The EU’s promotion of renewable energy is a form of (neo)liberal environmentalism that merges environmental concerns with ‘solutions’ that prioritize the growth of the (capitalist) economy. Thus, the fight against the environmental crisis is embedded within the very system that produced the environmental crisis. The disastrous consequences of this approach are evident in the boom of small hydropower in Serbia, as Aleksandra Piletić argues.
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The promotion of renewable energy in EU candidate countries such as Serbia is closely linked to their accession commitments. It relates to their obligation to incorporate the EU body of law, the acquis communautaire, in the domain of energy, competition, and the environment into their domestic legal frameworks prior to accession. It also refers to various commitments as part of their membership in the Energy Community. The Energy Community is an international organization established in 2005 that seeks to extend the EU energy market to non-EU countries in South Eastern Europe and the Black Sea region.
When the EU passed its 2009 Renewable Energy Directive – imposing a mandatory target of a 20% share of energy originating from renewable sources by 2020 – the obligation to implement it was imposed not only on the EU Member States, but also on the Energy Community members. The Serbian Energy Law (Zakon o Energetici), adpoted in 2014, reflects its Energy Community commitments. For instance, Article 65 of the Law stated that the use of energy from renewable sources was considered to be in the national interest of the Republic of Serbia, while Article 70 outlined a new category of ‘privileged energy producers’ who were entitled to receive subsidies for their production of renewable energy.
‘Natural’ predispositions and neoliberal incentives
These subsidies took the form of ‘feed-in tariffs’ (FITs), policy instruments that encourage market-based investments in renewable energy. FITs guarantee producers favorable, above-market energy prices and make investments in renewable energy particularly attractive by locking them in for long periods of time (10-15 years). The favorable tariffs are difficult to revoke, making renewable energy a lucrative and relatively safe investment. In Serbia, FITs have been approved for a period of 12 years for a number of renewable energy sources such as solar, wind and hydro.
In the years following the passage of the Energy Law, hydropower emerged as the most lucrative source of renewable energy for a number of reasons. First, small hydro is particularly suited to the topographical and hydrological characteristics of the Balkans. Run-of-river/diversion small hydropower plants rely on small rivers with steep gradients, which are abundant in the hilly and mountainous areas of Western Balkan countries such as Serbia. This ‘natural’ predisposition to small hydro has been coupled with numerous financial incentives that have made small hydro a particularly lucrative investment. Unlike solar and wind power, there was no cap on FITs for hydropower under the new energy law. Small hydro has also been further incentivized by multilateral lending institutions such as the EBRD and EIB, which have provided significant amounts of capital for this purpose. Between 2005 and 2018, for example, the EBRD has provided at least €126 million in loans to support the construction of 61 small hydropower plants, while the EIB has provided approximately €445 million for 11 plants.
Paradoxically, however, small hydropower has not experienced a similar boom in EU member states. While these projects can be found in EU member states, there are a number of controls in place to protect them from the environmental devastation that has occurred in candidate countries such as Serbia. For example, the Water Framework Directive 2000/60/EC imposes strict rules on any hydromorphological alteration of watercourses and ecosystems in the EU. This is important because the European Commission and the European Court of Justice can intervene if this law is not respected, as happened in the case of small hydropower plants built in protected areas of Romania’s Faragas Mountains.
Impact of small hydropower projects
While the promotion of renewable energy could be seen as a positive development for a country like Serbia, in practice very modest progress has been made in the actual production of energy from renewable sources. Despite intense public and private funding for the promotion of renewable energy, reports from the public utility EPS show that the energy produced by small hydropower plants has remained consistently low between 2016 and 2023, never exceeding 1% of the total energy produced from all energy sources in the country.
At the same time, small hydropower has resulted in widespread environmental degradation and dispossession of local communities. For instance, at least 24 of the 116 plants completed in 2019 were found to have been built without key environmental permits. At the same time, investors with close ties to the government have made significant material gains. Between 2013 and 2016, out of a total of €41.6 million paid out to renewable energy producers, €7.2 million went to companies linked to Nikola Petrović, a friend and associate of President Aleksandar Vučić. In response, local communities have fiercely contested the project, leading to the emergence of a number of grassroots initiatives, including Defend the Rivers of Stara Planina (Odbranimo Reke Stare Planine), as well as an upscaling of resistance at the national level, as small hydropower came to be perceived as a national issue.
A closer look at the small hydropower plant in Rakita, a village located in Southeastern Serbia, reveals these dynamics. The Rakita plant was fiercely contested by the local community, which has depended on the river for generations. The plant itself was built without following the necessary procedures, especially the environmental impact assessment. As a result, the presence of a number of protected species in the Rakita River was not detected; this is significant because, in 90% of cases where protected species are found, the Environmental Protection Institute (Zavod za zaštitu prirode) does not issue a positive decision. Contestation by local and national civil society groups has raised public awareness of the illegality and damage caused by small hydropower, and has even led to numerous victories, such as the suspension of construction of 84 projects in the Stara Planina region for a period of 15 years, and a tightening of environmental standards in the EBRD’s lending practices. However, it has been met with an intensification of violence, policing, and authoritarian repression against local residents and activists.
Disastrous consequences of renewable energy in Serbia
Conventional explanations for the failure of small hydropower in Serbia tend to focus on corruption and clientelism, and tend to be positioned in relation to the broader failings of the authoritarian government led by President Aleksandar Vučić. But this is only part of the story. I argue that it is impossible to understand the failure of small hydropower without developing a broader understanding of the links between renewable energy promotion, neoliberalism, and authoritarianism – and how they have played out in the Serbian context.
First and foremost, the contemporary promotion of ‘renewable’ and ‘green’ energy should be understood as closely tied to processes of neoliberal restructuring. By tying the success of small hydropower projects to their profitability as an investment, this investment became contingent on the commodification and privatization of river water – a process commonly referred to as ‘water grabbing.’ The EU’s promotion of renewable energy should therefore be understood as a form of (neo)liberal environmentalism that merges environmental concerns with solutions prioritizing the growth of the (capitalist) economy. In other words, the fight against the environmental crisis is embedded within the very system that produced the environmental crisis.
In addition to the inherently neoliberal nature of the EU’s renewable energy strategy, it is also important to note that EU integration as such is tied to the neoliberal project and has fundamentally shaped the EU’s eastward expansion. The same can be said of the EU’s aim to expand its energy market eastward through the Energy Community and the related expectations of EU candidate countries to adopt the EU acquis in areas such as energy, environment and competition. Through its membership in the Energy Community and its broader EU accession commitments, Serbia has committed itself to meeting the EU’s renewable energy targets, despite having far fewer resources to do so.
Authoritarian neoliberalism goes green
Finally, it is important to note that neoliberalism has taken a particularly authoritarian form in the post-2008 crisis period. While authoritarian tendencies have been part of neoliberalism since the early days of Augusto Pinochet and Margaret Thatcher, the financial crisis of 2007-08 caused a major material and ideological crisis in the neoliberal project, leading to (1) a search for new possibilities of accumulation, with the green economy becoming one of the new major capitalist projects, and (2) a more concerted emergence of so-called ‘authoritarian neoliberalism.’ Rather than neutralizing resistance and dissent through concessions, neoliberalism in the post-2008 crisis period is now more often accompanied by direct efforts to exclude, marginalize and repress subordinate social groups. It is in this broader context that we should understand the intensification of violence and repression in response to opposition to small hydropower projects in Serbia.
Indeed, small hydropower projects must be understood as closely linked to incentives emanating from much higher levels of government and, in particular, the EU as a neoliberal project. This is reflected both in Serbia’s commitments as part of the accession process and in the EU’s broader paradigm of renewable energy promotion. In this sense, while Aleksandar Vučić is a key point of convergence of authoritarian governance in Serbia, authoritarianism goes beyond Vučić. It should be understood as emerging from a complex web of material incentives and obligations that envelops the political economy in Serbia. Further efforts to challenge the promotion of renewable energy and other forms of neoliberal commodification of nature must therefore acknowledge the multiscalar character of authoritarian neoliberalism in the country (and beyond).