The World Bank’s board of executive directors approved on May 1 a €79.9mn loan and a €2.89mn grant to Bosnia & Herzegovina to support its National Energy and Climate Plan and facilitate a just transition away from coal, the institution announced.

A World Bank report estimates that 3,300 premature deaths annually are linked to air pollution in Bosnia.

The financing will back the Just Transition in Select Coal Regions of Bosnia and Herzegovina project, aimed at repurposing post-mining lands in Banovići, Zenica and Kreka, and facilitating the closure of underground mining operations in Zenica. It will also fund the installation of renewable energy systems at the Banovići and Kreka mine sites and support social and workforce development measures for affected communities.

The World Bank project includes funding for skills development and social protection schemes designed to provide alternative livelihoods for those employed in coal-dependent sectors.

“This new project is an opportunity to boost Bosnia and Herzegovina’s energy security while supporting communities, making sure no one is left behind,” said Christopher Sheldon, World Bank country manager for Bosnia and Montenegro.

Experts quoted by EnergyNews estimate that replacing the 2,300 MW from current thermal power plants would require installing 5,000 MW of wind power or 10,000 MW of solar power, amounting to billions of euros in costs.

Besides still being a net electricity exporter (despite shrinking electricity export incomes), Bosnia is a key coal supplier in the region, even as many European countries move away from fossil fuels in favour of cleaner energy resources. Bosnia’s coal exports have doubled y/y to nearly 235,000 tonnes in Q1 along a grossing path that started in 2022 according to Serbia Energy portal. Bosnia’s coal exports are predominantly shipped to neighbouring Serbia. 

The coal phasing off will therefore have significant economic and social implications, especially as the country holds coal reserves capable of sustaining current consumption levels for more than 250 years.

The mining industry directly employs over 17,000 workers and supports thousands more through indirect jobs.

The World Bank’s loan is part of Bosnia’s longer-term commitment to close all coal mines and coal-fired power plants by 2050, a pledge first announced in November 2020 as part of its goal to align with the European Union’s climate agenda.

Bosnia produces about 60% of its electricity from coal-fired power plants and the rest mainly from hydro. It has set a target of a 43.6% share of renewable energy in its power production in 2030, but the transition has been slow.