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What Does the New Law on Energy Efficiency and Rational Use of Energy Bring?

What Does the New Law on Energy Efficiency and Rational Use of Energy Bring?

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In April 2021, the National Assembly of the Republic of Serbia passed a set of new laws in the field of mining and energy, including the new Law on Energy Efficiency and Rational Use of Energy (hereinafter “the Law”), which entered into force on April 30, 2021.

With this Law, the Republic of Serbia harmonizes its regulations in the field of energy with the new EU directives in this sector. The Law is the starting point for further directing the public authorities, the economic sector, but also the population, to raise awareness of the importance of efficient and rational use of energy, by which the Republic of Serbia seeks to approach the results of EU countries when it comes to energy efficiency and reduction of harmful effects from this sector on climate change and the environment.

The Law aims to create conditions for efficient use of energy and improvement of energy efficiency, which will contribute to energy savings and security of supply, reduce the impact of the energy sector on the environment and climate change, sustainable use of natural and other resources, increase economic competitiveness, improve conditions for economic development and reducing energy poverty.

The Republic of Serbia has recognized the problem in the manner of energy use, which is spread on all levels, from public authorities to individual households. The consequences of the current state are primarily related to large, irreversible energy losses, which occur due to poor (obsolete) construction and technical solutions on existing facilities, but also due to the use of inefficient sources. In addition to energy waste, the consequences are a greater burden on the energy sector in production, high monetary costs and losses, but also a greater harmful impact on the environment, which has a significant negative impact on adverse climate change. 

The Law aims to improve the state in the energy sector, regulating the conditions and manner of efficient use of energy and energy sources, energy efficiency policy, introduces an energy management system, prescribes energy efficiency policy measures, regulates financing, incentives, and other measures in this area, i.e. other questions related to efficient use of energy.

The Law establishes a system of energy management, which represents a system of organized energy management, and includes the broadest set of measures and activities and a system of organized monitoring and analysis of energy activities and energy consumption.

The obligors of the energy management system will be determined on the basis of the criteria prescribed by the Government. At this moment, it is known that the obligors of the system will be companies and public companies from the production, trade and services sectors, in case they exceed the annual energy consumption higher than the quantity that will be prescribed. In addition, the obligors will be local self-government units and city municipalities with more than 20,000 inhabitants, as well as public authorities.

To the payers of the system, the Law imposes a number of obligations related to the monitoring analysis of energy consumption, bringing various planning, internal acts, and the obligation of appointing energy managers, as specially licenced experts. For non-compliance with future obligations, offences with fines are prescribed.

For the purpose of elaboration and implementation of the Law, a number of bylaws, rulebooks and regulations are expected to be adopted, while special attention will be paid to strategies, programs and plans, which will precisely determine the energy efficiency policy. The deadline for the adoption of bylaws is 18 months from the date the Law entered into force. 

This Law envisages the founding of the Administration for Financing and Encouragement of Energy Efficiency within the Ministry, instead of the, so far, Budget’s Fund for Improving Energy Efficiency. According to the Law, the Administration will start its operations no later than 12 months from the date the Law entered into force, while the Government’s plan is to be formed by June 2021.

The Administration has been entrusted with a number of tasks related to the financing of efficient use of energy and the implementation of energy efficiency measures. Public attention is particularly focused on various forms of financing and incentives (subsidies) for energy efficiency improvement.

Based on public invitations, legal entities and individuals from the Republic of Serbia will be able to use subsidies, among others, for installation of efficient biomass and gas boilers, isolation systems and carpentry. The participation of citizens in these activities shall be 50 percent, while the rest of the amount shall be financed by the Government and local self-government units. The bylaw necessary for the implementation of subsidies will be adopted within 6 months from the date when the Administration begins to work.

The Law pays special attention to the regulation of energy labelling and sets requirements for eco-design, which refers to the way of labelling devices that can be found on the market, and which affect energy consumption, therefore, it here also opens the possibility for other incentives and ease to the economy.

By Nemanja Aleksic, Founding Partner, Aleksic & Associates