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Roadmap for the Transition of the Western Macedonia Region to a Post-Lignite Era

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Roadmap for the Transition of the Western Macedonia Region to a Post-Lignite Era ECONOMIC & TECHNICAL ASSESSMENT JULY 2016 ROADMAP FOR THE TRANSITION OF THE WESTERN MACEDONIA REGION TO A POST-LIGNITE ERA ROADMAP FOR THE TRANSITION OF THE WESTERN MACEDONIA REGION TO A POST-LIGNITE ERA Prepared by: Antonis Rovolis, Associate Professor, Panteion University of Athens, Department of Economic and Regional Development Panagiotis Kalimeris, Institute of Urban Environment and Human Resources (IUEHR), Panteion University of Athens, International Hellenic University, School of Economics, Business Administration and Legal Studies Editing: Michalis Prodromou and Nikos Mantzaris, WWF Greece http://www.youtube.com/wwfgrwebtv http://www.facebook.com/WWFGreece http://twitter.com/WWF_Greece Contents ACKNOWLEDGEMENTS ................................................................................................................... 3 SUMMARY ...................................................................................................................................... 4 1. AIM OF THE REPORT ................................................................................................................... 7 2. LIGNITE IN THE PAST, PRESENT AND FUTURE ............................................................................. 9 2.1. What is lignite? .................................................................................................................. 9 2.3. The role of lignite in today's energy model ..................................................................... 11 3. THE WESTERN MACEDONIA REGION ....................................................................................... 18 3.1. Geographical characteristics ........................................................................................... 18 3.2. Population composition .................................................................................................. 18 3.3. Economic activities ..........................................................................................................19 3.4. Employment .................................................................................................................... 22 4. BEST PRACTICES - INTERNATIONAL EXPERIENCE ..................................................................... 26 4.1. Introduction ..................................................................................................................... 26 4.2. Theoretical approaches and guidance documents ......................................................... 27 4.3. International best practices in mine restoration and post-lignite transitions. ............. 31 4.4. International best practices in mine restoration and post-lignite transitions. ................ 33 5. RECOMMENDATIONS OF BODIES FOR THE TRANSITION OF THE WESTERN MACEDONIA REGION TO A POST-LIGNITE ERA ................................................................................................................ 37 5.1. Regional economic-development planning of W. Macedonia - Regional Operation Programme 2014-2010 .......................................................................................................... 37 5.2. PPC's lack of long-term planning for WMR ................................................................... 37 5.3. ANKO: Operational Development Plan for the Post-Lignite Era .................................. 39 5.4. The contribution of TCG, Department of Western Macedonia ..................................... 40 5.5. The report by Greenpeace Greece ................................................................................... 41 5.6. The proposal of Kozani's Ecological Group ................................................................... 42 5.7. European experiences and the Ptolemaida energy basin in the Kozani Regional Unit 42 5.8. Workshops on the transition to a post-lignite era ......................................................... 43 5.9. Conclusions ..................................................................................................................... 45 6. ALTERNATIVE ECONOMIC ACTIVITIES - SCENARIOS .................................................................. 47 6.1. "Inaction" Scenario ............................................................................................................. 48 6.2. "Ptolemaida V" Scenario .................................................................................................... 48 6.3. "Ptolemaida V and Meliti II" Scenario ............................................................................... 49 6.4. Alternative Activities Scenarios ......................................................................................... 49 6.4.1. Primary sector .............................................................................................................. 49 6.4.2. Secondary sector .......................................................................................................... 55 1 6.4.3. Tertiary sector .............................................................................................................. 62 6.5. Analysis of scenarios ....................................................................................................... 68 6.6. The incompatibility of developing alternative activities with the perpetuation of the lignite model of power production .........................................................................................77 7. PRECONDITIONS AND FUNDING TOOLS FOR THE TRANSITION TO A POST-LIGNITE ERA .............. 79 7.1. Preconditions ................................................................................................................... 79 7.2. National funds ................................................................................................................. 84 7.3. International lending resources ..................................................................................... 90 8. Conclusions ............................................................................................................................ 96 Appendix I: Methodology for the Estimation of Local Multipliers .......................................... 98 2 ACKNOWLEDGEMENTS The authors would particularly like to thank Ms. Eleni Kaliva (Kozani Saffron Cooperative), Ms. Natalia Tsaggadoura (Aromatic Plants Cooperative of Voio Kozani), Dr. Lazaros Tsikirtzis (Head of Kozani Ecological Movement), Mr. Tasos Sidiropoulos (ANKO Director of Programs' Department), Ms. Antoniadou (Head of PPC's Human Resources Department), Mr. Konstantinos Stefos (Grevena Forest Directorate), Mr. Panagiotis Papaioannou (Florina Forest Directorate), Mr. Iliadis (Kozani Forest Directorate), Mr. Ioannis Tsiantas (Kastoria Forest Directorate) for providing the data used in the calculations and the scenarios developed in the present study, and ELSTAT for conceding the rights to use the 2010 national Input-Output table, which was used to calculate the respective multipliers. 3 SUMMARY For more than two decades, the net annual increase rate of the installed coal and lignite power worldwide ranged between 20-25GW. However, since 2010, the fuel that has supported the growth of the global economy for decades fell out of favour. This trend is expected to accelerate in the years to come, particularly following the historic agreement of the 2015 United Nations Climate Change Conference in Paris (COP21). The future of lignite in Greece appears to be even more ominous, given its particularly low quality, the turn of big international finance institutions away from coal, the recent changes in the EU ETS, the tightening up of the European environmental legislation regarding the rest of the air pollutants, as well as the competition with renewables. In the Western Macedonia Region (WMR) in particular, where almost all of the country's lignite units are located, lignite capacity is expected to decrease by 3,495MW between 2014 and 2030. It's obvious that the impacts of such developments on the economy of Western Macedonia, which for decades has been relying almost exclusively on lignite, will be dire. In the midst of these developments, the government and the Public Power Corporation (PPC) seem dedicated to the prolongation of Greece's lignite-based model for electricity production. They are moving forward with the construction of the new, lignite unit "Ptolemaida V" and also planning to construct a second lignite unit, "Meliti II" in Florina, while PPC has revealed publicly its plans to extensively upgrade the Amyntaio TPS (Thermal Power Station) in order to extend its operation beyond 2023. The lack of institutional initiatives aimed at preparing the transition to a post-lignite era, indicates that the aforementioned actions are considered as the only solution to tackle unemployment in W. Macedonia. This is also illustrated by the fact that a recent request by the five "energy municipalities" of the country, which called for a share of the revenue generated by auctioning of CO2 allowances to be used to create jobs in the three "lignite Regional Units" of Greece, was rejected. At a first stage, the present study examined the local added value and the jobs that will be lost as a result of the expected shut-down of lignite units in W. Macedonia over the next 15 years ("Inaction Scenario"). It then examined the extent at which constructing new lignite units can make up for this loss. The results of the economic assessment were negative: Ptolemaida V and Meliti II can reinstate only 30% of the jobs and the local
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