Serbia’s energy transition is slowing down due to Chinese investments

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The People’s Republic of China has become a major investor in the Republic of Serbia. This is reflected in several domains, with the most prominent investments in industry, energy and the construction of new highways and other road facilities. In addition to investments from China, a large part of the work is carried out with the help of loans that the countries of our region take from Chinese banks. Starting in 2014, Serbia, along with Greece, stood out as the main address of China’s foreign direct investment in the region. In the period 2010–2019. According to the data from the National Bank of Serbia, direct foreign investments from China to Serbia amounted to over 1.6 billion euros.

Although it has committed itself to switching to higher production and consumption of energy from renewable sources in the coming years and decades, it seems that Serbia is nowhere near consistent with that plan. In the previous period, intensive work has been done on the completion of works on the construction of block B3 at the Kostolac B thermal power plant, which is already very late. This block is one of the largest construction sites and its construction is being realized from a loan mostly provided by the Export-Import Bank of China. The capacity of block B3 is 350 MW and as EPS representatives have repeatedly pointed out, it is extremely important for the energy system of Serbia.

And while work is underway on the construction of block B3 in Kostolac, the Chinese company Power Construction Corp. of China agreed a deal with EPS in early 2020. Namely, another Chinese investment will be based on the construction of block B within TPP Kolubara. This project is worth about 385 million euros, and aims to put the plant into operation during 2024, whose total capacity will be 350 MW. In that way, the two largest TPP complexes in Serbia will be renovated with new production blocks.

With these two investments, Serbia will continue with the exploitation of low-calorie lignite coal, which is necessary for the operation of these plants, and which greatly affects the environmental pollution in our country.

Chinese investment in other branches of “dirty industry”

In addition to investments in new TPP units in Serbia, Chinese investments, as stated, have been widespread for several years, primarily in road construction, but also investments in the development of mostly heavy industry. The most famous examples of realized investments are certainly the investments in the Ironworks in Smederevo and the former Mining and Smelting Basin Bor.

These two plants have been emitters of harmful substances for decades, however, with new investments, this trend has only further increased. Despite the announcements from the HBIS group, which is majority owned by Zelezara, that they will invest around 120 million euros in a new plant that will be far more environmentally friendly, from 2019 until today, this promise has remained unfulfilled. The citizens of Smederevo and its surroundings have been affected by high concentrations of pollutants in the air for most of the year, and the potential realization of such a project would be of great importance for solving that problem.

The situation is no better or further south, towards Bor. In previous years, citizens in this city often took to the streets demanding reactions from the authorities due to air quality problems. As in the previous example, here is part of the investment from China, where the pool is majority owned by Zijin Copper. Despite all the efforts, it all came down to a few financial penalties for this company. In addition to air pollution, the operation of the copper mine in Majdanpek, which also became the property of the mentioned company, has again caused pollution of the Pek River in recent weeks, and the river has changed color for the umpteenth time.

In recent months, the construction of the LingLong tire factory on the territory of the municipality of Zrenjanin has become more and more in the center of attention. This investment immediately alerted the representatives of the civil society and the professional public, who pointed out the harm to the environment in case this factory starts working. In addition, the problem is the threat to the special nature reserve Carska bara, which is located only 2 km away from this plant. Despite the case study, which shows a potentially large negative impact on the environment, the construction of this factory began in 2020 without public discussions.

The main feature of all three mentioned cases is that they are plants that have a very large negative impact on the health and safety of citizens. As examples of dirty industry, these plants deviate when it comes to Chinese policy, where the authorities there want to influence the creation of more environmentally friendly business with zero emissions of harmful substances.

The importance of Chinese investments for economic growth in Serbia is undoubtedly important, especially since they start industry and employ unemployed citizens. However, the quality of these investments remains highly questionable, especially if we consider their negative impact on the environment.



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