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KfW's position on financing coal power in Serbia

KfW has been financing the energy sector in Serbia under Germany's official financial cooperation on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) since the year 2000.

Project promotes energy efficiency and reduces CO2 emissions

The project mentioned in the german news magazine SPIEGEL (1 July 2013) aims to reduce emissions and increase energy efficiency through coal quality management in the Kolubara open pit mine. This allows a reduction in the variability in the calorific value of the coal used there and eliminates the need to co-fire large quantities of environmentally harmful heavy oil, which used to be common practice. The investment will thus make a crucial contribution to reducing the negative environmental and climate impacts of energy conversion in thermal power plants, in particular by reducing CO2 emissions by more than 700,000 t per year. This corresponds to 1.7% of annual CO2 emissions in Serbia. The project has a total volume of EUR 182 million. KfW is financing EUR 74 million of this sum while the European Bank of Reconstruction and Development (EBRD) is financing EUR 80 million. The Serbian executing agency Electric Power Industry of Serbia (EPS) is contributing EUR 28 million of the cost.

Environmental and social sustainability plans have been contractually agreed

During the preparatory phase of the project the resettlement issue was thoroughly examined and the affected population was closely involved. Various measures were discussed with the partners EBRD and EPS and contractually agreed under action plans .

Under these agreements and the legal requirements, EPS provides resettled households fully developed lots and newly built houses at a different location or offers compensation payments. The EPS has committed itself to implementing these environmental and social sustainability plans in the financing agreements concluded with KfW.

Practical emergency aid after the war: create energy security

In the first project supported in the Serbian energy sector under German Financial Cooperation, KfW financed state-of-the-art open pit mining equipment for the Tamnava West lignite field. This was an immediate emergency aid measure following the war which aimed to secure electricity supplies in Serbia. It helped to stabilise power generation, which in 2001 continued to be much too low and resulted in frequent power cuts for consumers and businesses in particular. Together with the other FC programmes of the first half of the decade of 2000, the project made a significant contribution to making electricity supply in Serbia much more reliable and efficient today.

KfW's strong commitment to the expansion of renewable energies and energy efficiency

In addition to financing for Kolubara, KfW supports Serbia in expanding renewable energies and energy efficiency. KfW-financed projects in a volume of EUR 417.5 million are currently underway. Further projects in a volume of EUR 396.6 million are under preparation.

The most important but very obsolete hydropower plants of the country are currently being renewed with EUR 100 million alone. A further project, in a volume of EUR 20 million, comprises the construction of Serbia's first biomass thermal power plant; a programme that aims to develop the biomass market with a volume of EUR 102 million is also under preparation. A first windfarm and a photovoltaic solar power plant are also to be financed.

So far almost EUR 104 million has been made available for the rehabilitation of the dilapidated district heating systems of 22 cities in order to significantly reduce heat losses and fuel consumption. A further phase of the programme is under preparation with a volume of EUR 32 million. KfW is continuing a successful World Bank programme aimed at the energy-efficient refurbishment of schools with some EUR 16 million. In addition, together with a number of partner banks KfW has developed innovative loan programmes designed to promote energy efficiency on the supply side and so far has provided around EUR 125 million under this initiative. A further EUR 25 million is under preparation. Around EUR 100 million is to be provided to support the renewal of existing transmission lines and the construction of new ones.

KfW is therefore providing extensive support to Serbia in renewing its energy sector. With a share of 28.5% (2012) of electricity production from renewable energies, Serbia has more green energy than Germany (22.9%). We are making a significant contribution to maintaining this high ratio or even increasing it.

Special topics "Financing of coal-fired power plants"

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