Coal Mine Methane Financing For Bosnia's Green Transition

This high dependence on fossil fuels contributes significantly to CO2 emissions, making decarbonisation of the sector a critical step towards reducing emissions and meeting international climate goals. BiH has approximately 20,000 workers directly involved in the operation of coal mines and thermal power plants, making the energy transition not only an environmental but also an important social issue for the country. 

Despite the centrality of the industry to the country, Bosnia has committed to reaching net-zero emissions by 2050. According to the latest National Communication on Climate Change, BiH's annual GHG emissions for 2015 totaled 26.88 million tCO2e. The energy sector is the largest contributor at 80%, followed by the industrial sector (9%), agricultural sector (6%), and waste (5%).

As a signatory to the Global Methane Pledge BiH must also take steps to reduce methane emissions towards the collective goal of a 30% reduction on 2020 levels by 2030.  The CCAC-supported Country Methane Profile for BiH showed a 62% abatement potential in the sector by 2030.

While Fossil fuel methane is overall one of the most cost-effective means to do this, coal mines are more difficult to implement measures in compared to oil and gas extraction infrastructure. Since joining the CCAC in 2023, Bosnia has received support to develop a sectoral roadmap for financing of coal mine methane reduction plans and increase national capacity to monitor, assess, and mitigate methane emissions from the coal mine sector.

While various options exist for coal mines, each option must be tailored to each mine, and to the country context. The first stage in determining these options are detailed mine surveys.

Beginning in 2009, CCAC partner Clean Air Task Force has been working to produce mine surveys for coal mines with underground exploitation.  Surveys look at the amount of ventilation, the content of the methane, and the coal production lifespan of a mine. Coal mines with underground exploitation with methane emissions exist only in Federation of Bosnia and Herzegovina.

“With the surveys we sort of run an analysis and which puts out a snapshot of what the methane capture or destruction options are moving forward for mine for a project period of 10 years,” said Felicia Ruiz, Director of International Methane Partnerships and Outreach at Clean Air Task Force.

BiH’s net-zero emissions goals entail a major energy transition for the country, however its reliance on coal power means initial measures must target the lowest hanging fruit such as mitigating coal mine methane, encouraging the use of energy-efficient technologies and practices, and focusing on expanding forested areas to act as carbon sinks and mitigate methane emissions. The transition is paralleled by new European Union regulations (for 2025) that will require active underground mines and abandoned mines to update, continuously monitor, verify and report their emissions.

At the request of the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina, the World Bank became involved and is supporting Bosnia’s energy transition process, which involves finding wholistic social and economic solutions to support environmental and climate goals.

“This is a similar situation in other coal mining countries. The energy transition in BiH must be carefully planned and executed to ensure fairness for all involved parties. Given the large number of workers directly dependent on jobs in coal mines and thermal power plants, the transition must be gradual to allow for proper adaptation by both workers and the local communities that rely on these industries. This not only involves creating new, sustainable jobs in the renewable energy sector but also providing support for workers in terms of retraining and social protection,” said Tamara Bajkuša Spahić, representative for the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina.

The process of evaluating BiH’s coal mine methane mitigation and financing options has been overseen by the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina. The Ministry has worked with coordinated data collection with the national utility company Elektroprivreda Bosne i Hercegovine, who has jurisdiction and exploitation rights over the mines. The Ministry expects that BiH’s energy transition process will cost eight to nine billion dollars for the period to 2030 only.

Clean Air Task Force is supporting BiH’s coal mine methane mitigation process with a wide range of international expertise. “Where we have faced data gaps in BiH we have been able to use data from similar experiences in other countries to add pieces to the puzzle,” said Ruiz. “We have also looked at the way different regulatory frameworks operate in countries like Australia. In Australia, the penalties for not capturing the gas are much higher than the cost of implementing proper mechanisms (which can be very expensive) so there is a clear incentive.”

Financing for coal mine methane mitigation also faces unique challenges. As international financing bodies implement higher sustainability requirements for energy projects, they are also hesitant to fund any projects which may further the lifespan of coal mines. In BiH, the national dependency on coal means this calculation is not helpful, as the mines will be in operation for some time and should be equipped with methane mitigation mechanisms as soon as possible.

“These projects are only going to clean up the environment and it really is one of the only short-term solutions that we have in the coal sector. It's just that because coal is seen as such a dirty word, it's nearly impossible to get financing,” said Ruiz.

CCAC support for the development of the sectoral roadmap for financing for BiH will be critical for strengthening the case for methane mitigation funding and for identifying the best possible mechanisms, including enabling access to World Bank funding.

The Roadmap will also form the basis for conducting further studies into cost-benefit analyses which assess the co-benefits to be gained from reducing air pollution derived from methane emissions and subsequent tropospheric ozone. In many countries, creating cleaner air equates to savings of billions of dollars in health and agricultural benefits.