Social justice and the energy transformation process in North Macedonia

A blogpost by LENS researcher Ivana Vuchkova.

The energy transformation means a different thing to different countries. While in some it represents an opportunity for decarbonization of the economy alongside employment growth and improved well-being of citizens, in the developing world that is not the case. Instead, the transformation towards renewable energy is perceived as a threat to the existing conventional energy system that offers security, stability, and social peace. North Macedonia, where every fifth citizen lives in poverty (World Bank, 2022), and every fourth is affected by energy poverty (State Statistics Office, 2021), and the capital ranks among the most polluted cities in the world – is a case study for the sustainability challenge in the developing world. On the one hand, the country needs to increase the consumption levels of the socially vulnerable citizens through creating jobs and boosting economic growth, while at the same time reducing ecological footprint and cutting emissions. That requires changes in policies, businesses and behavioural choices that represent a challenge for citizens that are dependent on social transfers and therefor leads to a different perspective.

The socio-economic specifics should be the underlying features of the energy transformation of North Macedonia, or more broadly the socio-ecological transformation. In fact, these issues are not mutually conflicting, but arise as a result of an unjust economic model. During the neoliberalism, the market disregarded ecological and social issues which led towards climate change with reinforcing effects on the environment and the socially vulnerable citizens. That is also the case in North Macedonia, which after the break-up of Yugoslavia, as a newly established democracy transformed its market by following the pattern of profit-driven development that was not compatible with social, nor with ecological standards. High emissions from the former socialist industries, the coal-fired power plants coupled with lack of sustainable transport options, poor thermal efficiency of housing and limited renewable energy on the local level remain a serious concern for the energy transformation process.

In the case of North Macedonia, the assessment of the structural changes on the labor market and future of jobs is very important. The country’s unemployment rate is 17% (State Statistical Office, 2022) and average salary amounts at 31.871 MKD (or 500 EUR) which makes jobs in the coal industry very attractive considering that they are paid 36.8% higher and employee around 3.800 (оr 0.54%) persons of the total registered labor force.  Following the positive examples of countries like Slovenia and Spain that are well-ahead on the road towards carbon-neutral development, North Macedonia needs to establish a Just Transition Fund, that will involve all relevant stakeholders in shaping the energy transformation. The national Strategy for Energy Development until 2040 envisages coal phase-out by 2025, both in the “moderate” and the “green” scenario. That urges the need for the Fund that should pay special attention to training and reskilling of employees in coal and carbon-intensive industries, and developing the qualifications needed for a sustainable development of the territories affected. In addition, financial and technical assistance is needed for reconverting economic development in municipalities like Kichevo and Bitola where coal-fired thermal power plants operate. The Smart Specialization of the country that evaluates the economic, scientific, and innovative potential could serve as a valuable resource in targeting sectors for creating new economic activities that will offer well-paid jobs.

Photo credits – Benita5 via pixabay

However, the energy transformation offers an opportunity for changing the rules of the game. In North Macedonia, it offers an opportunity for a transformation out of poverty and fossil fuels both in domestic and commercial use, which also means improved air quality and public health. Mechanisms like the European Green Deal that foresee carbon neutral development by 2050 are based on plans for institutionalization of the market regulation that will guarantee social and ecological standards while boosting economic growth and creating jobs. As a candidate for EU-membership and signatory of the Green Agenda for the Western Balkans (European Comission, 2022), North Macedonia is firm on the path of the energy transformation. To make it socially just, the process needs to not only prevent additional financial burdens for vulnerable citizens, but to catalyze and create better opportunities. This requires a very well planned and designed process that will include all relevant stakeholders: government bodies, trade unions, companies, local communities, academia and civil society. While it is not the first energy transformation that human development has witnessed, it is yet the most complex one because there is no “one size fits for all” approach and it is driven by political, scientific and activists concerns over climate change which differ in different countries.

In parallel to the the structural changes in the labor market and local economies, the energy transformation must consider the impact on the living standard and well-being of citizens in general. Democratizing the energy sector through citizens participation as prosumers and members of energy cooperatives must be at the core of the transformation processes. In such way, renewables will be accessible to citizens not only as a source of energy, but also as a source of acquiring additional income. Energy access for all is also crucial for eradicating energy poverty and poverty in general. But, in order to achieve that, a better understanding of the state-of-affairs is needed. Current levels of energy poverty are limited to the lack of heat and adequate temperatures in households during winter conditions, while neglecting various segments as: temperatures in summer conditions, thermal efficiencies of the housing stock and household appliances; the type of energy resources used by households (e.g. firewood, crude oil, gas, plastic or other non-standard resources); and last but not least, the implications on the most vulnerable citizens.

Photo credits – EdWhiteImages via pixabay

The Law on Energy and the Law on Social Protection provide the legal basis for the Annual program for the protection of vulnerable energy consumers, which defines the criteria they need to fulfil in order to receive financial support to their monthly electricity bills in an amount of 1.000 MKD (or 16 EUR). It also defines the Electricity Supply Rules which oblige energy suppliers to supply energy (electricity and natural gas) to vulnerable consumers in critical winter periods. However, the long and complex procedures of getting financial support and it size do not consider the high energy consumption of these consumers as a result of old household appliances and lack of thermal isolation. Therefore, apart from the de jure recognition of vulnerable consumers, the real situation must be determined, which requires clear criteria that will detect all vulnerable consumer and will be based on modern theoretical approaches and the context specific.

A socially-just energy transformation in North Macedonia is possible if replacing fossil fuels with renewables in an inclusive and just manner that follows the ecological boundaries of the planet and the needs of citizens. Considering that renewable technologies are not equally accessible to everyone, especially not to vulnerable consumers and citizens with lower incomes, whose houses oftentimes are not even compatible for solar panels installations, the energy transformation needs to foresee challenges and prevent further energy marginalization in the society. This requires special attention in designing the state programs for supporting schemes that exist even now but are limited to households that are already financially capable of investment in renewable energy and energy efficiency. Energy counsellors or energy doctors can play a role in assessing the needs for investment in energy efficiency on the local level and household appliances that will help in reducing energy consumption levels. Therefore, the energy democratization and decentralization need to also be aligned with the housing conditions and needs of citizens. Only then the perspective of the energy transformation could shift towards the benefits for all and enable an outlook for creating a better and just society.