance, such as advice, continuity and predictability of public funding and promoting good practice examples.
In order to meet the preconditions for accelerating the energy transition, the following is proposed:
– Accelerating and simplifying procedures related to environmental impact assessments, especially for small projects;
– Meeting deadlines (e.g. issuance of the Study of the optimal technical connection solution – EOTRP);
– Integrating energy transition measures of national and local strategies into spatial plans with the provision of funds from the national budget to help local governments implement integration in their area quickly and efficiently;
– Urgently resolving property and legal issues on state-owned land, which, according to national and local strategic guidelines, is favourable for the construction of RES;
– Ensuring capacities for providing advisory support to investors;
– Simplifying public procurement procedures and administrative requirements for the implementation of EU-funded projects;
– Adopting the “Zero Scenario” as a reference scenario for Croatia’s energy transition with an obligation to conduct a public debate and structured consultations with the interested public and to update the NECP in accordance with the adopted;
– Extending the deadline for the drafting of Energy Efficiency Action Plans, i.e. implementing already existing Action Plans until the end of the planned period;
– Ensuring the continuity of the Environmental Protection and Energy Efficiency Fund tenders;
– Incorporating carbon capture and storing technology (CCS) in the area of low-carbon energy transition measures and ensuring adequate funding;
– Encouraging new tenders for research and exploitation of geothermal water for energy purposes at existing and new locations;
– Developing and applying on a wider scale geothermal energy for cogeneration of electricity and heat, especially in densely populated areas with centralized heating systems, whereby the know-how and experience from the oil industry can be used;
– In addition to the current activities on the establishment of the so-called premium system, it is necessary to encourage the construction of integrated solar power plants on the roofs of family houses, apartment buildings and public facilities. In this sense, it is especially necessary to work on educating citizens who are not sufficiently familiar with the opportunities that are already available to them.
– Fostering broader forms of energy communities in accordance with the Directive and establishing an inter-sectoral working group of experts within the ministry that will develop a bylaw and facilitate the process of establishing energy communities in Croatia; Ensuring the possibility of self-sufficiency, energy production and association in communities of energy producers, with the possibility of choosing the legal form of action;
– Offering market advantages to energy communities in the premium model as well – to be further evaluated and introduced as criteria in public procurement processes in relation to companies, because the local community and its projects cannot compete with large investors, while on the other hand this has multiple benefits for local community development;
– Urgently drafting and adopting bylaws and implementing acts arising from both the legal and strategic framework of energy transition (e.g. the Energy Poverty Reduction Programme was mentioned as a measure in the 4th National Energy Efficiency Action Plan, which should have been adopted by the end of 2019. It reappears in the Integrated Energy and Climate Plan, but has not yet been drafted);
– Actively promoting the district heating and cooling systems and renewable energy sources, and their wider use.
Conclusion and final recommendations
In order to achieve the set goals and ensure progress of the Croatian economy, the development of the Croatian energy sector must follow European and global decarbonisation trends. This entails the greater use of renewable energy sources and increased energy efficiency. The energy transition is especially aimed at increasing competitiveness and encouraging innovation, reducing the negative impact on human health and the environment, but also ensuring the energy independence of the Republic of Croatia. Accordingly, the energy transition brings a number of direct and indirect benefits for the economy, health and the environment, and in this context urgent action is needed to improve and upgrade the current systems and to create a stimulating investment climate.
As an energy source, coal represents an extremely great danger to human health and is becoming increasingly uncompetitive in terms of the price of energy produced. Croatia is in the phase of decommissioning coal facilities and it is especially important to emphasize that coal is unacceptable as a fuel although it is still being used in rural areas for space heating. It is also unacceptable in the long run for electricity production, so it is necessary to set an official deadline for phasing out coal as an energy source.
Buildings are the largest single end consumers of energy in the Republic of Croatia and thus have the greatest potential for decarbonisation. Apart from the aspect of energy efficiency through comprehensive energy renewal, whereby it is necessary to provide financing models that will make energy renewal accessible to those who are poorer in terms of energy sources, it is necessary to work on the sustainable and clean energy supply of buildings and to change legal regulations or primary energy factors, which currently put central heating and cooling systems in an unfairly unfavourable position compared to individual systems and thus do not encourage the energy transition of their own district heating systems, investment in renewable energy sources, nor ensure the connection of new customers. This entails investing in new district heating systems, renovating existing ones and encouraging the use of clean and sustainable individual solutions.
Combined financing (merging private capital and ESIF / RRF funds) is a necessary model that achieves a sufficiently large leverage (multiplier effect) and it is the only way to achieve the overall goals of energy renewal and decarbonisation of the building stock by 2030 and 2050. Renovation of buildings in larger urban centres should be carried out at the level of blocks, not individual buildings, which significantly reduces the cost per building. It is also incredible that, unlike most European Union countries, investments in renewable sources have not yet been recognized by pension funds. At the same time, every large investment in renewable energy sources in the Republic of Croatia should offer a certain percentage to local companies and citizens (good examples of such practices come from Greece, Scotland, the Netherlands, Switzerland …).
Energy communities offer great potential for accelerating the processes of energy transition, which is also fairer since it hands energy over to the citizens. Unnecessary restriction of a model that has not yet managed to take hold in Croatia unnecessarily slows down this development and the overall transition process.
In order for the real cost of energy production from fossil fuels to be shown, it is necessary to clearly identify and eliminate all energy subsidies of fossil fuels (direct and indirect). It is also necessary to prepare mechanisms to encourage the implementation of acceptable solutions through subsidies for energy production from renewable sources or investments in energy efficiency where necessary. The ultimate goal is to eliminate all types of incentives and place an emphasis on commercially viable investment models.
The decarbonisation of transport, as the second largest single end consumer of energy in the Republic of Croatia, includes changes in the modality of this energy. The focus needs to be shifted as much as possible to public and rail transport, while road and coastal maritime transport must be modernized, increasing the use of vessels powered by alternative means (especially electricity and hydrogen), which must be accompanied by infrastructure development. This includes activities in the public and private sector and will require certain subsidies and/or changes in the mechanism of personal vehicle taxation, but also alternative models of project financing and a change in the paradigm of personal vehicle use. Traffic electrification has already begun, but the infrastructure for electric vehicles needs to be further developed.
The development of hydrogen infrastructure has yet to begin, so this process should initially be strongly subsidized both at the level of production (especially green hydrogen from RES) and at the level of hydrogen refuelling stations, until a sufficiently large network of refuelling stations is built for use by fuel cell vehicles on the entire territory of Croatia. Raising the share of renewable energy sources will increase the need to balance the electricity system, which will contribute to hydrogen production for transport, as well, thus further reducing dependence on energy imports. It is also necessary to increase the share of stationary traffic infrastructure, pedestrian and bicycle traffic.
These Guidelines were adopted at the 6th Working Session of the Energy Transition Council of the President of the Republic of Croatia on the 15th of December 2021 in Zagreb.
Doc. Class: 300-01/20-01/18
Ref. No.: 71-06/3-21-11
Energy Transition Council of the President of the Republic of Croatia
Council Chair: Julije Domac, Ph. D., Special Adviser to the President of the Republic of Croatia for Energy and Climate
Notetaker:
Apart from the Council members, the Guidelines to Accelerate Energy Transition were drafted with the participation of external experts:
– Tomislav Kurevija, Ph. D., Faculty of Mining Geology and Petroleum Engineering, University of Zagreb;
– Marija Macenić, Ph. D., Faculty of Mining Geology and Petroleum Engineering, University of Zagreb;
– Tomislav Novosel, MSc, North-West Croatia Regional Energy Agency;
– Luka Perković, Ph. D., Faculty of Mining Geology and Petroleum Engineering, University of Zagreb;
– Slavica Robić, Ph. D., North-West Croatia Regional Energy Agency;
– Velimir Šegon, MSc, North-West Croatia Regional Energy Agency;
– Domagoj Vulin, Ph. D., Faculty of Mining Geology and Petroleum Engineering, University of Zagreb;
– Filip Vodopić, Faculty of Mining Geology and Petroleum Engineering, University of Zagreb.
PHOTO: Office of the President of the Republic of Croatia / Dario Andrišek