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Albanian Commitments on Green Energy

Last intervention on the regime of Bio-diesel

Last intervention of the Albanian Minister of Economy on the regime of Bio-diesel

Economy Minister Arben Ahmetaj state today the government's commitment to green energy by introducing the "Changes Regime on Bio-diesel”, as the first step towards changing its fiscal regime measures on Bio-diesel fuel. “Current law not only did not help green energy, but contrary also has aggravated it." - said Ahmetaj. The measure of revision introduced today give the opportunity to the government to give implementation to the Energy Community commitments related to renewable energy.

Therefore, an obvious core issues became an overview in the Albania renewable energy sector. Under Directive 2009/28/EC, Albania committed to a binding 38% target of energy from renewable sources in gross final energy consumption in 2020, compared with 31.2% in 2009. Therefore, in May 2013, Parliament adopted a Renewable Energy Law dealing mostly with electricity from renewable sources, and only marginally with energy produced from renewable sources for heating.

In accordance with this Law, the Government must formally adopt the 38% target, including a 10% target of renewable energy in transport. However, in March 2014, the Parliament decided to postpone the implementation of crucial elements of the Renewable Energy Law to 1 January 2015, including the provisions related to the adoption of the National Renewable Action Plan and the adoption of support schemes. The reason given for this postponement was the harmonization with the new Power Sector Law currently being drafted.

Regard the State of Play, Legislation and Promotion of Renewable Energy at the end of 2013, the Ministry in charge of energy has awarded concessions for 100 large, medium and small HPPs of about 1300 MW. So far, the overall electricity capacity installed in Albania is 1878 MW, most of which was hydropower. Hydro capacity increased by 54 MW during the year.

Regard the specific situation of the Renewable Energy in Transport the final energy consumption in the transport sector in 2009 (the base year for the targets set by the Ministerial Council in adapting Directive 2009/28/EC) in Albania was 438 ktoe. The actual share of biofuels is not known, even though the legislation in place requires monitoring and reporting. The draft NREAP shows a share 0.11% for 2012. In any event, assessing Albania’s progress in real terms is very difficult. An Italian-Albanian joint venture produces biodiesel in Porto Romano since 2011, with a production capacity of 100,000 tons per year. However, all raw materials are imported and all produced biodiesel is exported so that it cannot count towards Albania’s target.

Other than setting a 10% target by 2020, the new Law on Renewable Energy as of 2013 does not apply to renewable energy in transport. The Law for the Production, Transport and Trade of Biofuels and other Renewable Fuels in Transport of 2008 deals with functional and organizational aspects of production, transportation and trade in biofuels. The Law also sets annual targets which are now outdated (an indicative target of 15% as of 2015) and imposes blending obligations on traders.

The Law also gives some incentives such as tax advantages for machineries, equipments and materials necessary for the construction and commissioning of biofuels plants etc. However, the secondary legislation needed for the implementation of the Law has not even been drafted since its entry into force. The Law is currently under review by a working group with a view to transpose the requirements of Directive 2009/28/EC with regard to sustainability criteria and the certification system, and to introduce more adequate incentive measures. The proposal is supposed to be prepared by 30 September 2014.

Therefore, regard the state of Compliance: there are in ongoing many open issues. The Renewable Energy Law transposes Directive 2009/28/EC is only partly. The Biofuels Law of 2008 is in line only with Directive 2003/30/EC, but not Directive 2009/28/EC. Albania must thus be considered non-compliant. In this regard the priorities that need a fast address see the adoption of the Renewable Energy Law, Albania increased compliance with the renewable energy acquis and the today initiative seems as a first step that need to be greet.

However, there is a need of immediate adoption of the NREAP. The network operators have to increase transparency regarding connection and access to the grids. ERE must also implement the system for certifying energy produced from renewable sources based on guarantees of origin. A full review of the Law for the Production, Transport and Trade of Biofuels and other Renewable Fuels in Transport and its implementation is immediately needed. The focus should be on the certification system, as biodiesel production seems to take place already in the country.

Finally, the current difficult financial situation of the electricity sector caused by high energy losses, accumulated bad debts and reduced collection rates create high risks also for new investments made in renewable energy projects. When reforming the electricity market model to allow for opening of the market, Albania needs to focus not only on the supply side but also on generation, as a precondition to attract further investments in renewable energy.

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