With a savings plan, we will neither become rich nor green

Analysis of Boyan Rashev, Forbes magazine

Climate / Bulgaria
3E news
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The last month was marked by discussions on the National Plan for Reconstruction and Sustainability, which will give Bulgaria access to funding from the EU Reconstruction Mechanism - about BGN 12 billion for the period 2021-2027. According to the plan, "this will allow in the long run plan to achieve the strategic goal of the government for convergence of the economy and incomes to the Central European ones ”.

In its current form, however, the Plan will not make a significant contribution to achieving its main goal. Instead of stimulating investments in green energy and industries with export potential, it relies on the absorption of funds with 100% grants for various causes (education, social inclusion, etc.) and increasing the energy efficiency of buildings. This is a Savings and Shrinkage Plan rather than a Development and Expansion Plan. And Bulgaria needs the latter if we ever want to achieve the cherished goal.

Priorities need to be different, with the main funding going to businesses with export potential that create employment and high added value. Potential examples are: activities that reflect the priorities of the European Sustainable Investment Taxonomy and the European Action Plan on Critical Raw Materials such as the extraction and recycling of non-ferrous metals, in which we have a tradition; heating and / or cogeneration of heat and electricity from alternative sources such as solar thermal panels, energy recovery of geothermal waters and geothermal gradient, biomass, waste, including sludge from treatment plants; electrification of the car fleet, but without large subsidies for the purchase of cars, but through the creation of charging infrastructure; introduction of innovative technological solutions in the energy sector and extraction of own energy sources such as batteries, small modular nuclear reactors, hydrogen, storage and utilization of carbon, extraction of gas from unconventional sources; mass gasification, which gives not only clean heat to households, but also a competitive advantage for many industries.

All of the above should take place in the context of the phasing out of TPPs that burn lignite without carbon storage. The oldest and the dirtiest assets must be closed first, and the last the most modern and clean, which can meet the EU's environmental requirements and are technically indispensable for the regulation of the electricity system and the integration of variable renewable energy sources.

The state must play a supporting role, which at the same time to use the country's resources and give clean technological solutions a boost to achieve a significant market presence. Sustainable "green transformation of the economy" is possible only if the latter are imposed on the free market and provide competitive advantages to consumers and companies. Too long and generous subsidies lead to a dead end.

No matter how much money is poured into the country's economy, the Plan will not achieve its goals if it is not accompanied by reforms that stimulate private initiative. This is not just about increasing foreign direct investment, but above all about creating conditions for the profits of Bulgarian companies to be reinvested in the country, as well as Bulgarian citizens to withdraw and invest their money, which sleep soundly under mattresses and in bank deposits. This is related to two things: a) increasing the general level of economic freedom, which is expressed in the following dimensions: rule of law; limited state intervention; regulatory efficiency; open markets and b) change of attitudes and trust towards entrepreneurship and business among the population. Only a strong and unrelated business can create a strong and sustainable economy.

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