Croatia

Croatia has been slower in developing its long-term energy policies and strategies for energy security and efficiency and in creating the appropriate institutions to implement sustainable reforms of energy markets than most countries in Central Europe and the Baltics. It still needs to develop robust energy strategies and reliable data systems in order to reach market fundamentals.

In October 2005, the EU and nine countries of South-East Europe (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, Serbia, Montenegro, Kosovo-UNMIK and Romania) signed the Energy Community Treaty, which aims to create the legal framework for an integrated European market for electricity and gas. Moldova and Ukraine also applied to join.  The Energy Community Treaty calls on the South-East European countries to create a regional energy market designed to fit into the framework of the EU’s Internal Energy Market.  This means that the relevant acquis communautaire on energy, environment and competition will be implemented in the Balkan peninsula as well.  This will enhance market opening, investment guarantees and firm regulatory control of the energy sectors.  This treaty is the first legally binding agreement signed by the South-East European states and territories since the wars of the 1990s.

The treaty will create a policy framework for international donors to support infrastructure investments.  It will also provide the framework for the expansion of the natural gas system to create an intermediate gas market between the Caspian Sea and the EU.  The treaty will also address the specific energy and environment concerns of South-East Europe, such as increased mortality rates from winter cold and environmental degradation from emissions of old power stations, the use of wood for domestic heating that results in deforestation  and the unsustainable development of wetlands and watercourses for hydroelectric power.  The expected short-term results of the initiative would be new investments in the mining and metallurgy sectors.  In the longer term, the stabilization of the energy sector will assist the macro-economic revival of the region, contributing to lower emigration rates, economic growth and peace.