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Greetings, dear viewers.
Welcome to the second

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episode of New Magazine's
podcast entitled

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Coal phase out in
the Western Balkan.

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My name is Damir Dizdarevic
and I will be your host in this

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as well as in the forthcoming
episodes of this podcast.

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In the first episode, we touched
upon urgency of coal phase out,

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as well as high price we pay
for still using it, primarily in

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the health department and
the protection of the environment.

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I will host today Mr. Aleksandar
Kovacevic, energy economist

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and an expert in this field.
We will discuss with him

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whether coal phase out presents
major economic risk and a road

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towards economic demise,
or it is development potential

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of our region that we simply
have to take advantage of.

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We will talk of the investment
needs in the new energy sources,

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the potential of renewable energy
sources in the region and

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proper energy transition, implying
that the transition is not only timely

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but also fair for the most affected,
such as miners and other workers

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in those lines of industries.

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Realization of this podcast has been
supported by Open Society Foundation

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for Western Balkans, and it is
available on our You Tube Channel.

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Moreover, we are availabe
on other podcast platforms

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such as Spotify and Deezer.
Also, follow as on social networks

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on Instagram and TikTok.
I hope you'll enjoy today's episode.

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Produced by New Magazine
with the support of

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Open Society Foundations
for Western Balkans.

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Good afternoon, Aleksandar,
and welcome to our podcast.

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Could you introduce yourself
to me and to our audience?

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Well, it's energy economy,
that is my field of work for

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the last 35-36 years,
in this line of industry...

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I was engaged in diverse major
energy projects in various countries.

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Here in Serbia, I worked for United
Nations, in terms of reconstruction

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of the energy system in the post-war
period, after 1999...

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I wrote several books in this field,
one for the United Nations, dealing

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with energy poverty, published in 2004
this book has become standard for

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energy poverty analyses, it was used
in many countries within EU,

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in the World Bank, and so on.
The other book was published

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for International Energy Agency (IEA)
and energy policy analysis in the

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countries within the Balkan region,
eight countries at that point of time.

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I had several papers, written for the
World Bank and Austrian Institute

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for Energy Studies, so that's it...
-Thank you, an impressive biography.

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I am honored to have the opportunity
to host you, so that you can share

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with the audience your opinion on
energy transition of coal phase out

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in the Balkans. First of all,
I would like to begin with

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a statement but also with a question.
Those who are critical of our coal

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phase out say coal is responsible
for our economic development,

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that we have been using
fossil fuels for decades,

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and because of its accessibility and
low price, it lifted many people out

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of poverty and improved
the work of industry.

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Now it's time to fight against
climate change and coal phase out,

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while they often announce that
this will bring economic demise.

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According to your opinion, is this
an attempt of some countries to

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play a dirty game, with the attempt
to economically devastate the region

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of the Western Balkans, whether
things will remain the same,

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or is it a chance for
economic growth?

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There is a whole series of comments
that can be made about it.

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Among others, we can say that an
original energy policy of Yugoslavia

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after the Second World War,
hadn't been familiar with coal.

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In fact, coal production declined
during the 1950s and 1960s.

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We had a single increase immediately
after the Second World War.

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After that, when energy policy gained
momentum, the production declined.

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Energy policy at that time focused
on hydropower, imported oil,

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and on the possible construction
of nuclear power plants.

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The famous program containing 14
nuclear power plants on the territory

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of former Yugoslavia.
-Out of which, just one was there.

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One nuclear power plant was built.
Regardless, at that time the industry

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was trained to participate in the
construction of nuclear power plants.

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Quite a large number of personnel
has been trained, including engineers.

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To the extent that the personnel
industry infrastructure made

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construction possible later on,
when energy policy has changed,

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and become coal oriented, but that
happened in the early 1970s.

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What caused this to happen?
-Due to diverse foreign circumstances.

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We should leave this aside, for now.
Above all, the then Trade Agreement

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with the Soviet Union presented
a crucial momentum.

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Energy policy has
changed its course...

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Followed by the industrial
capacity, which was there.

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The objects that were constructed
were of unique high-quality,

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so, when you compare similar
buildings in the former Yugoslavia,

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and its 50 year operation, up till
today, you see that those results

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are exceptional, compared to similar
objects built in some other countries.

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In the countries of former Soviet
Union, Vietnam, India, in central

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Europe, and in some
other places.

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So, a particularly high level of
industrial ability was achieved.

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This is just one dimension.
There is another dimension.

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We have gone through one
period of energy transition.

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In 1992, a transition took place in
the area of residential heating,

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where imported fuel was abandoned,
high quality coal, heating oil, etc.

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The population largely
focused on firewood.

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This was a major event.

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We haven't got a clue what
a major change this was.

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As a result, the timber industry
almost completely disappeared.

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Very important and powerful industry,
a large exporter with more than

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two hundred thousand workers
has practically vanished.

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Those people lost their jobs,
and nobody had warned them

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some 10 or 15 years in advance that
something like this would happen.

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So, the entire cities, such as Vranje,
or Zavidovici in Bosnia, were left

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without their industrial basis,
making all the people jobless.

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Are we threatened with the same
scenario with this energy transition?

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No, I don't think so.
This is not even close.

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First, number of people employed in
coal mines is incomparably smaller.

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Second, those two industries
cannot be compared at all.

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Namely, wood industry was then,
and what is left of it today,

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it was completely competitive
on the international level.

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I mean when it comes to
productivity, efficiency, innovation,

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sales on various international
markets, it was an industry that

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exported furniture, exported wooden
houses in the USA and Baltic states,

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Norway, Sweden, countries of former
Soviet Union, of course, Central

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European countries,
practically throughout Europe...

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It exported wood, both processed
and unprocessed wood, etc.

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The industry was in the zone of
international competitiveness.

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Unfortunately, the coal industry in
former Yugoslavia never reached

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that level, so one thing is the power
plants that have been built on high

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level, and another thing is
very, very poor coal resource.

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It was of a low quality,
with a high sulfur content,

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plenty of moisture...

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Quite irregular in the geographical
sense, of irregular shape,

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it was quite difficult to hire
large machinery for this purpose.

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So, we talk about two
utterly different worlds.

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We are now talking about the need
to replace an industry that does not

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have a basis for high productivity
with something else that might have

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an assumption of being highly
productive and efficient.

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So, as you just mention in the
final part of your expostulation...

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What might be that alternative and
how would we achieve that

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assumption of high productivity,
given that in the coal department,

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it is quite low, especially
compared to the European Union?

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Well, that's right.

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You see, European Union, in general,
had and still has to a larger extent,

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quite a big coal industry, although
it never reached the level of

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productivity that was seen in
the USA, or Australia,

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South African Republic, countries
that are large coal exporters.

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In Great Britain, for instance,
coal phase out was implemented.

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It happened back in the 1980s,
with the presumption that this

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industry was no longer
internationally competitive.

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Beware, the best coal industry in
Europe back then was phased out,

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because it is not competitive
enough in international relations.

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We are not even close.

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We are lagging behind in productivity
compared to the Central European

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countries, such as Germany
and so on...

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It goes without saying that compared
to world prices and productivity,

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we are far behind them.
That cannot be changed.

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The resource is just like that.

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So, what might be an alternative?

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Probably, a lot of things.

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One dimension is energy efficiency.

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The second dimension
is actually biomass.

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The third dimension is, of course,
geothermal energy.

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This is an area with abundant
geothermal energy compared

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to the rest of Europe, competitive
with some international resources.

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Solar energy and wind are available
thanks to geographical circumstances.

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There is also hydropower, which
is convincingly above average

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when we have in mind
European circumstances.

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So, we have plenty of resources
on our disposal, and I had

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directed attention many times to the
fact that the transition to renewable

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energy is actually a transition,
that is, an increase in productivity

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and an opportunity for
economic growth.

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When you mentioned biomass and
geothermal energy, it is being rarely

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mentioned in this concept of
energy transition and coal phase out.

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The focus is on photovoltaic systems
such as solar panels or wind farms.

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What is the reason for that?
Why this is so neglected?

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Listen, the use of geothermal energy,
biomass and hydroenergy calls for

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major infrustructural interventions.
It requires a serious energy policy,

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it requires spatial planning, series
of serious moves in management,

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organizational planning, etc.
This isn't a simple procedure.

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Installing a small solar panel
is much much simpler,

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building a wind farm is much simpler
as it seemingly requires less

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intervention, so there's a difference
as to what is simple and what isn't.

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Of course, one can always
give up development...

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This is by far the simplest solution.

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In the sense of infrastructure,
progress is quite demanding.

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The work has to be done,
changes must take place,

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it requires organizational skills,
investing takes quite a long time.

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It simply calls for
a serious capital investment.

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So, if you have a problem with
political risk, if you have problem

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with insecurity of ownership,
with contract uncertainty,

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then access to larger amounts
of capital is not easy.

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The development as category
faces with a bunch of problems.

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On the other hand, the decline
is much more interesting.

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When you find yourself in the state
administration in a city, municipality,

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whatever, and if the deterioration
proceeds unhindered...

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You keep your job and...
-Not just that, there's a lot of

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interesting things. There is no
water, and something caught fire,

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the bridge collapsed,
there was a flood, etc.

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You always have a problem
that needs to be solved,

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so the citizens see that
you are doing your job.

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That is completely fine. From the
point of view of the management,

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decay is an incomparably more
interesting process than progress.

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This is quite simple.

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You've been busy, so to say.
-Along with a much nicer result.

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We could say than if we continue
to use coal, it will inevitably come

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not necessarily to
collapse, but to hindering

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and slowing down of
economic development.

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You wrote something along these
lines in your article published by

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Connecting the Region, where some ten
days to big collapse that took place

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on June 21, if I remember right,
you warned that this might happen.

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And it really happened. Can it happen
again and can it even deteriorate?

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Yes, I wrote that the breakdown of
the energy system will happen

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and that it will happen again.
Of course, it will reoccur.

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At this point, there's no reason
for something similar not to happen,

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possibly with different
geographical coverage.

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At this moment, the energy system
in the region no longer guarantees

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a secure supply of energy.
This is very vital signal.

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Pay attention to what directions
and turns that signal takes...

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First of all, this signal caused in
2022, right after that big trouble in

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Serbia with shortage of electricity,
that occured on December 12, 2021,

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we had a drastic increase
in the price of firewood.

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So, the population reacted to
the fact that the safe supply of

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electricity was not complete,
regardless of the fact that

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electricity company did an
outstanding job at that moment.

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So, we experienced a loss of six
large blocks at the same time,

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there was no collapse of
the energy system,

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nothing happened that left
anyone without electricity.

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On the contrary, all departments
reacted as expected, and so on.

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Nevertheless, the economic signal
that security of the energy system

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is no longer guaranteed
reached the market,

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and caused an increase in
the price of firewood there.

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Most interesting of all, the price
of firewood has not decreased

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up to the present day.
-It remained the same.

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In the second half of summer season,
we still have high prices of firewood.

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So, the signal is still there.

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In an article that was published
yesterday, it says that with this

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heat wave that demands high power
consumption for cooling can also

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lead to problems in
the supply of electricity.

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It is also possible.
There are several reasons.

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All in all, we no longer have
a guarantee of secure energy supply.

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That signal goes in the direction
of potential industry investors.

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Experience of previous years says,
and that's not small, 20-30 years,

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in a situation when there is no gas,
when there is no electricity,

227
00:20:06,400 --> 00:20:08,680
the first disconnection
is within the industry.

228
00:20:11,280 --> 00:20:16,600
A modern industrial system requires
a high degree of responsibility and

229
00:20:17,000 --> 00:20:21,720
reliability, security of deliveries,
respecting deadlines and so on.

230
00:20:23,200 --> 00:20:24,920
It is difficult for the industry
to do that.

231
00:20:25,400 --> 00:20:28,680
We have a signal in
existing power plants.

232
00:20:30,400 --> 00:20:33,040
Not a small number of
industries in the region

233
00:20:33,480 --> 00:20:36,680
are looking to somehow
solve their energy issue

234
00:20:37,400 --> 00:20:43,640
by applying their own solutions.
With solar panels or smaller

235
00:20:44,200 --> 00:20:51,480
cogeneration plants, or
the use of wind, and so on...

236
00:20:52,320 --> 00:20:57,840
Anyway, we see that industry
is trying to solve its problems,

237
00:20:59,360 --> 00:21:02,960
that might not be the most
efficient way to deal with this.

238
00:21:03,960 --> 00:21:09,520
Exactly. So, practically, coal usage
will cause new system breakdowns,

239
00:21:10,040 --> 00:21:13,200
which will cause an increase
in the price of energy resources,

240
00:21:13,800 --> 00:21:15,880
which is the most common
objection to the energy transition.

241
00:21:16,680 --> 00:21:19,680
When you mentioned the solution
for the entire industry,

242
00:21:20,480 --> 00:21:24,680
how can sufficient capital be
secured to provide for the system,

243
00:21:25,880 --> 00:21:28,160
where will the investments
come from?

244
00:21:28,520 --> 00:21:31,320
Is Serbia or the region itself
attractive for the investors?

245
00:21:31,680 --> 00:21:38,120
No, here we have the average cost
of capital for the Western Balkans,

246
00:21:38,640 --> 00:21:41,520
which is almost twice
the European average.

247
00:21:41,880 --> 00:21:47,520
So, interest and capital investment
is more expensive than elsewhere

248
00:21:48,400 --> 00:21:51,800
in Europe, regardless
of the reasons for that.

249
00:21:53,040 --> 00:21:56,200
And that leads to some consequences...
-It means that it is harder to invest.

250
00:21:58,520 --> 00:22:05,200
It somehow favors investments
that are cheaper,

251
00:22:06,480 --> 00:22:09,480
that have a lower level
of capital involvement,

252
00:22:12,200 --> 00:22:16,600
while these capital-intensive
investments face with a problem.

253
00:22:17,960 --> 00:22:23,240
That is evident in all aspects,
it is obvious in common households,

254
00:22:25,320 --> 00:22:27,640
which buy the cheapest
heating device,

255
00:22:30,840 --> 00:22:36,360
knowing that the efficiency
of that device is not the best.

256
00:22:39,280 --> 00:22:42,720
However, the basic
investment is lower.

257
00:22:44,480 --> 00:22:48,480
Second, if you put the household in
a situation where security of supply

258
00:22:49,080 --> 00:22:57,400
is not ideal, then it will have in
the same time firewood stove,

259
00:22:59,560 --> 00:23:05,600
electric stove, TA furnace,
heater, and so on...

260
00:23:06,240 --> 00:23:09,840
A single household will have a whole
series of different heating devices,

261
00:23:10,480 --> 00:23:12,360
and then they will also
buy an air conditioner,

262
00:23:12,880 --> 00:23:14,680
to use it for heating and cooling.

263
00:23:17,200 --> 00:23:21,880
When you have such a situation,
then it is very hard to say:

264
00:23:22,320 --> 00:23:25,760
All right, now I have a house,
I'm going to introduce serious

265
00:23:26,400 --> 00:23:29,040
air-condition system, let's say
with a serious heat pump, and

266
00:23:29,560 --> 00:23:35,600
solve the problem with one major
investment, efficiently and neatly.

267
00:23:36,720 --> 00:23:39,680
It doesn't happen often.

268
00:23:40,840 --> 00:23:46,120
The same goes for the industry,
it is the same in other aspects,

269
00:23:46,960 --> 00:23:49,520
finally, also on the level
of energy system.

270
00:23:50,840 --> 00:23:53,880
In the major energy industry,
you have important questions,

271
00:23:54,640 --> 00:23:56,920
such as economy of scale,
economy of standardization.

272
00:23:59,640 --> 00:24:04,720
Solutions for both aspects
require large amounts of capital.

273
00:24:06,000 --> 00:24:08,320
How can we attract those
large amounts of capital?

274
00:24:08,920 --> 00:24:11,960
You said that it is a negative trend,
but how to reduce the cost of capital?

275
00:24:13,360 --> 00:24:16,200
I'm going to reiterate again
what might seem a heresy.

276
00:24:18,920 --> 00:24:28,920
Former Yugoslavia and the history
of development on this terrain,

277
00:24:30,800 --> 00:24:35,440
show that we always needed
certain systemic endeavors,

278
00:24:37,800 --> 00:24:46,760
solutions where such a step forward
was made in international relations,

279
00:24:47,920 --> 00:24:51,720
which then enabled the engagement
of a large mass of capital.

280
00:24:52,720 --> 00:24:59,560
In 1947, one of the first projects
of Marshal's plan for Europe was

281
00:25:00,320 --> 00:25:02,800
hydropower in Yugoslavia.

282
00:25:04,320 --> 00:25:07,960
A large financial framework
that, in turn, made it possible

283
00:25:08,520 --> 00:25:11,000
to build large
hydropower plants.

284
00:25:12,120 --> 00:25:14,040
Without that,
it wouldn't be possible.

285
00:25:14,520 --> 00:25:17,360
So, state measures are necessary...
-Not only state measures.

286
00:25:17,720 --> 00:25:19,240
International arrangement.

287
00:25:21,480 --> 00:25:25,360
International arrangement took
place back in 1971 and 1976,

288
00:25:26,560 --> 00:25:32,000
which allowed investment
in the major mines,

289
00:25:32,840 --> 00:25:35,120
and large coal-fired
power plants.

290
00:25:37,200 --> 00:25:39,560
There was one international
arrangement that provided for

291
00:25:39,960 --> 00:25:42,480
the investment into
the field of industry.

292
00:25:44,120 --> 00:25:47,520
A large international arrangement
was our reconstruction of energy

293
00:25:48,120 --> 00:25:56,400
system, from 1999 to 2004.
It was an international arrangement.

294
00:25:57,520 --> 00:26:03,360
A framework that secured several
billions of dollars of investment to

295
00:26:03,960 --> 00:26:09,200
make the whole system operational.
-So, that's what we need.

296
00:26:09,560 --> 00:26:13,160
How many investments should come
from the private sector, Aleksandar?

297
00:26:13,720 --> 00:26:17,360
Is it a large majority, can this be
pushed through the public sector?

298
00:26:18,920 --> 00:26:23,480
I reiterate, we need a neat,
major financial framework.

299
00:26:24,840 --> 00:26:28,520
What it should include? It could
be composed of private investments,

300
00:26:29,120 --> 00:26:32,120
it may include the engagement
of domestic capital...

301
00:26:34,400 --> 00:26:37,520
There's one interesting question
which exists here all the time...

302
00:26:37,960 --> 00:26:40,840
We talk in length about energy
efficiency, we just mentioned

303
00:26:41,520 --> 00:26:45,360
the problem of energy efficiency
of a single household,

304
00:26:45,840 --> 00:26:52,080
we talk much about the renewable
energy sources, but on the other hand,

305
00:26:53,600 --> 00:27:00,760
12 billion euros is in savings of
the population, with low interest.

306
00:27:02,520 --> 00:27:10,520
There's a logical question: why don't
we use part of that funds to invest

307
00:27:11,280 --> 00:27:14,680
into energy efficiency,
improving home efficiency,

308
00:27:15,040 --> 00:27:17,440
improving efficiency of the
buildings and apartments,

309
00:27:18,120 --> 00:27:21,200
providing a solar panel, or a heat
pump, or something like that.

310
00:27:22,040 --> 00:27:25,760
We didn't. So, it is obvious that
it's some systemic reason...

311
00:27:27,440 --> 00:27:30,280
So, it's not a matter of mentality
but a systemic reason for that?

312
00:27:31,880 --> 00:27:35,640
Absolutely, that's right. And that
systemic reason is not specific

313
00:27:36,400 --> 00:27:39,680
only in Serbia, it appeared
everywhere, throughout the region.

314
00:27:40,320 --> 00:27:43,760
It exists in Montenegro, in Kosovo,
it exists in Bosnia-Herzegovina...

315
00:27:44,920 --> 00:27:47,240
Including North Macedonia,
so it's present everywhere.

316
00:27:48,760 --> 00:27:54,800
So, the problem really exists.

317
00:27:57,440 --> 00:28:04,200
You don't have serious projects like
green bonds, project bonds and so on,

318
00:28:04,720 --> 00:28:08,840
where domestic savings
could be engaged.

319
00:28:10,280 --> 00:28:14,480
Whether international capital market
of green bonds and green loans in

320
00:28:15,120 --> 00:28:18,440
banks, which are now a new
trend in the financial sector,

321
00:28:18,920 --> 00:28:21,560
where it is often said that they, in
a certain sense are pushing energy

322
00:28:21,920 --> 00:28:24,680
transition on a global level,
is this perhaps an opportunity for

323
00:28:25,120 --> 00:28:27,240
domestic companies and domestic
investments from private sector,

324
00:28:27,600 --> 00:28:29,520
or do you think
it is still far away?

325
00:28:30,480 --> 00:28:36,320
It probably is, but only in the
context of financial framework.

326
00:28:39,120 --> 00:28:41,520
What comes up, and that's
what I wrote about,

327
00:28:43,120 --> 00:28:46,080
when you see what happens
in the Central Europe,

328
00:28:46,720 --> 00:28:50,080
you realize that over there
the use of financial framework

329
00:28:51,360 --> 00:28:58,600
from the context of EU market
of carbon loans, or EU ETS,

330
00:28:59,200 --> 00:29:03,400
EU Emissions Trading System,
this financial framework is dominant.

331
00:29:06,240 --> 00:29:11,000
At this point of time this is so,
with some tens of billions of euros,

332
00:29:12,600 --> 00:29:18,840
the countries of Central Europe
actually use this financial framework

333
00:29:19,280 --> 00:29:22,240
for the investments into
renewable energy, etc.

334
00:29:27,520 --> 00:29:31,880
Thank you, Aleksandar. You can
briefly touch upon the carbon loans.

335
00:29:35,840 --> 00:29:41,600
Well, first of all, EU ETS
market is quite extensive,

336
00:29:43,600 --> 00:29:46,360
in tens or hundreds
of billions of euros...

337
00:29:50,440 --> 00:29:55,080
If you get a chance that EU
Commission provides you with

338
00:29:55,720 --> 00:30:01,160
free allocation of carbon loan,
you can sell it on that market,

339
00:30:04,120 --> 00:30:08,040
you can sell it instantly,
you can sell it in advance,

340
00:30:09,960 --> 00:30:14,480
as soon as the price is
determined by the market

341
00:30:15,640 --> 00:30:18,960
you got a collateral that could
be used for the investments.

342
00:30:20,760 --> 00:30:28,160
This is a big step, or could
be a big step for this region.

343
00:30:29,480 --> 00:30:32,080
So, essentially...
Sorry for interrupting you...

344
00:30:32,600 --> 00:30:36,840
Essentially, carbon loan is granted
for one ton of emissions and

345
00:30:37,400 --> 00:30:40,120
based on its offer,
market price is regulated.

346
00:30:40,720 --> 00:30:45,400
Free allocation is to be granted loan
without buying it on the market or on

347
00:30:45,760 --> 00:30:51,400
auctions, and if certain company,
let's say, electric power industry,

348
00:30:52,200 --> 00:30:54,480
saves some of it,
or does not emit this ton...

349
00:30:54,920 --> 00:30:56,800
If it decreases or disrupts the
emission, then it can sell what

350
00:30:57,160 --> 00:30:59,440
it managed to save.
This is a big step...

351
00:31:00,880 --> 00:31:03,800
But you must understand that
this is a kind of state assistance,

352
00:31:04,680 --> 00:31:08,600
and it is essential that it has
several important features:

353
00:31:09,200 --> 00:31:11,840
that it has a purpose, that
it can be used properly,

354
00:31:13,160 --> 00:31:17,520
to have a greater ambition,
in terms of reducing CO2,

355
00:31:18,200 --> 00:31:21,560
than it is presented in official
documents at this point in time.

356
00:31:22,920 --> 00:31:29,640
Of course, you must have the
appropriate economy and profitability

357
00:31:30,560 --> 00:31:32,840
so that it could make
sense altogether...

358
00:31:33,720 --> 00:31:36,200
This is the general direction...

359
00:31:39,640 --> 00:31:44,840
Then again, a large infrastructural
undertaking requires a certain degree

360
00:31:45,600 --> 00:31:51,600
of energy policy that enables it.
Certain degree of coordination,

361
00:31:53,400 --> 00:31:59,320
spatial plans, property rights,
energy policy, and so on...

362
00:31:59,960 --> 00:32:02,560
Simply, neat and organized system
with an international framework...

363
00:32:04,400 --> 00:32:10,200
I wouldn't go so far, you know...
Economics doesn't recognize

364
00:32:11,600 --> 00:32:13,520
ideally arranged systems.
-Of course, nothing is perfect.

365
00:32:14,600 --> 00:32:20,920
But it knows the will to develop.
This is of utmost importance.

366
00:32:22,560 --> 00:32:30,560
And it requires one step forward.
The prize for doing that is amazing.

367
00:32:34,040 --> 00:32:41,760
You see... If you are in a position
at this point in time... Let's see...

368
00:32:43,880 --> 00:32:51,320
All sources of renewable energy,
new ones, such as wind, sun,

369
00:32:52,920 --> 00:32:56,120
they make up a small
part of the energy balance.

370
00:32:56,960 --> 00:32:58,040
Below 2 percent.

371
00:32:58,720 --> 00:33:01,800
Firewood accounts for 16 percent
of the energy balance,

372
00:33:02,360 --> 00:33:04,600
the same goes for other
Western Balkan coutries.

373
00:33:07,400 --> 00:33:09,000
Hydropower is beyond that.

374
00:33:13,120 --> 00:33:19,320
This 16 percent of biomass was
used with extremely low efficiency,

375
00:33:21,280 --> 00:33:27,920
Equivalent efficiency is negligibly
low, below 10 percent...

376
00:33:28,640 --> 00:33:34,520
Compared to what can be done.
You can automatically dramatically

377
00:33:35,080 --> 00:33:38,960
increase productivity and
efficiency of this resource.

378
00:33:40,720 --> 00:33:48,800
Some cities present good example.
Let's say... whatever city you want.

379
00:33:50,400 --> 00:33:53,120
I have done research on
several cities in the region.

380
00:33:54,280 --> 00:33:58,000
So, the city has some district
heating, part of the city is covered

381
00:33:58,320 --> 00:34:01,000
with it, another part of the
city is heated with firewood.

382
00:34:01,920 --> 00:34:05,240
You see how much firewood that is,
and you realize that with that mass

383
00:34:05,840 --> 00:34:11,440
the whole city could be heated,
and create surplus of electric energy.

384
00:34:12,840 --> 00:34:14,440
This is such a huge step.

385
00:34:15,560 --> 00:34:17,920
You don't spend more
than you have so far,

386
00:34:18,200 --> 00:34:20,480
but you're getting
many times greater result.

387
00:34:21,160 --> 00:34:24,320
Energy efficiency is one of
the most important steps...

388
00:34:24,960 --> 00:34:29,120
Exactly, but this is systemic energy
efficiency, which is not connected

389
00:34:29,680 --> 00:34:34,880
to a single object, it is happening
at the level of the energy system.

390
00:34:36,520 --> 00:34:40,400
I would like, Aleksandar,
to talk about businesses.

391
00:34:41,200 --> 00:34:44,320
When we talk about phase out or
energy transition, this is always

392
00:34:45,120 --> 00:34:49,480
one of the major issues, apart from
the high cost, how many jobs are

393
00:34:50,000 --> 00:34:52,840
are threatened in the Western
Balkans by this energy transition

394
00:34:53,960 --> 00:34:56,080
and with the coal phase-out,
directly or indirectly?

395
00:34:56,480 --> 00:34:58,120
I look at this from a different
perspective.

396
00:34:58,720 --> 00:35:01,600
If you have a mine,
it doesn't matter which one,

397
00:35:03,000 --> 00:35:04,160
the situation is similar.

398
00:35:07,160 --> 00:35:13,680
And you set as target that the
mine has productivity similar to

399
00:35:14,800 --> 00:35:16,320
the mine in Central Europe.

400
00:35:17,000 --> 00:35:19,360
On an international scale,
it is not spectacular...

401
00:35:21,240 --> 00:35:27,480
I will replace mining technology,
I will lead mine in good direction,

402
00:35:29,160 --> 00:35:34,320
and I will try to make as
cheap a product as possible.

403
00:35:36,920 --> 00:35:39,160
90 percent of employees
ends up jobless.

404
00:35:42,160 --> 00:35:46,400
A high productivity mine, this
quantity of tailings and coal

405
00:35:47,720 --> 00:35:51,760
can dig by using 10 percent of
manpower compared to that moment.

406
00:35:53,080 --> 00:35:56,480
This was done, we had similar
situations throughout the region.

407
00:35:58,560 --> 00:36:02,880
Without major problems, number of
employees was drastically reduced.

408
00:36:04,840 --> 00:36:07,240
It was increased again later,
but that is not the point now.

409
00:36:08,520 --> 00:36:11,320
This is one situation.

410
00:36:12,120 --> 00:36:17,840
Another situation: what happens when
those people start another job?

411
00:36:19,280 --> 00:36:22,080
If they take up the business involving
biomass, geothermal energy,

412
00:36:22,360 --> 00:36:23,800
hydroenergy and so on...

413
00:36:25,480 --> 00:36:28,800
The same thing happens.
10 percent of manpower

414
00:36:29,360 --> 00:36:32,440
remains in the mine, there's
work to be done regarding

415
00:36:32,880 --> 00:36:38,440
reorganization of that area,
but another 90 percent can

416
00:36:39,520 --> 00:36:45,560
get a qualified good job.
-Do they need to do something?

417
00:36:46,520 --> 00:36:49,600
Do they need additional qualification,
retraining, is it possible to do that?

418
00:36:49,960 --> 00:36:58,560
This is intensive, to certain extent,
but we should perceive it differently.

419
00:37:03,160 --> 00:37:05,960
As we've seen in some of the
countries of Central Europe,

420
00:37:07,520 --> 00:37:14,560
very often so-called 'just transition'
performed by European Commission,

421
00:37:16,200 --> 00:37:21,720
means that people lose jobs,
looking for other solutions for them

422
00:37:22,360 --> 00:37:24,360
in the form of small and
medium-sized companies,

423
00:37:24,640 --> 00:37:26,160
re-training programs, etc.

424
00:37:27,280 --> 00:37:32,360
Watch out, a disciplined large
industrial organization is being lost.

425
00:37:33,960 --> 00:37:36,840
We cannot afford such luxury.

426
00:37:38,040 --> 00:37:42,680
The organization that is existent,
large companies with thousands

427
00:37:43,120 --> 00:37:49,440
of employees, there's lots of work in
infrastructural equipment of biomass,

428
00:37:50,240 --> 00:37:54,960
in infrastructural equipment of
biothermal energy, hydroenergy...

429
00:37:57,200 --> 00:38:04,840
This calls for serious organization,
so we should not easily allow

430
00:38:05,400 --> 00:38:15,120
a disciplined, industrial
organization to fall apart like that.

431
00:38:16,240 --> 00:38:20,080
It can be improved, it can reach
a higher level of productivity and

432
00:38:20,640 --> 00:38:29,440
efficiency, and it can surely be
an engine of development for

433
00:38:30,040 --> 00:38:33,320
the countries in the Balkans.
-This is rather interesting.

434
00:38:33,960 --> 00:38:38,080
So, in general, along with big
infrastructural projects and

435
00:38:38,440 --> 00:38:41,520
investments, and with retraining
of manpower, we have a chance

436
00:38:42,080 --> 00:38:47,520
to re-employ them, and to achieve
economic development at that level

437
00:38:47,800 --> 00:38:50,080
and simply to replace coal with
some other energy sources.

438
00:38:52,040 --> 00:38:55,360
I would say this: let's employ
those people purposefully,

439
00:38:56,560 --> 00:38:59,560
taking a modern approach
to the territory.

440
00:39:04,480 --> 00:39:08,280
This is very demanding, in terms
of technical and technological

441
00:39:08,760 --> 00:39:11,240
and organizational perspective.

442
00:39:13,080 --> 00:39:15,680
Starting from computer models,
drones, land analysis,

443
00:39:16,640 --> 00:39:19,640
use of territories,
in one way or another,

444
00:39:20,040 --> 00:39:23,320
along with design, planning,
construction of infrastructure,

445
00:39:24,640 --> 00:39:30,520
those are works that are
technologically demanding,

446
00:39:32,160 --> 00:39:36,520
the same or more, let's say,
than lignite mining now.

447
00:39:39,680 --> 00:39:48,600
There's a good term in English:
upskilling, improvement of skills,

448
00:39:49,960 --> 00:39:55,360
but also improving the skills
of industrial organization.

449
00:39:58,160 --> 00:40:01,600
So, I would mind if industrial
organization is being destroyed,

450
00:40:03,200 --> 00:40:07,600
leading to the production of smaller
organizations, that's not the way.

451
00:40:08,920 --> 00:40:15,760
Big corporation has its advantages,
and you cannot make it easily.

452
00:40:16,280 --> 00:40:21,880
You cannot destroy one organization
in order to make similar smaller ones.

453
00:40:23,520 --> 00:40:28,360
So, just transition in the region is
possible, but not in a way it is

454
00:40:29,120 --> 00:40:32,360
done in the EU,
but in some other ways.

455
00:40:33,400 --> 00:40:37,600
That's right, European Union
has many differencies, first of all,

456
00:40:38,160 --> 00:40:42,760
such high concentration of hydropower
doesn't exist anywhere in Europe.

457
00:40:43,560 --> 00:40:46,240
It also goes for hydro-thermal
resources.

458
00:40:48,200 --> 00:40:53,520
There is no combination of those
circumstances anywhere,

459
00:40:54,840 --> 00:41:00,120
nor such a high level of yield
in biomass production,

460
00:41:02,160 --> 00:41:04,920
and of course, cross-connections
between all those sectors.

461
00:41:06,360 --> 00:41:09,560
The Balkan region is
a reservoir of biodiversity,

462
00:41:10,600 --> 00:41:13,680
on a European scale,
that should not be forgotten.

463
00:41:14,520 --> 00:41:17,320
In other words, the regulation
of the territory requires serious

464
00:41:18,120 --> 00:41:28,360
interventions, compared to the level
of biodiversity, and productivity that

465
00:41:29,400 --> 00:41:36,160
this territory offers, we have
unusually few protected areas.

466
00:41:40,760 --> 00:41:44,680
Finally, the question
of hydroenergy...

467
00:41:45,440 --> 00:41:48,040
We are talking about the construction
of hydropower plants in Serbia and

468
00:41:48,520 --> 00:41:51,800
Bosnia-Herzegovina, in Montenegro,
new hydropower plants are mentioned.

469
00:41:55,040 --> 00:41:59,960
It is always about large objects,
and it is always about the fact that

470
00:42:01,000 --> 00:42:06,120
they, first with their size, and then
with their economic capabilities,

471
00:42:07,440 --> 00:42:10,680
surpass the size of the countries
where they are located.

472
00:42:12,160 --> 00:42:15,880
It means that again we are talking
about some kind of framework

473
00:42:17,680 --> 00:42:20,600
involving European Union,
so we need an agreement

474
00:42:21,280 --> 00:42:24,240
on how we will trade electricity
with the European Union.

475
00:42:25,480 --> 00:42:27,760
As we are nearing the end of
this episode, maybe we could

476
00:42:28,400 --> 00:42:31,800
just touch upon the issue of
digging lithium in the Republic

477
00:42:32,600 --> 00:42:37,080
of Serbia. So, do you think that
it is possible to perform energy

478
00:42:37,640 --> 00:42:40,440
transition without this resource,
and whether we have energy

479
00:42:41,560 --> 00:42:45,600
enough to open up this mine?

480
00:42:50,600 --> 00:42:54,200
Listen, Balkan is rich in
diverse mineral resources

481
00:42:56,520 --> 00:43:01,040
such as copper, aluminum,
lithium, among others,

482
00:43:01,440 --> 00:43:03,600
chrome, ferronickel,
and other ones...

483
00:43:04,880 --> 00:43:10,320
All of these resources call for
major quantity of electricity,

484
00:43:12,160 --> 00:43:19,280
in order to be processed,
followed by lots of energy

485
00:43:19,680 --> 00:43:22,640
for some purposeful use.
If you are going to produce

486
00:43:23,360 --> 00:43:26,080
something, such as batteries,
cars, no matter what.

487
00:43:30,800 --> 00:43:36,000
We witness that the production
of aluminum has practically died.

488
00:43:38,520 --> 00:43:41,680
There is no electriticy
for this kind of purpose.

489
00:43:42,200 --> 00:43:46,320
We have witnessed that copper
production is maintained with

490
00:43:47,480 --> 00:43:53,280
a lot of effort and it's not able to
pay commercial price of electricity.

491
00:43:58,400 --> 00:44:04,520
In whatever direction one thinks,
it again requires a macro solution.

492
00:44:05,840 --> 00:44:09,880
Both spatially and traffic-wise,
and in terms of energy efficiency,

493
00:44:10,440 --> 00:44:18,400
cost productivity and so on.
You can always give it a try

494
00:44:20,160 --> 00:44:26,200
to outsource the problem
of energy security,

495
00:44:26,760 --> 00:44:30,560
to contract it with someone else.
You say that you have some great

496
00:44:31,120 --> 00:44:34,320
friends that will deliver to us
it doesn't matter what exactly.

497
00:44:34,720 --> 00:44:37,960
Coal, oil, gas, it doesn't matter.
That won't happen.

498
00:44:41,560 --> 00:44:46,280
Energy security must be ensured
first of all with domestic resources,

499
00:44:47,400 --> 00:44:52,080
then energy trade should help to
use that resource more efficiently.

500
00:44:53,280 --> 00:44:56,920
You cannot give up the use
of domestic resources

501
00:44:57,640 --> 00:45:00,320
and hope for economic
growth in the same time.

502
00:45:02,680 --> 00:45:06,120
As we are going to wrap up this
episode, I wonder if you have

503
00:45:06,680 --> 00:45:09,800
something to share with our
audience, summarizing all

504
00:45:10,840 --> 00:45:14,000
that we've discussed today,
with the focus on the last sentence,

505
00:45:14,360 --> 00:45:17,560
do we have enough natural resources
and renewable ones, renewable

506
00:45:18,040 --> 00:45:21,840
sources of energy in order to replace
coal, ensuring economic development?

507
00:45:23,480 --> 00:45:29,040
Well, yes, of course, entire region
has above-average quality resources

508
00:45:29,720 --> 00:45:32,760
compared to the rest of Europe.
So, yes, by all means...

509
00:45:34,680 --> 00:45:41,000
A new development context can
be provided quite efficiently here,

510
00:45:42,520 --> 00:45:47,080
which would then enable everything
else, in terms of energy use,

511
00:45:49,240 --> 00:45:52,680
whether in the mineral industries,
whether in the wood industry,

512
00:45:53,600 --> 00:45:58,400
whether in the production of
any other industrial product,

513
00:45:59,120 --> 00:46:03,200
or in something that today
is very energy demanding.

514
00:46:04,320 --> 00:46:12,080
So, if you want an IT industry,
which cannot be imagined without

515
00:46:13,000 --> 00:46:19,720
large computer centers, which are
today large energy consumers...

516
00:46:21,680 --> 00:46:26,520
So, we have all preconditions,
I have even mentioned on several

517
00:46:28,000 --> 00:46:36,880
occasions that this is an area which
has a high competitive advantage

518
00:46:37,920 --> 00:46:40,800
for computer center compared to the
rest of Europe, for various reasons.

519
00:46:42,080 --> 00:46:49,160
We can say that coal phase out in this
region can lead to economic progress.

520
00:46:50,760 --> 00:46:55,640
Coal has already been practically
abandoned by natural circumstances,

521
00:46:56,680 --> 00:47:00,760
the facilities are old,
almost obsolete,

522
00:47:03,640 --> 00:47:07,280
a good part of the mine
is practically outdated.

523
00:47:08,440 --> 00:47:13,600
There are certain combined facilities,
meaning pretty good mine, accompanied

524
00:47:14,160 --> 00:47:19,240
by a really bad facilities, or a bad
mine, with a relatively good facility,

525
00:47:21,640 --> 00:47:27,480
but you don't have good mine
and good electric power plant.

526
00:47:29,080 --> 00:47:31,000
We don't have that
in the region.

527
00:47:32,680 --> 00:47:35,800
So, we can say that we are in
the natural process and that

528
00:47:36,320 --> 00:47:40,560
it is a necessity...
-Yes, but that results in

529
00:47:41,680 --> 00:47:43,800
a huge problem of
energy security.

530
00:47:45,680 --> 00:47:51,400
We have to face a very big
problem of energy security.

531
00:47:52,640 --> 00:47:54,760
Thank you, Aleksandar,
we finish today's episode.

532
00:47:55,200 --> 00:47:56,920
I am glad that I hosted you
in this episode.

533
00:47:57,480 --> 00:47:59,560
I'm looking forward to seeing you
on some forthcoming occasion.

534
00:48:10,320 --> 00:48:11,320
Produced by
New Magazine

535
00:48:11,760 --> 00:48:12,880
Supported by Open Society
Foundation for Western Balkans