Renewables Readiness Assessment: Bosnia and Herzegovina

Bosnia and Herzegovina (BiH) is taking steps to improve the country’s long-term resilience, to support its economic diversification and competitiveness, and to secure its energy supply and sovereignty by harvesting its natural renewable resources.

Despite being in a situation of security of supply and energy independence, and maintaining a net electricity exporter position, BiH bears the heavy cost of air pollution and health impacts due to the combustion of fossil fuels and wood. The residential sector largely relies on local wood biomass for heating. The coal sector employs thousands of workers and is a major economic activity in several regions.

Already, BiH has made international commitments to address climate and health impacts in the energy sector. Drivers to the energy transition have emerged with the progressive integration of the European Union acquis communautaire. The Sofia Declaration on the Green Agenda for the Western Balkans is a strong message for the region, as it reconfirmed the determination to pursue and accelerate the accession process and contribute to the carbon neutrality goal introduced by the European Green Deal.

Compliance with the European legislation will imply drastic changes, e.g. the removal of subsidies for the power sector,1 the adoption of cost-reflective prices, the progressive adoption of carbon prices and the requirements to preserve the environment. If not managed ahead of time, with planning, the changes could turn into cost to the economy, through loss of purchasing power for households, reduced competitiveness for energy-intensive industries and a shift to a net importer position.