Western Balkans coal plants continue to breach pollution limits despite legal deadlines, report says

Coal-fired power plants across the Western Balkans emitted sulphur dioxide at more than six times legal limits in 2025, with dust pollution reaching its worst level since current emissions rules came into force eight years ago, according to a report published on June 23 by environmental watchdog Bankwatch.

The report, the latest edition of Bankwatch’s annual Comply or Close assessment, said ageing coal plants in Bosnia & Herzegovina, Kosovo, North Macedonia and Serbia continued to violate pollution ceilings agreed under the Energy Community Treaty, despite years of warnings and multiple legal proceedings.

Bankwatch said sulphur dioxide (SO2) emissions from plants covered by National Emissions Reduction Plans (NERPs) were collectively 6.6 times higher than permitted in 2025, marking the highest relative breach since pollution controls took effect in 2018.

Nitrogen oxides (NOx) emissions also remained above legal limits, while dust pollution surged sharply, reaching 2.9 times the permitted ceiling, up from 1.9 times in 2024.

The findings highlight the continued environmental and public health cost of the region’s dependence on coal, even as economic pressure from the European Union’s carbon policies and ageing infrastructure increasingly undermine coal’s commercial viability.

“The pollution levels eight years after the deadline for implementing the Large Combustion Plants Directive remain appalling,” the report said.

Bosnia recorded the highest SO2 emissions in the region for the second consecutive year, with its coal plants releasing 196,940 tonnes, or 12.7 times the national limit. Serbia followed with 177,756 tonnes, equivalent to 5.1 times its legal ceiling.

The single biggest polluter in the region remained the Ugljevik coal plant in Bosnia, which emitted 115,079 tonnes of sulphur dioxide, its highest level since the current rules began. The plant’s continued pollution is especially striking because it already has desulphurisation equipment installed, raising questions over why emissions remain so high, the report said.

Bankwatch said the plant operator had admitted the desulphurisation system was not functioning properly because it represented an economic burden, casting doubt over whether the expensive retrofit would ever be fully used.

“Ugljevik’s SO2 emissions have been increasing since 2022,” the report noted, despite an €85mn pollution-control investment.

Five coal units exceeded their individual sulphur dioxide ceilings by more than tenfold in 2025, according to the report. These included the Bitola B1 and B2 units and Bitola B3 in North Macedonia, along with Ugljevik, Gacko and Kakanj 6 in Bosnia.

Dust pollution, meanwhile, worsened significantly, driven largely by the Bitola plant in North Macedonia. Bankwatch said dust emissions from North Macedonia more than doubled compared with 2024. Bitola’s units emitted a combined 7,675 tonnes of dust, exceeding the total dust ceiling allowed for all four Western Balkan countries combined.

The report said the plant “single-handedly exceeded the sum of NERP ceilings for dust of all four countries.”

Bosnia’s Gacko plant remained the worst performer relative to its legal dust limit, emitting 15.1 times the allowed level despite a slight year-on-year decline.

NOx emissions also continued to exceed legal thresholds. Total emissions from covered coal plants were 1.4 times above permitted levels, unchanged from 2024.

Serbia’s Nikola Tesla B plant produced the highest absolute NOx emissions at 11,247 tonnes, while Kosovo’s Kosova A remained the worst relative emitter.

Beyond pollution from plants covered under emissions reduction plans, the report also highlighted continued illegal operation of several older coal units that were supposed to shut down under “opt-out” derogations. These exemptions allowed older plants to operate for a limited number of hours before mandatory closure. The deadline expired at the end of 2023. Yet plants in Bosnia, Montenegro and Serbia continued operating throughout 2025.

Montenegro’s Pljevlja plant, which has undergone a controversial retrofit, remains under scrutiny. “Montenegro’s Pljevlja plant has been operating illegally since late 2020,” Bankwatch said, adding that no clear evidence exists that the retrofit has brought the plant into compliance.

Coal units Tuzla 4, Kakanj 5, Morava, and Kolubara A are also still operating more than two years after their closure deadline.

The Energy Community Secretariat has opened multiple infringement cases against the countries involved. However, Bankwatch said national authorities have failed to impose penalties. “Eight years after the Large Combustion Plants Directive compliance deadline passed in the Energy Community, national authorities have not fined a single plant operator for these breaches,” the report said.

Environmental campaigners say the lack of enforcement reflects broader governance failures. Davor Pehchevski, Balkan energy coordinator at Bankwatch, said governments were tolerating pollution while failing to prepare communities for the inevitable decline of coal.

“In some Western Balkan countries we now have the worst of both worlds: a decline in coal-fired electricity generation without a clear plan to mitigate the socio-economic fallout, combined with high — and in some cases even worsening — pollution levels,” he said.

“Instead of enforcing pollution control safeguards, governments are turning a blind eye. This goes far beyond human health and the environment, right to the heart of fundamental principles such as equality before the law.”

Coal has long been promoted by governments in the region as a source of energy security, but Bankwatch argues that narrative no longer matches reality. The average age of coal power units in the Western Balkans is now 49 years, with outages becoming increasingly common. 

Coal supply constraints have also worsened. Serbia and North Macedonia have increasingly relied on imports to compensate for domestic shortages, while Bosnia and Herzegovina has also struggled with supply issues. As a result, coal-based electricity generation has been declining in several countries even without formal plant closures.

At the same time, the European Union’s Carbon Border Adjustment Mechanism (CBAM), whose definitive phase began in January 2026, is raising the cost of electricity exports to EU markets. The mechanism imposes carbon-related charges on imports including electricity, making high-emission generation less competitive.

Bankwatch said CBAM is likely to further erode the profitability of coal generation, particularly for utilities that rely on exports to offset domestic inefficiencies.

According to the Energy Community Secretariat, electricity exports across borders with EU member states fell by 25% in the first quarter of 2026, even amid favourable hydropower conditions.

Despite mounting pressure on coal, campaigners warned governments risk replacing one fossil dependency with another. Bankwatch criticised growing interest in gas infrastructure across the region, saying it could divert investment from cleaner alternatives such as wind, solar, geothermal energy and heat pumps.

Ioana Ciută, strategic area leader for Beyond Fossil Fuels at Bankwatch, said the European Union must also apply stronger pressure.

“Although the Western Balkan governments clearly bear the main responsibility, the EU institutions need to step up as well, conditioning EU financing and accession progress on compliance; sending clear, public messages; and securing financing for a just transition of coal regions and a switch to sustainable heating,” she said.

“Stronger enforcement tools are also needed in the Energy Community Treaty, to protect human health and the environment, including dissuasive penalties for breaches.”

Bankwatch warned that without credible transition planning, the region faces the risk of an unmanaged collapse of coal generation rather than an orderly phase-out. “There is now a serious danger of an uncontrolled coal phase-out, with unnecessarily harsh impacts on coal-dependent communities that could have been avoided by proper planning,” the report said.

The group urged governments to use upcoming updates to their long-term climate strategies and energy plans to establish realistic closure timelines and transition measures.

For many plants, Bankwatch argued, the window for costly retrofits has effectively closed. “Now it is too late to initiate costly projects like desulphurisation as they will not be feasible,” the report said. “The only real choice for many plants now is between controlled, gradual closure or collapse.”